SaaS applications & cloud-based solutions have become necessary for every organization in this modern digitized environment. As software proliferates throughout every department and every function within the company, software license optimization becomes more critical than ever.
The IT team must ensure that all software spending is tightly controlled, even with compliance, productivity, and business growth in mind. This post will explore strategies for helping organizations manage their software licenses, eliminate unnecessary spending, and ultimately increase ROI.
The Growing Need for Software License Optimization
The Impact of the Digital Transformation on Software Costs
Companies have rapidly adopted SaaS platforms and cloud-based software tools during the last decade, contributing to increasingly digital workplaces. Every department, from marketing and HR to engineering and customer support, relies on a multitude of solutions to operate optimally. Managing all these software solutions at once is not simple, turning into a complex maze of licenses, subscriptions, and contracts.
Growing organizations and the variety of tools being adapted there leave IT teams with some software license optimization challenges.
- Tracking the exact count of licenses
- How they are used
- Ensuring the company is not spending on unnecessary software
- Estimating whether all licenses are full or assigned to users
Research says up to 50 percent of all the installed software and licensed SaaS applications go unused, costing businesses millions each year.
Software license optimization is the magic wand of IT departments. With software license optimization, IT departments reclaim unutilized or underutilized licenses, reduce waste spending, and free resources for investment elsewhere. Let us have a closer look at what license optimization of software entails and how it could be maximized for returns.
What do you know about Software License Optimization (SLO)?
Software License Optimization Definition
Software License Optimization (SLO) means the proper management of purchased licenses. SLO ensures organizations effectively pay for the licenses they require, maximizing value. Software license optimization involves auditing, tracking, and reallocating licenses based on actual use rather than estimates or assumptions. The primary goal is to reduce software expenditure while maintaining operational efficiency and compliance.
SLO includes the phases of acquiring, deploying, monitoring, and renewing software licenses’ lifecycle. However, several organizations experience problems such as over-provisioning software licenses, having software with no use, and a barren sight of total software footage. Increased costs and compliance risks may accrue if licenses are poorly managed.
Some Key Goals of Software License Optimization
- Cost Efficiency: Software license optimization works to ensure that the right license is allocated to the right user. It tracks proper license usage to cut costs that are tied to unused licenses by reclaiming or reassigning their use.
- Compliance: SLO ensures that your organization is compliant with vendor licensing agreements, thus minimizing the risk of penalties or fines.
- Productivity: With proper licensing, employees will have access only to relevant tools, increasing productivity while saving costs associated with licensing downtimes.
The Problem with Traditional License Management
Many businesses continue to manage software licenses through outdated, traditional methods such as spreadsheets, surveys, and basic license tracking tools. These traditional methods often fail due to several key limitations:
- Lack of Accuracy: It’s exhausting to keep proper track of employees’ own making and destruction of licenses. Without clearly defined, centralized usage systems, businesses may end up underusing or overusing licenses.
- Low Visibility: In most cases, IT departments are not very visible to the actual usage of software within the organization. This makes it hard to track unused software and monitor compliance.
- Compliance Risks: It’s easy to miss renewal dates or misallocate licenses during manual tracking, which leads to non-compliance with licensing agreements and costly audits.
Usage-Based Software License Optimization: A Smarter Approach
Why Usage-Based Optimization is the Future
A usage-based approach to software license optimization is a game-changer for IT departments. Rather than estimates, usage-based optimization uses real data to make better decisions. By collecting and analyzing usage data, businesses track which software licenses are being actively used and which are sitting idle, collecting dust.
Key Metrics for Software License Optimization
To optimize software licenses, the IT departments need to collect and analyze key usage metrics. These are:
- Usage Frequency: How often are employees using the software? Are there any licenses that are rarely accessed?
- Device Type and Usage: Which devices are running the software? Are certain devices over-licensed or under-utilized?
- Time of Use: When are the employees using the software? Is there any pattern that shows it’s being used sporadically?
- License usage ratio: What is the percentage of employees who use the deployed licenses compared to those who don’t use them effectively?
IT departments can make informed decisions based on the data. They can determine which licenses need to be removed, re-allocated, or renewed to hold onto only those that will maximize the ROI on their investments.
