The Future of Software Licensing: The Importance of an Optimal License Model in Divestitures

When a company spins off a business unit, the spotlight often shines on financials, operations, and IT infrastructure. Yet, hidden within the fine print of software contracts lies a strategic lever that can make or break the success of a divestiture: licensing. In today’s rapidly evolving digital landscape, where hybrid cloud, SaaS, and AI-driven platforms reign supreme, software licensing has transcended its role as a mere compliance checkbox. It has become a critical enabler of agility, innovation, and cost control. However, many organizations still underestimate the complexity and opportunity embedded in licensing decisions during a carve-out or spin-off.

Predictive analytics and AI are revolutionizing license management, enabling organizations to simulate cost scenarios, forecast usage, and identify compliance risks before they materialize. Licensing strategy connects to broader IT transformation themes, cloud migration, cybersecurity, and digital workplace enablement. In the future of software licensing, the winners won’t just be compliant, they’ll be ready.

Licensing as a Strategic Lever in Divestitures

Divestitures are high-stakes operations. They demand speed, precision, and foresight—especially when it comes to software licensing. Yet, licensing is often treated as an afterthought, buried beneath infrastructure planning and financial modeling. That’s a costly mistake.

Optimal license models can accelerate Day 1 readiness, reduce stranded costs, and foster innovation in the new company (NewCo). Real-world transitions, such as IBM’s ELA renegotiations and Broadcom’s shift away from perpetual VMware licenses, illustrate the pitfalls of poor planning and the power of early action. Whether navigating a carve-out, spin-off, or joint venture, organizations that treat licensing as a strategic lever, not just a compliance concern, gain a critical edge.

To navigate the complexities of software licensing during divestitures, consider these three critical aspects:

1. 1. Strategic License Positioning: More Than a Baseline Review
      Before the ink dries on a divestiture agreement, both the parent and the divested entity must assess their licensing positions. But this isn’t just about counting seats or checking out contracts. It’s about identifying which licenses are mission-critical, which can be shed, and which require renegotiation.Take Microsoft, for example. Many of its enterprise agreements include non-transferability clauses or require re-signing under new legal entities. These nuances can delay Day 1 operations or trigger unexpected costs without early planning.

1. 2. License Portability and Vendor Lock-In
      Vendor lock-in is one of the most underestimated risks in divestitures. Proprietary licensing models, such as the Salesforce Platform Enterprise License, often restrict portability, forcing NewCos to either repurchase licenses or scramble for alternatives.
      Centralized entitlement management systems can help. By consolidating license data and enabling self-service activation, these platforms reduce friction, support compliance, and streamline renewals across hybrid environments.

1. 3. Contract Divestiture Planning and Supplier Engagement
      While strategic license positioning and vendor lock-in mitigation are foundational, organizations must also prioritize contract divestiture planning and supplier engagement to ensure licensing compliance and operational continuity during divestitures.
      This involves a structured, pre-spin approach to:

• • • • • Contract divestiture analysis: Confirming the current service and product offerings, collecting licensing and entitlement data, and developing a detailed work plan aligned with stakeholder expectations.
        • Supplier engagement: Establishing a communication plan to engage suppliers early, confirm the scope of services, and negotiate contract terms.

These activities are essential to avoid compliance gaps, unexpected costs, and service disruptions. This framework ensures that licensing transitions are not only technically sound but also contractually enforceable and operationally aligned.

From Reactive to Predictive: The Rise of Intelligent License Management

Software licensing has long been reactive. Organizations discover compliance issues during audits, realize overspending after renewals, and scramble to adjust when usage patterns shift. But that model is no longer sustainable, especially during divestitures, where every decision is magnified.

Today’s advanced Software License Management (SLM) tools transform how organizations approach licensing. Instead of reacting to problems, companies can now anticipate them, simulate outcomes, and optimize proactively.

As we delve deeper into the future of software licensing, it’s essential to understand how predictive analytics and AI are transforming license management, making it more proactive and strategic.

