Everything you need to know about SaaS license management

What is SaaS license management?

Modern business operations are underpinned by software platforms that aid a specific organizational function. Companies access these platforms through license agreements — contracts negotiated between software providers and procurement teams looking to improve their IT infrastructure.

Software license management is the process of monitoring, reviewing and recommending improvements to an organization’s software usage. It’s a process made possible by software license management tools — which is itself an example of the kind of software platform these tools look to optimize.

As an organization grows, so too does the number of licenses it requires to stay functional. For this reason, software license management can quickly become impossible without effective software license management systems in place.

Neglecting software asset management can lead to operational, financial and cyber-security issues. Managing software licenses has therefore become essential not just for IT teams, but for wider business practices too.

Why is software license management important?

Licensing terms typically commit buyers to monthly or yearly subscription payments. With so many software products in circulation — each with their own contract renewals and expiration dates, and falling under the remit of separate divisions within the company — conducting a thorough software audit can be arduous, time-consuming and inaccurate.

This is particularly true when IT teams have poor visibility of their organization’s software inventory — a common trait in businesses lacking software license management solutions.

It’s vital that companies have a more detailed understanding of their software license usage. Failure to do so can lead to existential organizational threats, which we’ve broken down into the three categories below.  

Damage to operations

Software license management concerns surveying an organization’s existing software products, identifying improvements that can be made to software license agreements, and making suggestions on the types of software licenses that can be added to streamline specific workflows. These factors combine to stimulate operational excellence across the entire company.

For modern enterprises, there are no factions of business not impacted by IT operations. License management software gives organizations the tools to improve IT operations, and by extension wider business operations too.  

Without software license tracking, your business may never uncover the route to more productive operations.

Damage to finances

There’s an imbalance in the industry of software procurement: 55% of software vendors hide their pricing online. At the same time, we estimate that 90% of organizations are overpaying for software applications by 20-30%.

Something is amiss here. It seems that as long as vendor pricing transparency remains low, IT service management is destined to suffer from sales pitch frustration and spiraling costs. A software licensing tool, supported by a customer purchasing team working on your company’s behalf, is the tonic to this long-standing ailment of IT procurement.

Software provider profits also prey on the power of inertia — the knowledge that many customers are simply too busy, or lack a software license manager, to pay close attention to their subscription contracts. Without sufficient warning of contract renewal dates, subscriptions can roll on a monthly or yearly basis, quietly going underused or even unseen.  

These software products’ performance also requires comprehensive monitoring. Which features of the platform do you use? Which features are surplus to requirements? Is the platform as a whole adding value to the company, according to the metrics and KPIs established during software contract negotiations? These are the kind of cost saving questions asked by software license management.

The bottom line is that SaaS subscriptions are on the rise. The industry is currently worth over $200 billion and growing at an exponential rate, with unit prices increasing at a rate of 9% every year. With the average company subscribing to over 250 software apps, current levels of waste are unsustainable; only an effective license management system can arrest the rate of mounting SaaS costs.

Damage to security

Of course, as with all IT-related considerations, security is at the forefront of license management software.

These solutions are particularly good at weeding out shadow IT — a term used to describe IT activity that isn’t entirely accounted for and thereby represents a security risk. Software license tracking makes shadow IT impossible, highlighting the rate at which SaaS licenses are being used and the teams and individuals using them.

This level of SaaS visibility is also a boon for onboarding and offboarding processes, tracking employee interactions with every subscription service on one management platform.

Software license management extends to on-premises, hybrid and cloud environments, providing a central overview of product lifecycles and end-users. With these tools, every SaaS product within your IT infrastructure is constantly monitored, with real-time notifications triggered by security threats and compliance issues.

The challenges of software license management

In the absence of software license management, it’s likely that your organization will encounter the following challenges:

• License underutilization — The right platform will alert users to underutilized products — or underutilized features within those products — and suggest ideas on how to streamline your existing subscriptions and maximize tail spend management. This might involve modifying existing licensing models or retiring subscription services altogether
• Overlapping subscriptions — Similarly, a software licensing tool can highlight when two different platforms offer the same functions, thereby rendering one of the solutions redundant. For example, businesses may subscribe to both HubSpot and Sprinklr without the knowledge that many of the features of each platform overlap with one another.
• Software license compliance — Software license management also sheds light on issues of non-compliance, particularly where products have been purchased outside the parameters of established procurement processes. A lack of compliance management poses a security threat to your organization’s IT infrastructure and risks running afoul of data regulations such as GDPR. Effective management here also extends to end-user license agreements, which reminds users of their responsibilities when using a platform.
• Vendor risk — Before you purchase any SaaS product, you’ll want to conduct a vendor risk assessment to make sure you’re buying from a reputable company. Has the vendor been the subject of any damaging news stories, and is its product as effective as it claims? Take a look at some recent user reviews for first insights here.
• Internal security risk — Software license management solutions are able to control access to specific platforms. With this facility, access to certain products can be restricted by role-based permission sets, reducing the likelihood of an internal security risk. The management of a CRM is an obvious example here: marketers and sales teams can’t perform well without access to this data, but sharing that information can cause security issues.
• Costs — In business, the purpose of every SaaS product is to save money — either by directly cutting costs, streamlining operations, or offering insights into how savings can be made. In that respect, license management software is the ultimate SaaS spend management service, since its aim is to reduce spend across an organization’s entire SaaS portfolio.

Take control of software license management

The Vertice platform can automate all of the challenges posed by software license management. Our product manages your subscriptions in four key stages: Discovery and Onboarding, Auditing and Usage Analytics, Negotiation and Renewals, and Optimization and Contracting.

The first two stages are taken care of on the platform itself, while the last two require additional support from our customer purchasing teams. We leverage transactional records from recent vendor sales to see precisely what other companies are paying for their subscriptions, so that you never have to overspend on SaaS contracts again.

This is what distinguishes Vertice as a license management tool: the commitment of our agents to work on your company’s behalf to secure you the very best SaaS prices. Using Vertice, procurement teams can enter vendor discussions on a level playing field, putting themselves in a stronger position from which to negotiate contracts and subscription features.

Then, once the Vertice platform is live, every facet of software license management is monitored for performance and compliance reports, giving you greater visibility of your company’s SaaS usage.

For more information on how Vertice can optimize SaaS purchasing, click on the link.