5 Software License Management Best Practices To Maximize ROI

With the growth of SaaS apps, organizations are spending more on software licenses to support their operations. However, without proper management, they can end up wasting money on unused or redundant licenses.

This lack of software license management can have serious financial consequences. Efficient SaaS license management helps by automating the process, leading to significant savings and better control over software usage.

Let's explore the importance of mastering license management best practices and how it can help you optimize your IT asset management (ITAM) efforts.

1. SaaS Licensing: What Is It?

SaaS licensing is a legal arrangement between the software provider and the end user that allows the software to be used in exchange for a monthly fee.

Think of it as renting an apartment. You can continue using it as long as you’re paying the monthly rent.

The licensing agreement usually specifies the number of users, devices, and the duration for which the software can be used. Depending on the pricing plan, software licenses can be bought either at a one-time cost or on a subscription basis.

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2. Types of SaaS Software Licenses

Organizations must understand the different licensing models associated with their software usage to manage software licenses properly.

Organizations can save on wasteful spending by using software license management to track app usage across the organization.

The following are the most common types of software licenses:

• Subscription: Enables access for a month, quarter, or year for paid subscriptions.
• Perpetual: Provides perpetual usage of software for a one-time price.
• Named-User or Per-Seat: Only provides access to a single user, with the option of transferring access to another.
• Concurrent User: Allows a certain number of individuals to utilize the same license simultaneously.
• Per Device: This installs the software on a single device and allows several people to access it.
• Network: Allows access to all users on a specific network.
• Metered or Consumption-Based: Users prepay for expected usage or are invoiced depending on usage.

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3. What Is Software License Management?

Software license management (SLM) is a process followed by SaaS buyers to manage purchased SaaS licenses. SLM tools assist in tracking usage, making changes, and accurately completing audits to ensure compliance and prevent costly penalties or legal issues.

Effectively managing SaaS licenses helps firms enhance their ROI in addition to managing their risks. SLM reveals how users utilize your SaaS stack, enabling you to make necessary cost optimization decisions.

As an essential component of any software asset management (SAM) strategy, enabling license management best practices guarantees that enterprises can run their IT operations efficiently and confidently.

4. Why Is Implementing Software License Management Best Practices Important?

Effective management of software licenses is a crucial aspect of IT operations. It ensures that your company handles its SaaS license acquisitions in a compliant and efficient manner.

You must follow software license management best practices for:

Avoiding SaaS Waste: Duplicate SaaS apps and orphaned app licenses might result in wasted money and resources. An efficient SLM will provide visibility on SaaS licenses and subscriptions. Thus making it easier to prevent SaaS waste and unnecessary expenses.

Ensuring Compliance: The Business Software Alliance monitors businesses for non-compliance. Software vendors can impose a fine on your organization for excessive license usage beyond the agreed limit.

One approach to mitigating this risk is through effective license management. It’ll help you ensure that you comply with the license agreement and are not breaching the contract.

Increasing ROI: An effective SLM provides a clear picture of your team’s license usage, allowing for better decision-making and optimizing your budget for software licenses.

You can reallocate licenses based on usage and priority, cut down unused licenses, and get the best returns from your licenses.

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5. Top SaaS Software License Management Best Practices

Managing software licenses can be complex for enterprises, particularly if they use countless SaaS applications.

Businesses that do not have effective management may overspend on unnecessary licenses or violate licensing requirements, leading to costly fines and penalties.

To avoid these issues, you must follow the software license management best practices to ensure that the licenses are properly utilized for what they’re paid for.

A. Get Visibility On Saas Licenses And Centralize Them

Organizations uses a variety of SaaS applications. However, there won’t be centralized visibility of all the apps and licenses; some businesses still use spreadsheets to track applications. Organizations must have complete visibility into their apps and licenses to manage them effectively.

Centralizing apps and licenses in one place will provide a clear overview of licenses and the number of licenses purchased. This will make it easier for the IT teams to provision users, analyze usage, and track licenses effectively.

B. Regularly Track License Usage

Tracking license usage is vital for avoiding SaaS overspending. It assists enterprises in determining whether or not the licenses they purchased are being used efficiently.

