The Role of Software License Management in Compliance and Security

Software Asset Management Software / September 2024

The uptick in cloud-based tool adoption since the COVID-19 pandemic has increased the importance of software license management (SLM) practices and tools to ensure compliance and protect against security risks.

How Software License Management Works & Why It’s Important

Software license management (SLM) refers to tracking and evaluating software use at an organisation to ensure you adhere to licensing agreements.

SLM is an integral part of completely controlling your software asset management protocols, with Gartner suggesting that companies can cut their software spending by 30% with better software licensing practices.

Software licenses are a legal document between the vendor and the end-user defining the rules and guidelines by which the software can be used. Effective SLM requires IT staff to follow proper methodologies and utilise tools with SLM-specific functionality.

When appropriately implemented, SLM details:

• What software is licensed for use (vendor, version, etc.)
• Who is licensed to use it (the employees with access or the machines with a copy)
• How it is licensed for use (what applications the software can be used for)
• Where it is licensed for use (on-prem vs cloud, virtual machines, etc.)
• When the license expires (renewal dates)

For many organisations, tracking this information is seen as a mundane task. The administrative overhead is required for everyone to have access to the software they need. But, this mindset ignores the importance of SLM and the value it can offer.

As businesses further digitise operations and software requirements increase, so will the need for SLM. Organisations implementing comprehensive SLM processes will see significant advantages compared to those with a less structured approach. Complete visibility into your tech stack and how staff use and interact with software enables you to:

• Prevent fines or legal action for non-compliance
• Gather insights to improve security against cyber threats
• Optimise software spending

Control Your Software License Management With the Right Tool

Use our sophisticated software comparison tool to select a Software Asset Management System that matches your security and compliance needs when it comes to software license management.

Maintaining Compliance with Software License Management

Compliance means following the rules and guidelines detailed in the software vendor’s license agreement. Software license management allows you to track software purchases, installations, and usage across the organisation, identifying any instances of non-compliance. Examples include:

• Operating beyond the user limits defined in the license, whether that be per device, per user, the number of concurrent users, or another metric
• Using software under an expired license
• Using non-commercial licenses for commercial purposes
• Distributing software to third parties
• Software use outside of geographically approved locations

SLM provides the visibility needed to avoid these examples and more, protecting your organisation and guaranteeing compliance. Also, proper SLM means the relevant staff fully understands terms and conditions when using different software solutions.

The data behind software compliance can be skewed, with reports identifying 85% of organisations being non-compliant with software license agreements. Whereas 76% admit to over-licensing to avoid licensing audits.

Non-compliance consequences can be severe, including legal action from vendors and financial penalties. Companies suspected of non-compliance may have to undergo software audits by third parties to compare usage against entitlements.

Following SLM best practices and performing regular internal audits streamlines the process of proving compliance.

Managing Software Licenses for Security

Tracking who has access to software and how they utilise it is critical for minimising cybersecurity risk, allowing you to identify both authorised and unauthorised users.

A PWC report found that 48% of a business’s employees lack security awareness, which contributes to employees being responsible for over 50% of software security breaches.

SLM provides information on software access to implement cybersecurity practices such as least privilege access (LPA). The process of restricting software access to only the users who absolutely need it. This minimises the impact of an account becoming compromised.

Plus, with SLM data, you can quickly and efficiently remove access during offboarding or if staff roles change.

Beyond access, SLM provides valuable security information on:

• Software updates and patch management to ensure the most recent and safe versions are in use, eliminating risk from newly identified exploits
• Conducting vendor reviews for compliance with security standards
• Preventing software bloat or the installation of redundant software that unnecessarily increases your organisation’s attack surface
• Possible vulnerabilities from using software beyond its intended capacity
• Software and license details to help internal security audits
• Identifying end-of-life software that is no longer supported with updates or security patches

Poor SLM and not fully understanding your tech stack creates unnecessary security risks. With a greater attack surface to target, it increases the chances of unauthorised access while also increasing the impact of a successful attack. Data breaches can lead to a range of issues, from financial losses to reputational damage.

Boosting Software ROI Through License Management

With insights into how software is being used, organisations with meaningful software license management processes only pay for what they need. Identifying waste and misallocated resources to maximise the ROI from software spending.

This includes:

• Correctly aligning licenses with use to ensure you are not under-licensed (leading to compliance problems and possible fines) or over-licensed (leading to waste)
• Cancelling redundant software or consolidating operations into a single platform when significant crossover is identified
• Understanding the software requirements of different teams and departments to properly allocate resources
• Improving the license renewal process to ensure you only invest in active and necessary software
• Streamlining IT management with centralised software oversight and the introduction of automated license tracking

Without SLM, you don’t see the whole picture when it comes to software usage. Limited visibility increases the chances of investing in unnecessary software or licenses, and complicating IT management.

Types of Software Licenses

The specific software license management processes you need to implement are dictated by the scale of operations and the types of software licenses you utilise.

Generally, these can be divided into proprietary and free/open-source licenses. SLM typically focuses more on paid commercial licenses due to the greater restrictions they entail.