1. 1. Forecasting usage and avoiding waste: Predictive models can analyze historical usage data to forecast future demand. This is especially valuable during a divestiture, when the NewCo’s software needs may diverge significantly from the parent companies.For example, AI-driven tools can:

• • • Simulate license consumption under different organizational structures;
    • Model cost scenarios based on growth projections or cloud migration plans; and
    • Identify underutilized licenses before renewal cycles.

This allows CIOs and procurement leads to make data-backed decisions, avoiding both over-licensing and costly shortfalls.

1. 2. Flagging compliance risks before they materialize: AI can also detect anomalies in usage patterns that may signal noncompliance. For instance, if a spike in user activity doesn’t align with entitlements, the system can flag it for review before it triggers a vendor audit.
      Some platforms even integrate contract metadata to cross-reference usage against licensing terms, helping organizations stay within bounds automatically.
   3. Real-time dashboards for real-time decisions: Modern SLM platforms offer real-time dashboards that visualize license usage across business units, geographies, and vendors. During a divestiture, visibility is crucial for
      allocating licenses to the right teams, tracking consumption trends as operations shift, and supporting Day 1 readiness with confidence.
      Predictive license management isn’t just a tech upgrade—it’s a strategic advantage.

Licensing as a Catalyst for IT Transformation

Software licensing doesn’t just follow transformation—it shapes it. Whether migrating to the cloud, modernizing cybersecurity, or enabling a digital workplace, the licensing model you choose can either accelerate or constrain your progress.

During a divestiture, this becomes even more critical. The NewCo must often build a modern IT environment from scratch, under tight timelines and with limited resources. Licensing decisions made early in the process can unlock agility, reduce technical debt, and future-proof operations.

Table 1 below maps common licensing models to typical divestiture scenarios and transformation goals to help CIOs and transformation leaders make informed choices.

This framework helps organizations match licensing strategy to transformation intent, ensuring that IT investments are not only compliant but also catalytic. Figure 1 illustrates the subscription-based licensing model, highlighting its suitability for SaaS-first environments and its strategic benefits in spin-offs and cloud-first carve-outs.

Future-Gazing: What’s Next in Licensing

Software licensing is no longer about access; it’s about adaptability. As digital ecosystems evolve, so must the frameworks that govern how software is consumed, shared, and monetized. For organizations navigating divestitures today, understanding where licensing is headed tomorrow is essential for building resilient, future-ready operating models.

1. 1. AI-generated workloads: licensing the machines: The rise of generative AI introduces a new licensing frontier: non-human users. As AI agents generate code, content, and decisions, questions emerge around how their software usage is measured, billed, and governed. Will licenses be tied to AI instances? Will vendors introduce “AI consumption tiers”? These are no longer theoretical questions—they’re already surfacing in enterprise negotiations.
   2. Edge computing and decentralized licensing: Traditional centralized licensing models begin to strain as workloads move closer to the edge, whether in factories, retail locations, or autonomous vehicles. Organizations will need lightweight, decentralized licensing frameworks that can operate in low-connectivity environments while maintaining compliance and auditability.
   3. Sovereign cloud and regulatory fragmentation: Geopolitical shifts and data sovereignty laws are driving demand for sovereign cloud solutions, where data and software must remain within national borders. This trend will force vendors to offer region-specific licensing models, and organizations must navigate a patchwork of compliance requirements across jurisdictions.
   4. The rise of licensing-as-a-service: Just as infrastructure evolved into IaaS and platforms into PaaS, licensing itself is becoming a service. Expect to see dynamic, API-driven licensing platforms that integrate directly into DevOps pipelines, enabling real-time provisioning, usage tracking, and cost optimization.

As divestitures become more frequent and digitally complex, software licensing is emerging as a critical enabler of operational success, not just a compliance hurdle. From leveraging predictive analytics to navigating vendor lock-in, the most successful transitions treat licensing as a living, evolving component of the IT landscape. As AI-generated workloads, edge computing, and sovereign cloud requirements reshape the digital frontier, licensing strategies must evolve in parallel. The future of software licensing is intelligent, adaptive, and deeply intertwined with broader transformation goals. Organizations can turn a traditionally reactive function into a source of competitive advantage by planning early, engaging in the right tools and expertise, and aligning licensing models with business outcomes.

By Francisco Trevino, Manager