IT Freedom Blog

Developing a Software License Management Process

by Jessica Baker on

It’s one of those things you know you should do, but you just don’t want to, or you simply don’t have the time - tracking software licenses. Although creating a good internal process for this can be time consuming and confusing, it’s extremely important to establish and maintain a process for tracking licenses.

If you’re like most people you’re probably wondering “Okay, why is tracking them really that important?”

There are actually quite a few reasons. Tracking licenses gives you the ability to:

  • Know what software is on which computers
  • Know the number of licenses still available if you bought a few at a time; this will keep you from buying new ones if you already have free licenses
  • Know the expiration/renewal dates (if applicable)
  • Know if someone’s device has a piece of software licensed to it that they don’t need and could be used by someone else
  • Establish guidelines on what can be installed and who can install it
  • Track registration accounts that licenses are registered under to avoid major problems and heavy fines for using improperly licensed or pirated software

While all of these are great reasons, if we could stress only one it would be the last one - without fail, a few of our clients each year get letters from Microsoft or other large software vendors stating they will be undergoing an audit to make sure that their software is licensed properly. And unless you want lawyers involved, this audit isn’t exactly optional.

As a real world example take Forever 21. Back in January of 2015 Adobe filed a lawsuit against the retailer for pirating 63 instances of Photoshop and “[continuing] their infringing activities even after being contacted by Adobe”.

What are the consequences?

Poor software license management puts your company at risk, even if you’re not as blatantly irresponsible as Forever 21. Even for unintentional infringement, a business can be hit with damages three times the cost of the software itself. Classified as piracy, violations that are found to be intentional can mean fines of tens or hundreds of thousands of dollars - money that could be much better spent on your company or employees.

Incentives for Reporting Violations

“Getting in trouble” is easier than you think. Major software publishers invest in protection against piracy by joining anti-piracy consortiums that advocate for their interests and legal rights. Two of the most popular are BSA, which includes Microsoft and Symantec, and SIIA, whose membership includes other major vendors. Consortia like BSA and SIIA are backed by law firms that specialize in anti-piracy and incentivize reporting piracy violations with rewards. Both make reporting suspected instances of piracy as simple as filling out a form.

How not to waste time or money

The best way to prevent big fines or hassle starts with being organized and informed. Develop a software license management policy and associated procedures to accurately track all your purchased software and its use. Don’t assume that your IT provider is doing this for you, because it is often outside the scope of managed IT services. License management is often an accounting and compliance function an

d is best done as a part of other compliance procedures given the potential liabilities involved. But, IT can help by providing things like software tools to automate inventory scans. Additionally, your IT department might be a great resource for explaining the intricacies of various kinds of licenses- pro vs. home editions, per-seat vs. per-user licenses, and client access licenses.

Your software license management process should include a few key things:

Proper record-keeping of all purchased software.
The scanning and saving of all receipts and maintenance of a thorough inventory spreadsheet or database.
Well defined and publicized employee policies against software piracy:
  • Maintain a list of allowed “free” software for staff to reference - but be aware that many “free” applications are free for personal use only, and cost money for commercial use.
  • Make sure someone is in charge of reviewing software license terms before adding applications to the list
  • Disallow all use of unlicensed software and provide consequences for non-compliance
  • Communicate/re-communicate the policy regularly
Periodically perform internal audits to verify accuracy, completeness and compliance.

Establishing your software license management process

Now that we’ve proved why this is important, we want to address how to actually establish a process for this. If you’re a larger business with an astronomical number of licenses, it might be worth looking into an actual inventory/license management software. Spiceworks offers a software inventory management application that is free no matter the number of users or licenses you need to keep track of. Depending on your size and needs, this might be a good option.

If you’re more of a DIY’er when it comes to creating internal processes we have a couple ideas for you as well.

Create an Excel spreadsheet

This spreadsheet can help you keep track of licenses already in use, and those that aren’t in use, making sure you don’t purchase unnecessary licenses as well as ensuring you’re using legal licenses.

Key information to be included in this sheet:

  • Vendor name - Example: Microsoft, Adobe
  • Type - Example: hardware, software, etc.
  • Product name/Description - Example: Microsoft Office
  • Device serial number - this could also be called a service tag
  • License key - these look different based on software, vendors, and may include letters, numbers or dashes
    • Example: a SonicWall key may look like this “XXXXXXXX”
    • Example: A Microsoft Office key may look like this: “XXXXX-XXXXX-XXXXX-XXXXX-XXXXX”
  • Purchase date
  • Install date
  • Registration account  - which email account the key was purchased under
  • Physical location/assigned user
  • Comments

Creating a physical folder

Another option, and the route that one of our clients uses, is to create a physical folder for each new device that contains all licenses and software downloads. When we order a new workstation for this client, we install all necessary software and create a folder with the serial number on it. When we finish setting everything up, we give them the folder which they use to keep their records updated. This is also useful in keeping track of software license agreements.

The perks of staying on top of things

By establishing and maintaining a rigorous software license management policy and practice, you can greatly minimize your exposure to unintentional license violations and effectively eliminate the chance of getting reported for outright piracy. Most importantly, you’ll have up to date records of all your software purchasing and licensing should you need it internally and should anyone attempt to report you.

If you have any other suggestions on efficient ways to keep track of software licenses let us know! We are always interested in different and new ways to do things!


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