Common examples of software licenses include:

• Public Domain License: The software is free for anyone to use or modify without restrictions.
• Permissive License: Modifying and distributing the software is allowed, but with some minor restrictions that vary depending on the specific license.
• Copyleft License: Developers can modify and distribute the software as long as the rights from the original license remain in future versions.
• Proprietary License: Users are prohibited from copying, modifying, or distributing the software. This is the most restrictive license type. Remaining compliant is significantly easier with SLM practices.

Key Software License Management Processes to Implement

Software license management can be broken down into a number of key processes that define how you track software usage, ensure compliance, help security practices, and optimise resources. These include:

• Auditing software: Identifying all of the software used internally by your organisation and their license agreements
• Compliance checks: Comparing usage to license agreements for compliance and protecting yourself from potential fines
• Tracking changes (Metering): Continually checking licenses for changes over time and how these may affect compliance or the value you derive from them
• Access control: Onboarding and offboarding employees with different software packages as their roles change
• Renewals: Developing a system for renewals to ensure you always have access to the software you need

Practices to Improve License Management

Single Sign-On (SSO)

Single Sign-On is an authentication method that allows users to access multiple software applications with a single set of login credentials.

SSO helps user management in SLM by centralising authentication and reducing the need for multiple passwords across various licensed software. This improves user experience and simplifies access for licensed applications, making SLM more efficient.

Provisioning

Provisioning refers to the automated process of assigning and managing user access to software licenses. It creates a list of necessary software licenses based on specific roles within the organisation.

When an employee joins or changes roles, provisioning automatically updates access and license requirements to prevent non-compliance and over-licensing.

Tool Owners

Tool owners are a dedicated role or team that focuses on software licenses to align them with broader organisational goals. They generally configure, maintain, and optimise SLM tools to ensure comprehensive visibility into software usage for compliance monitoring and efficient resource allocation. Tool owners define access policies, determining the software employees do and don’t need in order to complete their tasks.

Other roles include conducting audits and addressing any compliance issues that arise. To be effective, tool owners must work closely with IT staff to ensure licenses are properly assigned and renewed. Additionally, they are critical in defining the responsibilities of delegated admins.

Delegated Admins

Operating as part of the IT team or under the tool owners, delegated admins execute SLM tasks within a defined scope. This could be a specific department, team, or region within the organisation.

Delegated admins facilitate more granular oversight of licenses, improving efficiency and responsiveness by having dedicated staff closer to the relevant end users and breaking up SLM operations to be more manageable. They follow clear guidelines to ensure smooth operations and reduce security risks even as staff join, leave, or change roles within the organisation.

Within SLM, tool owners develop the bigger picture direction of software license strategy, and delegated admins execute their vision.

The Features to Look For in Software License Management Tools

Centralised Inventory

Centralised inventories offer a comprehensive view of all software licenses within an organisation. This feature consolidates essential details such as license type, expiration dates, and the number of licenses purchased, along with software versions and vendor information.
By combining this information into a single platform, organisations can easily track and manage their software assets, reducing the risk of losing critical license documentation and simplifying compliance monitoring.
Your centralised inventory needs to be updated over time as new software is implemented and redundant software is removed. To maintain an up-to-date accurate view of your software use, the inventory is typically combined with IT asset management (ITAM) tools that scan the network for changes. This is achieved through differential asset scanning to ensure the inventory represents the current view of your organisation’s software landscape.

Tracking Use/Metering

Tracking software usage is a crucial feature of SLM tools, enabling organisations to monitor software utilization across devices and users. The process of capturing detailed usage data and analysing patterns in real-time is often referred to as software metering.
This practice facilitates better decision-making on license renewal, redistribution, or termination. It provides the data needed to optimise the allocation of software resources, reduce unnecessary costs and improve ROI while protecting against non-compliance.

Compliance Monitoring

Compliance monitoring is a vital function of SLM, ensuring that organisations adhere to the terms of their software licensing agreements. SLM tools provide features for generating compliance reports and alerting organisations to potential issues. This process can be automated based on your specific compliance criteria to prevent issues that might lead to legal or financial penalties.
Compliance reports provide details on commercial software usage and their associated license status. They also provide visibility into upcoming license renewals and software metering data to determine whether money should be reinvested.
To automate alerts, SLM tools require auditing functionality and a comprehensive inventory of existing software usage. Beyond compliance checks, the same functionality can provide alerts when license usage falls below a specified level to protect against over-licensing.

Automation

By automating routine tasks related to SLM you can reduce the burden on IT teams and minimise human errors. Automated alerts provide timely notifications for upcoming license renewals, expirations, or compliance issues. This proactive approach ensures that deadlines are not missed and costly disruptions in software availability or compliance status are avoided.

Integrations

Integrations allow SLM tools to connect with other IT systems such ITAM systems, Enterprise Resource Planning (ERP) solutions, procurement platforms, and configuration management databases (CMDB).

These integrations enable seamless data sharing, improving visibility into software usage, financial management, and overall IT operations. It ensures a unified approach to asset and license management, enhancing organizational efficiency.