Monitoring Software Licenses to Optimize Costs and Mitigate Risks

Application software is becoming increasingly important to all organizations. Therefore, they must engage in effective license management for cost optimization and compliance. License management is no longer just a box that needs to be checked. This best practice usually includes automated systems that monitor actual software usage to determine whether the organization is within the terms of its licenses and whether it has overprovisioned licenses.

As shown in Figure 2 from the full report, Monitoring Software Licenses Best Practices, 88% of organizations monitored software licenses, up from 84% in 2022 and 78% in 2021. This is only the third year we have included this practice in our annual study. Relative to other best practices in this study, the percentage of organizations monitoring software licenses is high, even if only at an informal level.

Monitoring of software licenses should be done regularly and involve an organization’s entire IT operation. It mitigates financial, legal, and security risks, and optimizes software spending. However, despite the many benefits of software license monitoring, challenges remain. For instance, licenses are becoming more complex, making it difficult to manage or audit them proactively. But numerous software license monitoring tools are available to suit a range of enterprise demands and price points.

“Ineffective license monitoring is like a ticking time bomb,” said Asif Cassim, principal analyst for Avasant Research based in Los Angeles. “Your budget suffers from overages, risks are introduced by compliance gaps, and innovation is stifled by restricted access. When these risks are monitored, they become opportunities.”

To create an effective and compliant software management environment, cooperation between IT asset management (ITAM) and IT service management (ITSM) is essential. When combined, they create a potent coalition in which ITAM finds licenses that are not being used while ITSM automates the uninstallation procedure to recover licenses for the best use of resources.

Software license management does not end with license procurement or even renewal of licenses. Software licenses need to be monitored throughout their life cycle to ensure that value is delivered and that both client and vendor are compliant with the terms of the licenses.

In this study, we first look at the adoption trends for monitoring software licenses by organization size and sector. The responses enable us to determine how widely a discipline has been adopted, how formally and consistently it is being practiced, and how quickly it is likely to grow. Monitoring software licenses is just one of the best practices in our annual major study, IT Management Best Practices.

This Research Byte is a brief overview of our report on Monitoring Software Licenses Best Practices. The full report is available at no charge for Computer Economics clients, or it may be purchased by non-clients directly from our website (click for pricing).