License Management – Everything you need to know!

Nowadays, License Management is practiced more or less in every company. However, there are big differences depending on whether License Management is prioritized in the company or not. This article shows that the topic is not only relevant for compliance, but can also minimize costs and risks.

Other questions tackled in this article:

• On-premise, Cloud & Co.: When does License Management play a role?
• Status quo: What is the status of License Management in companies?
• Roles and responsibilities: Who does the topic of License Management concern?
• Advantages: Why is active License Management worthwhile?
• Outsourcing: Does it make sense to outsource License Management?
• Conclusion: License Management is becoming increasingly important 

License Management affects a wide range of manufacturers, products and environments – whether workstation, server, on-premise or Cloud. Especially on servers, the correct recording and reconciliation with the acquired usage rights pose challenges. Today, we are seeing an ever-increasing shift from traditional on-premise licenses to Cloud-based solutions (Microsoft 365, IBM Cloud Pak, Adobe Cloud, etc.). These Cloud subscriptions often escape License Management because they do not run in the company's own data center and cannot be monitored. At the same time, this trend results in considerable savings, as companies generally do not even make full use of the functions acquired in expensive subscriptions. This is another reason why License Management has become a highly relevant commercial issue in recent years.

Today, there is hardly a company that does not deal with License Management at all. The ever-increasing use of software and the associated costs alone make it necessary to plan and control license expenditure.

Uniform procurement processes, usually controlled by purchasing, attempt to tackle this situation. But all too often, these are bypassed in urgent project phases in order to be able to act quickly. The subsequent workup is usually lost in the day-to-day business.

This division also ensures that all areas of the company are involved in License Management and that potential risks can be identified and evaluated from different points of view. It is not uncommon for a manufacturer audit to reveal which risks License Management was not even aware of. Only risks that are transparent can be evaluated. Therefore, effective License Management is a symbiosis of processes, responsibilities, tool-supported data preparation and data processing as well as license and product know-how.

A license manager plays a central role in this process. Depending on the size of the company and its organization, this role may be more involved in day-to-day operations or in the strategic and coordinating management of License Management. In any case, the license manager is the central contact person in the company for all license-related issues.

License Management primarily pursues three main objectives: The contractual use of commercial software use in the company (compliance), the identification and evaluation of technical and licensing risks in software use (risk management), and the efficient and economically optimized purchase and use of software in the company (optimal licensing).

This results in the following advantages:

• Increased transparency of the actual software usage
• Increase in the quality and availability of data on software usage
• Correct and regular determination of license requirements and the license balance sheet
• Audit-proof management of the effective license inventory and license contracts
• Audit-proof compliance based on automated license accounting
• Significantly reduced effort for the preparation and execution of audits
• Increased cost-effectiveness of software deployment (e.g., by realizing optimization potential)
• Increased transparency with regard to software costs in the individual company divisions and the possibility of internal company cost allocation
• Avoidance of unnecessary license expenditures
• Evaluation of risks in software use (e.g. patch levels, versions) and in licensing (e.g. free or commercial use)

Another option, which is currently the subject of much discussion, is to "outsource" License Management. In principle, this is intended to achieve two things: On the one hand, minimizing the internal effort in License Management and, on the other hand, obtaining external License Management expertise. Of course, some aspects can also be outsourced and the actual license management remains in-house. In any case, it is important to clearly delineate the tasks and clearly define the interface between the external service provider and internal resources. Then companies can indeed benefit greatly from external licensing and product know-how and minimize the often considerable effort involved in the continuous maintenance and provision of license- and audit-related information. Regular jour-fixes should be established to ensure a common understanding of the current situation and to prioritize topics.

These advantages result from partially or fully outsourced License Management:

In summary, today's License Management encompasses a wide range of activities, processes, tools and responsibilities. The task is to manage an increasingly complex IT infrastructure consisting of products from different manufacturers on workstations, servers, on-premise, in the Cloud, hybrid or as cloud apps in an audit-proof and license-optimized manner. License Management will become increasingly important as the use of software continues to grow and now affects many areas, even outside of traditional IT and the data center.

With clearly structured license management and the support of external specialists, these challenges can be mastered and the three most important goals of License Management – compliance, risk management and optimal licensing – can be realized in the long term.

Martin Lange has been working for TIMETOACT as an IAITAM-certified Software Asset Management consultant since 2020. His focus is on the holistic view of and consulting on SAM processes and SAM tools. A pragmatic approach is particularly important to him. In his words, "SAM should not be a science, but should deliver fast and value-adding results." Martin has gained experience in various SAM projects during his 15-year sales and consulting career with software and tool manufacturers as well as consulting companies.