With the rise of Software as a Service (SaaS) tools, businesses are investing more than ever in software licensing to support their operations. However, without effective management, firms can become victims of SaaS waste, wasting money on redundant or orphaned SaaS licenses.
The absence of a software license management process can have serious financial implications for businesses.
That's where efficient SaaS license management comes in. It provides organizations the tools they need to automate software license management (SLM), resulting in increased SaaS savings.
Read on to explore the importance of the software license management process, its best practices, and how it can help businesses maximize their IT asset management (ITAM) efforts.
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.
SaaS vendors usually use a per-seat license model for their software. This is where the end-user purchases a number of seats based on the number of individual users that have to access the software.
Each seat will be charged by the vendor. As a SaaS buyer, you must ensure that all the seats are adequately utilized. This is where SaaS license management comes into play.
Types of SaaS software licenses
Businesses must understand the different licensing models associated with their software usage to manage software licenses properly.
Businesses can save 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 duration of 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: 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.
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, SLM guarantees that enterprises can run their IT operations efficiently and confidently.
Why Managing Software Licenses Is Necessary For Business?
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.
Here are some of the reasons why SLM is essential:
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. And 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.
5 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.
Perform Regular Software 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.
Get Visibility On Your Saas Licenses And Centralize Them
Businesses will use 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.
Businesses 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.
Regularly Track Your 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 provides insights into user behavior, revealing whether particular apps are underutilized or not used. It also plasy a vital role in deprovisioning users. Businesses can make better cost-saving decisions by cutting-down licenses or reallocating them based on usage and priority.
Use A SaaS Licensing Management Software
You cannot manually track license usage using spreadsheets. It’ll be a time-consuming process. Using SaaS licensing management software paves the way for more efficient license management.
It’ll assist organizations in providing visibility over purchased licenses, keeping track of them, managing renewals, and optimizing SaaS expenses based on license consumption.
It also provides insights into license usage, making it easy to find ways to lower costs and maintain licensing compliance. Businesses can minimize wasted SaaS expenses and streamline the licensing management process by employing SaaS license management software.
A SaaS license management software will make it easier to deprovision users from license and reallocate licenses to users who actually needs them.
Maintaining Healthy Vendor Relationships
Maintaining a positive relationship with software vendors is critical for successful license management. Businesses can negotiate better license agreements and gain more advantageous pricing by cultivating positive relationships with providers.
Vendors who have a good relationship with the business are more inclined to renegotiate licensing and offer discounts. This helps firms lower costs and maximize their ROI on SaaS applications.
ROI should be your primary focus when purchasing licenses. Most businesses purchase licenses just to get the work done. That’s not how SaaS licensing works. Calculate an estimated ROI before purchasing licenses.
And for your existing licenses, following the above-mentioned best practices for software license management will help increase your ROI.
Benefits Of Effective SaaS License Management
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.
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.
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.
Maximize the value of your SaaS investments
Businesses that invest in SaaS apps want to ensure they get the most out of their money. Businesses can use SaaS licensing management to guarantee that they are getting the maximum value from the licenses for what they are paying for.
Effective license management ensures that there are no wasted licenses in your SaaS stack and that your team utilizes all the licenses properly.
Why is CloudEagle an ideal software for license management?
CloudEagle 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.
Another key aspect of CloudEagle is centralized license management. Businesses can clearly 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.
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:
Assisted buying feature of CloudEagle 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.
An effective software license management 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, businesses 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 to get the maximum ROI from purchased licenses.
So, what are you still waiting for? Schedule a demo with CloudEagle today!