The Trouble with Software License Management

Michael Vizard

IT organizations spend an inordinate amount of money on software licenses that, all too often, are poorly managed. The reasons for this are largely two-fold: A lot of IT organizations are afraid to find out how much software is actually being used for fear of having to pay higher fees and the process of managing those software licenses is frequently divorced from mainstream IT operations.

This latter issue exists because the responsibility for acquiring software licenses is frequently in the hands of the purchasing department, which usually has zero visibility into how any given application is being used. As for concerns about having to pay additional fees, many IT organizations will be surprised to discover how much money is being wasted on software licenses that nobody is actually using.

When all is said and done, there is a significant opportunity to save a fair amount of money by being more proactive about software license management. But for that to happen, the management of software licenses and the rest of the IT environment need to be more tightly coupled, says Ken Drachnik, director of product marketing at Dell KACE, a unit of Dell that markets dedicated systems management appliances.

To facilitate that integration, Dell KACE has upgraded the Dell KACE K1000 Management Appliance with tools that monitor an organization's compliance with the terms of its software licensing agreements.


Beyond saving companies from incurring additional fees because they violated the terms of their software licensing agreements, a tighter coupling between IT systems management and software license management should actually wind up reducing the total cost of software by more easily identifying software licenses that are not actually being used.

The trouble with software license management is that it's not a continuous process in most organizations. A lot of thought goes into acquiring software, but once it's installed, the collective memory of the organization forgets about it until it's time for renewal. Given the huge percentage of the IT budget that goes to software licensing, it's pretty clear that there are lots of room for improvement.

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May 5, 2011 2:30 AM Dominic Haigh Dominic Haigh  says:

The first issue, that of liability arising from exceeding the terms of the license under which software was purchased, is of course resolved by the software vendor using a competent license management system to enforce the agreed terms of the license. The end-user is therefore relieved of the obligation to track the number of users, geographic distribution etc., as the vendor's system will make sure these do not go outside the licensed bounds.

On the separate issue of purchasing too much capacity, we as a supplier of software licensing solutions see software vendors migrating away from the perpetual all-encompassing license to other models that reduce or eliminate this problem. For example, a yearly renewable subscription license limits the upfront cost, and if the software is not of value then the subscription is simply not renewed, or reduced in scope.A better example is usage-based licensing, where the fees paid are based solely on the actual usage (=value) in perhaps one calendar quarter or a year. The application securely tracks the agreed usage metric, which could be the number of times functions are called, terabytes of data processed, number of channels analyzed, pages printed etc., and the due invoice submitted at the end of each period. We recently published a case study of such usage-based licensing.Both of these approaches better align the vendor's and user's concerns, and probably also swing the balance of power towards the user - who now has better means by which they can hold the vendor's feet to the fire.Dominic HaighAgilis Software

May 9, 2011 5:42 AM Jeff Kelsey Jeff Kelsey  says:

Thanks for the article, Mike.  As a vendor of asset management software, I'd like to point out that many of our customers do, in fact, purchase and manage software assets from within the IT organization.  For these folks, it's less a matter of forgetting about the software once it's purchased; on the contrary, they worry themselves sick about whether they're properly licensed or at risk in the event of a vendor audit.  For these companies, it's more an issue of resources and recognition from executive management that there are significant dollars at risk (in the form of both copyright infringement fines and/or wasting money on unused licenses) if software isn't properly managed. Without a top-down mandate that software license management is a priority, IT staff generally aren't provided the resources to implement good asset management technology, establish careful processes surrounding management of software, and dedicate the right personnel to get the job done.

Dec 3, 2013 9:18 AM William Patton William Patton  says:
How much is the license pack? Reply
Jan 22, 2014 1:36 AM Donna Barnes Donna Barnes  says:
I agree to the article. As programmer / developer you have to make sure you choose the right  software license management software for your system. You also have to make sure that it offers maximum flexibility for implementing customized copy protection and licensing strategies. Reply

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