SaaS License Management, Explained

Ben Pippenger: $18 million, that's how much the average organization wastes each year on unused SaaS licenses. For enterprises, that number jumps to$ 127 million. Shelfware is not just a problem for your bottom line. With more than half of your provision licenses sitting unused, it means you're also number one, failing to maximize the value of those applications. Number two, potentially introducing risk to your business by allowing former employees to still have access to your systems. And number three, causing productivity issues for your procurement team as they don't have the data they need to effectively manage and make decisions on your renewals. That's why SaaS license management is so important.

Ben Pippenger: But what is it and how do you do it? SaaS license management is overseeing the full life cycle of a software license from onboarding to offboarding. For IT and software asset management teams that requires central visibility to understand license positioning and looking for optimization opportunities and then running workflows to reclaim unused licenses. It starts with having a strategy for each individual application. That's because you'll see a variety of different licensing models from application to application.

Ben Pippenger: For instance, you may have an agreement with one vendor that puts a hard limit on the number of licenses you can deploy without buying more. You may have another agreement that does a true up once or twice a year where they'll bill you for any additional licenses you've deployed.

Ben Pippenger: Now, you're going to want to approach these two examples very differently and build a strategy for each of them. So how do you do that? First, understand your contract terms and what you've purchased. Do you have unlimited licensing? Do you have one of those true up situations? Work to understand what boundaries you are working in.

Ben Pippenger: Then understand what data is available to make informed decisions about your licensing. Are you confident in the data source to take action? If not, what additional data do you need?

Ben Pippenger: It's very important to understand where the data is coming from. Is it coming from single sign- on? Are you sure there's no one in your organization accessing that application outside of SSO? Is it coming from a data upload? When was the last time that data was uploaded into your system? Or is it coming from an integration? If it's coming from an integration make sure you understand the specific data fields that are being reported and then validate the logic that you're using to determine an active versus an inactive user.

Ben Pippenger: After looking at where the data's coming from, you have a couple decisions to make. How aggressive do you want to be with your approach? We recommend looking at 90 days of inactivity to start, but it makes sense to look at this from an app- by- app perspective. If it's intended to be a daily use application, you may want to rein that number in from 90 days down to something less.

Ben Pippenger: Next would be how you want to do that reclamation. Do you want to give your end users a choice if they can give that license back or they keep it, or do you want to just go ahead and take it if they haven't used that license? Make sure you're thinking about what disruptions may be caused as you're thinking through this strategy.

Ben Pippenger: The last decision to think through here is that if there are any additional artifacts that you'll need to consider when removing someone's license. For instance, do they own a document or maybe they're owner of a workspace that will need to be transferred to another user. Now, once you have that strategy in place, you can put it into action. At a minimum, you should be reclaiming licenses once a year at renewal. Typically, we recommend that to be about 90 days before your renewal date.

Ben Pippenger: Now, some organizations will do it quarterly, monthly, or even weekly depending on what makes sense for the application and for their business. Now, while reclaiming licenses is great for avoiding new costs and saving money in renewal it will all fall flat and even potentially backfire if you don't engage the entire business. To do that, you must put out a communications plan or partner with your internal comms team. The goal here is to be transparent about your license reclamation efforts. You also need to do this proactively, communicating with employees early in the process so that it's not a surprise. And also it needs to come from the executive sponsor of your program.

Ben Pippenger: In your communications explain, number one, what it is you're doing and the process. Are you giving them the choice or will you be automatically reclaiming their license? Number two, clarify why you're doing it. If you have a company directive that supports this, make sure to include that. Number three, explain how it works. Will they be receiving an email to request your license back, what the email will look lik, and the actions requested? And number four, how can they request access if they'd like their license back?

Ben Pippenger: So let's quickly recap on some key things to remember. First, get familiar with the agreement and the license model you have for the app you want to manage licenses for in order to define your strategy. Next tip is to understand the data you're using to make your reclamation decisions off of. Ensure that you're reclaiming your licenses regularly, but always before your renewal. Also, make sure you get executive buy- in to the program to ensure success. And then lastly, partner with your procurement peers to cash in on cost savings.

Ben Pippenger: Stay tuned to the next episode where we'll dive into the details of renewal management. Thank you for joining me and I'll catch you next time.