Software as a Service (SaaS) breaks the shackles of traditional software licensing approaches, but savvy users still optimize their SaaS environments to avoid undue costs.
SaaS subscription models typically require a one to three year commitment. Customers are invoiced, usually on a monthly basis, and the license typically uses some sort of billing metric based on resource usage, such as the number of end users that can access the product. The flexibility of SaaS licensing models enables organizations to expand the use of the product according to their needs during the term of the subscription.
For instance, decreasing the number of subscribed licenses is usually permitted during the course of the subscription, or at least on its renewal date. The ability to reduce or increase the number of licenses, as needed, is beneficial to organizations if they can closely monitor use so that all licenses purchased are actually being used.
However, many organizations fail to adequately monitor SaaS product use, resulting in over-licensed situations where subscriptions are paid for but not fully used. Software License Optimization best practices, processes and technology can and should be applied to SaaS software use (in addition to on-premises, virtualized, and other forms of cloud software). Doing so will result in valuable visibility and allow you to ensure that licenses paid for actually correspond with product use.
How software license optimization works
Applying Software License Optimization techniques to on-premise software often results in as much as 25% cost savings. To understand why this is the case consider the traditional enterprise desktop application. These products are usually sold using perpetual software licenses that employ a per-device or per-user licensing metric, whereby each installation or end user needs to be licensed.
There are two distinct areas of potential waste that Software License Optimization can resolve for desktop applications. First, organizations can be out of compliance with their license agreements because they are using more licenses than they've purchased. Secondly, they may not be using all of the licenses they've purchased (they have "shelfware"), or they may not be leveraging all of their rights to the software meaning the licenses are being under-utilized and therefore waste is still occurring.
Software License Optimization solutions solve these problems at every level to minimize all instances of waste. For instance, inventory tools can assess software usage, enabling organizations to make sure software use is aligned with the number of licenses purchased. If there are unused licenses (i.e. unused copies of the software allocated to end users or devices), organizations can reclaim licenses that are not actually being used, instead of having to purchase more software.
But license optimization goes further by also ensuring that license entitlements are fully leveraged. A Software License Optimization solution does this by aligning "product use rights" specific rules in the contract that dictate the ways in which customers are entitled to use the product (i.e. such as the right of second use, downgrade and upgrade rights, multiple installation rights on the same device, etc.) — with how the product is actually being used. If all the rights are not being leveraged an organization may be able to avoid purchasing additional software until all the entitlements have been applied and consumed.
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