App usage tracking gives insights into user behavior, showing which apps are underused or not used at all. It helps businesses save costs by reducing or reallocating licenses based on usage and priority.

C. Automate Provisioning & Deprovisioning

Automating software license provisioning and deprovisioning ensures that licenses are managed efficiently from start to finish. When an employee joins the organization, their access to the necessary software is automatically granted, reducing onboarding time.

Conversely, when an employee leaves, their access is promptly revoked, preventing unnecessary license costs. This process minimizes human error and ensures companies only pay for active licenses, leading to significant cost savings and better software usage control.

D. Right-Size Licenses

Right-sizing licenses means ensuring that employees are only using the software plans that best suit their needs. It’s easy for companies to over-purchase software licenses, especially when premium plans offer additional features that are rarely utilized.

Regularly reviewing each employee's software requirements and downgrading unnecessary premium licenses to basic or more affordable options can result in substantial savings. This practice helps optimize software spend and ensures that each user has the right apps without overspending on features they don’t need.

E. Use Saas Licensing Management Software

Manually tracking license usage with spreadsheets is time-consuming. SaaS license management software makes the process more efficient by providing visibility over purchased licenses, tracking them, managing renewals, and optimizing SaaS costs based on usage.

It also offers insights into license usage, helping businesses reduce costs and maintain compliance. With this software, companies can minimize wasted SaaS expenses, streamline license management, and easily reallocate licenses to users who need them.

F. Set Renewal Alerts & Automate Workflows

Managing software renewals is crucial to avoid paying for unused licenses or missing out on better pricing. Setting up automatic renewal alerts ensures that no renewal dates are overlooked. This gives teams enough time to review contracts, check usage, and negotiate better terms before the renewal date.

Automating the renewal process makes things easier by reducing manual work. Alerts for contract reviews and price negotiations can be triggered automatically, ensuring everything is handled on time. This way, businesses can save time and money while keeping their software costs in check.

G. Run Regular Compliance Audits

Regular software audits must be performed to determine which licenses are in use and which are not. Audits assist firms in identifying potential cost-cutting options and ensuring compliance with licensing rules. They also assist businesses in identifying any unapproved software, lowering the chance of security breaches.

6. Benefits of Effective SaaS License Management

a. Cost Savings: Most businesses purchase licenses upfront without analyzing the requirements. This is one of the major causes of wasted licenses.

SaaS license management provides visibility into licenses and usage insights. This enables enterprises to right-size their licenses by eliminating unnecessary ones and only paying for the ones they use. Effective license management will lead to better cost savings.

b. Improved Security and Compliance: A good SaaS license management solution ensures that your organization follows licensing agreements and regulations. It also aids in the management of security threats by keeping track of the number of licenses, users, and devices that access your app. This lowers the likelihood of unauthorized access and data breaches.

c. Enhanced Productivity: Firms can concentrate on their core operations with an effective SaaS license management platform rather than worrying about software licensing.

The software handles license tracking, sends alerts during low usage, and helps IT teams reallocate licenses based on usage and priority. This, in turn, increases staff productivity and allows them to concentrate on strategic tasks.

d. Optimize ROI from SaaS Investments: Maximize the value of your SaaS investments: Businesses want to get the most out of their SaaS apps. With SaaS license management, you can ensure you're making the most of your licenses, avoiding waste, and making sure your team uses all the licenses effectively.

7. Why is CloudEagle.ai An Ideal Software for License Management?

CloudEagle.ai is SaaS spend management software with much-needed license management and cost optimization features.

One of the most important aspects is application visibility, which gives businesses total visibility into their SaaS application stack and licensing. This visibility enables enterprises to identify and manage licenses, making it more straightforward to provision users and reallocate licenses.

a. License Management: Another key aspect of CloudEagle.ai is centralized license management. Businesses can see the number of licenses bought and licenses in use by combining licenses on a single platform.