How to Collect and Analyze Usage Data
Tools and Technology for Software License Management
To monitor and manage software licenses properly, a business needs the right tools. Many IT teams rely on digital employee experience management tools and endpoint agents to collect telemetry data. These tools provide a comprehensive view of software usage. They offer insights about the most used application, who uses it, and how often they use it.
But what if you have a company that sells SaaS products like VPN or antivirus software and relies on license keys? You probably need a virtual license manager to half your workload and let you focus on productivity.
For example, License Manager for WooCommerce allows businesses to manage software licenses for their products smoothly. It integrates with the platform’s API, allowing businesses to activate, deactivate, and validate licenses automatically. This can help optimize software license management, improve compliance, and reduce manual errors.
The Benefits of Software License Optimization
1. Recovering Budget: Saving Money on Software
Cost savings are perhaps the most immediate slice of the pie that comes with optimizing your software licenses. Sources like G2 Track indicate that 53% of software licenses remain unused. Which translates into large amounts of waste (in dollar terms) for organizations. By reclaiming unused licenses, businesses can reduce their overall spending on software, creating financial resources for other strategic initiatives.
2. Improve Productivity
Optimizing software licenses can contribute to a great increase in the productivity of employees. Workers furnished with the right tools and applications work in a better way. Reducing the usage of unneeded software also decreases device load, subsequently improves performance, and minimizes downtime.
3. Reduced Service Desk Burden
By reducing the sprawl of software & proper optimization of license allocation, they can reduce the number of tickets coming to the service desk. Fewer software problems mean fewer support requests, which leads to faster resolution times and a more productive IT team.
4. Accelerating Digital Transformation
Optimization of a software license can speed up digital transformation projects. IT teams can make the right decisions concerning the deployment and adoption of software and upgrades because of software usage. Hence, it makes system rollout smoother and less disruptive to the employees.
5. Environmental Impact: Reduce Software Waste
There are also benefits to sustainability when one makes unused licenses and optimizes better software usage. The first thing that comes with reducing digital waste is aligning a company’s footprint with broader corporate social responsibility goals.
Effective Strategies for Software License Optimization
Tip 1: Regular Audits of Software Usage
The first step in software license optimization is to conduct regular audits. These audits help businesses identify underutilized or unused software, ensuring that licenses are allocated efficiently and effectively.
Tip 2: Build Smart Digital Personas
To allocate software licenses effectively, it’s essential to categorize employees based on their specific software needs. To do this, build digital personas, which group employees by job function, software usage patterns, and consumption needs.
Tip 3: Ongoing Monitoring and Adjustment
Software use changes over time. People change jobs, acquire new tools, or discontinue software use. Software license optimization should be an ongoing process where one continually monitors and makes adjustments accordingly.
Tip 4: Overlay Employee Sentiment with Data
Combining usage data with employee feedback can help identify the actual need for the software. For instance, employees may report that a certain software tool is a must for them, although the data may suggest that they don’t use it.
Tip 5: Repeat Audits and Adjustments
License optimization is not a one-time job. Continuous audits and adjustments will ensure your organization remains efficient and balance software needs with cost savings.
Real-Life Examples: Success Stories in Software License Optimization
Case Study 1: Flutter Entertainment Saves $500,000
One of the companies that has benefited from software license optimization is Flutter Entertainment. They managed to recover unused or underutilized licenses through a thorough software license remediation program, saving them $500,000 annually. This reduced costs but also streamlined their IT operations.
Case Study 2: US Hospital Reduces Service Desk Burden by $1.7M
A US-based hospital implemented software license optimization; service desk tickets plummeted dramatically, saving them about $1.7 million in one year. All this was due to improved operational efficiency and reduced unnecessary software deployment. Result: reduced burdens on their IT support staff.
Case Studies Source: Nexthink
Unlocking Cost Savings and Efficiency with Software License Optimization
Today’s fast-paced, changing world has made us follow software license optimization practices. This is no longer an option but a must in the new software-dominated globe. Through proper management of software licenses, organizations save costs, improve productivity, and ensure compliance. A good SLO strategy will keep your organization agile and cost-effective and help grow the business in the long term.
Take action today with products like License Manager to optimize software licenses. You will see its benefits firsthand.
The time is now to optimize your software license management; don’t let the next audit tell you how much you are overspending!
