Software License Optimization is an important and expensive part of IT’s remit. The SaaS industry alone is expected to generate 883.34 billion by 2029, as the use of SaaS applications moves from common to ubiquitous. The workplace is now primarily digital, and many businesses either are, or are moving to entirely cloud-based systems.
Yet this proliferation of cloud-based SaaS applications alongside existing on-prem applications creates complexity for IT teams. Licenses ownership is rarely concentrated in one department, rather it is spread amongst user groups, making license ownership difficult to track. When licenses can be owned by marketing, HR, engineering, and many others, who is responsible for managing the software license sprawl?
This can make managing the cost of SaaS applications nearly impossible for the average IT department. How can you uncover how many licenses are deployed in your enterprise if you don’t have endpoint data? How can you know if those licenses are in use, or are sitting on the endpoint gathering digital dust?
Yet, managing and controlling the cost of software licenses in the enterprise is essential for continued business health. In this guide, we’ll show you how to create a software license optimization strategy that balances the needs of employees with the needs of the business, so you can save budget without impacting employee productivity.
What Is Software License Optimization?
Software License Optimization (SLO) is a strategy that aims to make a single procured software license, or group of licenses, as cost-efficient and effective as possible through management of software license counts, usage, and cost.
Every software license has its own user agreement, terms and conditions, updates and support, and payment model. Typically, one software license equates to one employee or “seat”. But many organizations lose money on unused licenses and redundant software when they over-provision or lose track of inventory. In order to resolve this problem, IT can leverage a licensing optimization strategy that is centered around software usage.
What Is Usage-Based Software License Optimization?
Traditional IT systems allow teams to monitor much of their technology environment, but the endpoint remains a blind spot. In order to collect usage data in this set up, IT teams depend on unreliable sources of data like employee surveys.
While teams can choose to cut licenses with this limited data, that decision comes with significant risk. Cutting licenses only to meet cost savings requirements without usage data can lead to removing critical applications from employees who need them, causing employee and business productivity to take a significant hit.
This is where usage-based software license optimization comes in.
Usage-based software license optimization is a strategy which leverages key usage metrics and comparisons to make smarter, more cost-effective decisions. Typical usage metrics and views include (but are not limited to):
- Device (make & model)
- Utilization by end user
- Time of utilization
- Average usage per day/month/year (based on any binaries IT deems relevant)
- Average software executions per day/month/year (based on any executions IT deems relevant)
- Last activity of end user
- Usage pattern
- License usage ratio
This is not an exhaustive list, but it’s a good start if you want to improve your software licensing strategy.
How to Collect Usage Based Data
First, you need a digital employee experience management tool that includes an endpoint agent to collect telemetry data. This endpoint agent will detect and categorize all applications on the device, both desktop and web, in order to collect data on application utilization.
Once you have that data, the right tool can provide software metering dashboards to allow you to filter and view your data according to software usage. You can then understand which devices have high usage of a particular application, which have low usage, and which devices (and users) aren’t using the applications at all.
IT departments can then leverage this usage-based data to understand which licenses are often used, rarely used, or not used at all. Easily remove unused licenses with remote actions, or reach out to employees with a quick engagement campaign to confirm whether or not they need the application. In this way, IT can safely reduce the spend on software applications across the enterprise without impacting employee or business productivity.
Benefits of Software License Optimization
Optimizing your software licensing strategy can translate into huge cost savings and benefits for your business:
1. Recover Budget by Paying Only for the Seats You Need
The first and most obvious benefit of usage-based software license optimization is the cost savings. You can safely and effectively reduce software licensing costs with this approach, by only eliminating the licenses that are not in use.
In a recently published software licensing research report, based on a sample of 6M anonymous customer devices around the globe, we found that roughly half (49.96%) of all installed software and licensed SaaS applications sit unused! Taking that information one step further, we were able to estimate that unused seats costs the IT industry $536M per year.
Imagine if you could recover 30, 40, even 50% of your budget. You could use those savings to reinvest in research and development, or hire new staff, or save for a “rainy” IT day.
Nexthink customers use our products software license metering capabilities to save budget through reduced license spend. Hear one of our customers, Flutter Entertainment, explain how they saved $500,000 through licenses remediation in this short video.