This feature assists businesses in tracking license utilization, determining whether licenses are being used efficiently, and identifying underutilized applications. As a result, companies can make informed cost optimization choices by analyzing license usage.

b. Renewals: Renewal tracking notifies businesses when licenses are due to expire, lowering the risk of increased spending due to auto-renewals.

You can configure renewal workflows that initiate 90 days in advance and send consistent renewal reminders. It’ll automatically escalate the task to various stakeholders until one of them acts on it.

During renewal negotiations, you can verify the license usage and prepare a renegotiation plan to right-size your licenses.

Check out this exciting story as our customer Pratibha Mehta from Falkonry recalls how they streamlined renewals with CloudEagle.ai:

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c. Assisted Buying: The Assisted buying feature of CloudEagle.ai can also assist organizations in negotiating with vendors to rightsize their licenses.

You can seek our expert's help if your team lacks the bandwidth for negotiation. Our negotiation experts will analyze your license usage and negotiate with the vendors to cut down unnecessary licenses, resulting in increased SaaS savings.

8. How CloudEagle.ai Strengthens Your License Management?

CloudEagle.ai is the perfect software for organizations looking to optimize their software license management. Here’s why CloudEagle.ai is the ideal choice for license management:

A. Centralized License Management

CloudEagle.ai centralizes all your software licenses into one platform, allowing you to manage and track their licenses from a single location. This eliminates the need to keep multiple spreadsheets or use different systems for different departments.

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With everything in one place, it’s easy to access and manage software licenses, track expiration dates, and stay on top of renewals. By having all license-related information in a centralized system, you can avoid confusion, reduce human error, and streamline the management process.

Know How CloudEagle.ai Helped Remediant Simplify App Usage, License, and Spend Tracking.

B. Real-Time License Usage Monitoring

One of the key benefits of CloudEagle.ai is its ability to monitor license usage in real time. This feature helps businesses track how and when licenses are being used, making sure no resources go to waste.

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By continuously checking license utilization, you can spot underused or idle licenses and take action, like reclaiming and reallocating them. This real-time data helps avoid buying unnecessary licenses, saving costs while ensuring efficient use of resources.

C. Automated License Renewals & Alerts

CloudEagle.ai simplifies the license renewal process by automating it. It sends automatic reminders for upcoming renewals and manages the entire process so businesses don’t have to do it manually. This ensures that renewal dates are never missed, preventing service disruptions and the risk of non-compliance.

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Additionally, CloudEagle.ai sends alerts for important license events, such as upcoming expirations or license overages, allowing businesses to stay proactive and on top of their software license management.

D. Reclaiming Unused Software Licenses

CloudEagle.ai’s license reclamation workflows helps organizations optimize resoures by recovering unused or underutilized licenses. When employees no longer need a license or when a department has excess licenses, the tool allows organizations to reclaim these licenses and make them available for other users.

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By optimizing license usage, companies can avoid paying for extra licenses. This reduces unnecessary software costs and helps keep license management more efficient.

Read the inspiring success story of how CloudEagle.ai helped RingCentral save time and reduce costs in license harvesting.

E. Streamlined Contract Management

CloudEagle.ai simplifies software contract management by using AI-powered metadata extraction to track key details like start and end dates, renewal terms, pricing changes, and payment schedules. The platform automatically extracts these details from contracts and stores them in one place.

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It automatically sets up renewal reminders, so stakeholders are notified about renewals or price changes in advance. This helps avoid missed deadlines, penalties, or surprise costs. With everything organized, companies can track key dates and negotiate better deals during renewals.

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Check out this exciting story as our customer Pratibha Mehta from Falkonry recalls how they streamlined renewals with CloudEagle:

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9. Conclusion

Enabling the software license management best practices process is vital for businesses that desire to get the most out of their SaaS license investment.

Businesses that do not have it risk overspending on needless licenses or violating licensing requirements, which could result in significant expenses and security lapses.

However, organizations can streamline the licensing management process by implementing the software license management best practices discussed in the article. Utilizing SaaS license management software like CloudEagle.ai to get the maximum ROI from purchased licenses.

Schedule a demo with CloudEagle.ai to streamline your organization’s license management.

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