Assess your software license management – eight requirements for a complete administration

You can easily evaluate the benefits your current software license administration brings by assessing your practice against eight objective B-lay requirements. Even without compliance calculation, a license administration is very useful and an essential first step to take.

Questionable answers

Are you in control of software license management?

Yes, we are.

How are you in control?

We implemented SAM tooling, have appointed a SAM manager and if we have issues we cannot solve ourselves, we hire specialists.

Good to hear, then you also have a license administration?

Yes, we have a central location where we store our contracts and as mentioned we are in control and don’t have any issues.

Many fruitful discussions have started with a casual conversation and questionable answers. In general, companies don’t like being bothered with questions about license administrations or being in control. Still no one should easily sidestep these issues for having a software license administration in place and being in control enables you to manage licenses, thereby reducing (financial) risks, improving efficiency and lowering costs. Companies believing to be in control, while actually they are not, may be treated to very unpleasant and unbudgeted surprises.

Do you have a basic software license administration?

Let’s start with the four fundamental requirements a basic license administration at least should meet. Another four requirements will elevate our initial efforts to a complete license administration.

A basic license administration is sufficient to perform an initial risk analysis and determine what data needs to be gathered for compliance calculations. Additionally, you are prepared to deliver the proof of entitlements in case of audits.

We consider you to have a basic license administration, when the following requirements are being met:

1. You have insight in all of your current license entitlements.

You possess a list of all Software products (with their included products) that you are entitled to use, including the license metrics and number of licenses.

2. You know and understand how you are entitled to use the licenses.

You can easily extract the specific metric definitions and restrictions included in contracts and other documentation from your administration, such as:

Territorial and legal entity restrictions, for example licenses that can only be used by a specific legal entity in a specific country;

Usage restrictions, for example licenses that can only be used in a test environment;

Product dependencies, for example licenses that can only be used in combination with another software product.

3. You have evidence to prove your license entitlement position.

You can reproduce the underlying (historical) documents, such as contracts, order forms, license agreements, etc. from your license administration archive.

4. Your administration is kept accurate and up-to-date.

When new agreements are closed (purchases, renewals, migrations, etc.) the license administration is being updated. And just as important, when the publisher changes terms and conditions the impact on your license entitlement position is included in the license administration as well. Note: publishers can and do unilaterally publish changes of their terms and conditions which do impact existing license rights.

When these four basic requirements are met you are prepared to extract and deliver the information required for initiating deployment and compliance measurements. You will also be able to deliver the required license entitlement information and proof of entitlement in case of audits.

Do you have a complete software license administration?

In a complete license administration all relevant documentation is standardized and structured. The information included is analyzed, normalized and stored in the license administration, where it is available for further analysis, reporting and decision making. We consider you to have a complete license administration, when these additional four additional requirements are being met:

5. You can easily extract included update and support rights.

For all license entitlements you have registered if rights on update and/or support are included. If they are, there is a clear description of what these rights are.

6. You have a detailed understanding of how much you spend on license entitlements and how costs develop.

For each license entitlement you know how much you have paid in the past years (initial purchase, renewals, etc.) and how much you pay currently. You can also easily extract how much you can expect to pay next year, e.g. for budgeting and forecasting purposes.

7. You know when contracts are due for renewal and products move into or out of extended support.

Your administration provides you with information to pro-actively prepare and plan meetings with vendors. You can easily extract the relevant information from your license administration, e.g. what license entitlements, rights and restrictions are currently included in the contract. You have information on related contracts. You know what your current costs, previous discounts, costs of other contracts, etc. are.

On top of this you know when a product version will no longer be covered by standard support, what the costs of extended support are, when to start migrating products, etc.

8. You can easily extract license management information, for example to highlight potential risks and money saving opportunities.

Some examples of other useful management information from the license administration:

What are your main cost drivers: Can you reduce costs? Do you really need all licenses and support? Should you consider repurchasing licenses?

Which legal entities purchased licenses: Should you move to centralized buying? What is the impact of acquisitions, mergers and divestitures?

Quality of license administration: What proof of entitlement is missing? Is the number of missing proof decreasing over time?

Purchasing behavior: Could your purchasing history and administration label you as a ‘sitting duck’, meaning a target for software publisher audits?

Metrics vs. architecture: Should you opt for other metrics or adjust your architecture to reduce risks and costs?

These are just a few examples of management information that can be derived from a complete license administration.

When explaining and discussing these license administration requirements, the next logical question always comes along at some point:

What is the use of a license administration without deployment information?

In order to establish your software compliance position, you indeed need both.  But it all starts with a good license administration. Understanding your license position is the first step for a software compliance calculation. The metrics and restrictions determine what needs to be measured.  Therefore, if you do not know what your license entitlements position is, you do not know what to measure. Having a proper license administration allows you to produce this information with a ‘press on the button’.

Historical information is required for determining and proving license entitlements positions. It pays off to start a license administration, because the required documentation is gathered and archived over time. As a result, quality and completeness of the administration will also steadily improve over time.

The license entitlement position determines ifwhen and how oftenyou need to measure your software deployment. This leads to questions such as: is the required information available; do you need to implement tools or run scripts manually; do you have people and knowledge to run and analyze the information; will the publisher accept your output; do you expect an audit or do you see saving opportunities; et cetera? All of this helps you establish your risk level and estimate costs.

When you are under audit, much effort is typically put into gathering all license documentation and processing it in a limited amount of time. This often results in both high direct and visible costs – e.g. hiring external resources – and less visible indirect costs – e.g. time spent by internal employees – not to mention escalations and emergency meetings. Wouldn’t life be easier if you would instead direct your efforts towards building and maintaining a license administration so that the next time you are audited audit you’ll have all required information readily at your disposal.

Finally, a complete software license administration provides you with valuable information about your business, allowing you to:

Understand and control the (financial) risk related to software licenses;

Take decision based on relevant and correct management information;

Understand your opportunities for savings and optimizing your IT cost;

Shift focus from administering licenses to actually managing licenses;

Be in the lead instead of being led by your software vendors.

How to implement a software license administration?

You can of course set up your own license administration: archive all license documents, extract license positions, metric definitions, restrictions, etc. and create a consolidated overview. To do this properly, you would need people with in-depth knowledge about the different software vendors’ licensing rules.

However, with multiple software publishers, products, metrics, restrictions and documents, this will become quite complex. Specialist knowledge, time and effort will be required. A SAM tool can help to store the licensing information. But a tool does not take away the effort and knowledge required to run the license administration. It might even require additional knowledge and resources to manage and configure the tool and enter the license data correctly in the tool. The focus is on administering the licenses, rather than on managing them.

As mentioned, keeping a complete and up-to-date license administration requires a lot of specialist knowledge on different publishers, product groups, metrics and restrictions as well as expertise in different areas such as legal, IT and administration.

We believe the easiest and most efficient way for you to administer your software licenses is to outsource your license administration. This eliminates the need to keep all the required resources, tooling and knowledge in house and up to date. Instead, you simply gather and share all license documents and in turn you’ll receive a complete license administration meeting the eight requirements.


A complete license administration puts you in the driver’s seat with a dashboard for managing your software license assets, including related financial risks and optimizations. Our eight requirements enable you to assess objectively to what extent a complete license administration is met.

As creating and maintaining such an administration requires a lot of specialist knowledge, the easiest and most cost efficient way is to outsource your license administration. A complete software license administration will enable you to manage your financial risks and be really in control.

If you are in need of extra expertise and a structured approach, feel free to contact B-lay. We will help you make software compliance an exciting opportunity to improve your business!

This article was published on 17-12-2015