May I see your license (for asset management) please?


Today I will discuss license management, the second of four topics related to Software Asset Management (SAM).  In my last blog, I wrote about the Inventory management: get a complete picture of your enterprise. In that post we saw that inventory management, while basis for the Software Asset Management, does not tell us anything about required licenses. Required licenses and company’s entitlement to use the software is defined in license agreements. It is clear that failing to manage and control licenses thoroughly can lead to high litigation costs and disputes with vendors as well as high over-spend on software.


Why do licenses matter?


License management answers the questions about what the company owns, what applications can be used and their contractual conditions. Why do licenses matter? When we say license, what do we mean? Unfortunately, “license” may mean several things, depending on the context.


In essence, software licenses are a contract between client and the software vendor. As with most other contracts, the content and the semantic of that document is important. License contracts define the software usage right and usage limitation, among many other things. It documents how licenses will be calculated – for example:


  • Per number of users -named, floating, concurrent or role based
  • Based on hardware - server or device based, number of processors, number of cores per processor, etc
  • Enterprise based for unlimited (which is rather rare case) or large number of users
  • Based on business metrics such as output, revenues, assets or transactions


Multiple metrics can and often do apply. License contracts usually include attachments about support and maintenance and upgrades. Licenses have a term, i.e. the timeframe within which the client has the right to use the software. The most common types are perpetual, temporary or subscription licenses. So far, a license is a right to use certain software in a certain circumstances and is considered a company asset. Keeping record of these software license agreements is one of the most important tasks in asset management.


Sometimes licenses needs to be “installed” with the software to enable the usage. These license keys are assets and should be re-allocated when machines get retired, or employees leave the company. Unfortunately, real-life statistics sadly tell us that too many organizations do not properly manage license-keys and instead purchase new licenses when they don’t have to.


Organize all license data to understand what you own


Licensing is complex and this is especially true for server-based license types that are too complicated to count. Therefore there are two principles that you need to apply in order to get full control over the procured licenses:


  1. Track the licenses throughout the full life cycle, from request and procurement to allocation to users over re-allocation until retirement
  2. Track all license contracts, such as purchase, license and maintenance contracts. These agreements define terms and conditions including transfer policy, upgrade rights, right for second usage, backup, high availability and metrics for counting deploymentsPicture1.png

Needless to say that tracking and managing software licenses in spreadsheets in unpractical.


Asset managers from organizations that enforce central procurement and centralize repository for all software license contracts have an advantage when this is not the case. License contracts can be a part of distribution media or sent via email (in a subscription model this is very usual) and it is crucial to gather all the files and data, and give them structure. This way only you know what licenses you have and what you spend on software in reality.


If you cannot prove your actual software deployments, the auditing company will have to make assumptions based on your environment, such as employees’ numbers, test servers numbers or OEM deployments. They may request you provide the application access log files. All this will lead for you to be at a disadvantage and most probably need to purchase more licenses.  


When buying new licenses, try to negotiate your rights and don’t only concentrate on price. Try to make sure that you can use your licenses in the cloud or that you can use them worldwide. If you are a large and distributed organization, do not forget about your contractors right to use the software well. Licenses are an asset and having more rights and fewer limitations makes it more valuable.


Automated contract management for easier and quicker operational transparency


HP SAM solution includes contract management which provides a step-by-step process to create and manage contracts in a manner that meets compliance requirements and avoids over-purchasing. It manages procurement, license and maintenance contracts with their details, such as system numbers, assignments of assets, total lifecycle costs of similar software packages, vendor history and existing contract terms. HP Contract management tracks and manages subscriptions and key details that are automatically sent to employees who subscribed to receive service or application usage. HP SAM solution comes with a best practice content package containing predefined license standard terms and conditions for more than 700 software titles and versions. These titles are from most important software vendors, including IBM, Oracle, Microsoft, SAP, Adobe, Vmware, Symantec, Autodesk, RedHat, etc. The solution calculates license costs and reports on upcoming renewal dates for all contracts.


In my next post I will look into SAM’s next two processes, Internal policies and Compliance management.


Have you missed the SAM webinar? You can watch it on demand here:


Vesna Soraic

Chris Toff(anon) | ‎06-28-2013 01:45 PM

Great post this gives lots insight to those just starting out as Asset Managers.

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About the Author
Vesna is the senior product marketing manager at HP Software. She has been with HP for 13 years in R&D, product management and product marke...

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