2. Drive Down Service Desk Tickets & MTTR
How does eliminating and reallocating software licenses benefit the service desk? The first reason is perhaps obvious – with fewer unnecessary applications bogging down devices and employees, devices will run better, employees will spend less time in applications they don’t understand, and fewer tickets will come into the service desk.
Additionally, an employee that wants and uses the software installed on their device is an employee that’s more comfortable and knowledgeable within their digital workplace. And this ‘digital familiarity’ helps achieve two things: it eliminates L1 tickets driven by simple UX questions; and if an employee does contact the service desk with a question, that person might have a better understanding of the application and may use more technical language, which in turn makes it easier for IT to understand and fix their problem.
Nexthink customers see a significant reduction in MTTD and MTTR, and a large part of that success comes from our platform’s usage-based analytics and dashboarding features. One US Hospital documented a savings of $1.7M in one year through a reduction in tickets and productivity time returned to the service desk.
3. Increase Employee Productivity
A usage-based software strategy helps boost employee productivity because it allows IT to corroborate software data with employee sentiment. For example, if IT sees a drop in software usage, that might indicate the real issue has to do with the software (for example, an error message or UX flaw), or something else. On the other hand, the employee might have new job responsibilities and no longer needs that particular software license. What’s important is that IT has smart contextual data to work with and isn’t left guessing.
4. Accelerate Your Digital Transformation Projects
In addition, having access to usage-based software data can help IT drive faster and more efficient transformation projects. By keeping tabs on which users interact with their software pre, during, and post rollout, IT can intervene at the right time and track towards a quantifiable ROI. Identify super-users to leverage as application advocates, find struggling users or non-adopters, then reach out with additional trainings to ensure proper adoption, and proactively monitor your digital transformation projects through every stage, to get ahead of major technical issues or end user issues before they happen.
5. Reducing Environmental Impact of Server Sprawl
Have you ever thought about how your software usage impacts your organization’s environmental sustainability goals? Server farms are a major consumer of energy, resulting in significant environmental impact. By reducing the number of software licenses in the enterprise, your strategic decisions as an IT department can have a positive impact on the environment, as well as on your employees and your budget. Green IT initiatives like this not only support environment stability and CSR goals but improve the reputation of IT with top executive leadership.
5 Tips for Your Software License Optimization Strategy
1. Conduct Software Usage Audits for Smarter SaaS Vendor Negotiations:
IT leaders enter software negotiations at a distinct disadvantage if they aren’t equipped with the right data. Software vendors will naturally encourage them to purchase as many licenses as possible – and without a clear picture of what their employees are using and what they’ll need, IT leaders often find themselves overspending without realizing it.
A comprehensive software usage audit can help IT leaders avoid this problem and conduct smarter negotiations that save their company money in the long run.
This audit will answer important questions related to usage patterns, including:
- What licenses are installed but not being used?
- What licenses are being used very little?
- What licenses are being used regularly?
This data can then help IT leaders negotiate subsequent contracts, reducing the number of unused licenses on the contract and only paying for what the organization needs.
2. Create Accurate Digital Personas Based on Binary & Variable IT Traits for Smart Software License Allocation
IT has found itself with a tricky problem:
How do you do the right things for the right people? A one-size-fits-all approach is easy to implement — for example, everyone receives the same laptop. But it doesn’t satisfy everyone’s needs and isn’t a very efficient way of managing the digital experience. Or what about extreme personalization? That will meet everyone’s needs but it will likely be costly and labor-intensive.
Smart persona building can help IT for the latter but without wasting resources or budget.
In order to do that you should organize employees using binary & variable IT Traits.
Binary IT Traits
- Metrics that fall under this category are clear cut; either you are, or you are not something.
- These can be 1:1 or 1:Many; meaning a defined Persona might be “users needing 16 CPU-core systems” which could be a simple yes/no qualification.
Variable IT Traits
- Metrics that fall under this category are typically numerical calculations or “building blocks” that measure an individual construct, such as the amount of time Microsoft Excel is being used during the working day [Notice how it’s more than just “has MS Excel been installed or not?”].
- Variable traits don’t just tell IT what behaviors an employee is exhibiting, but how much they’re exhibiting those behaviors.
When you build your persona you should combine both binary and variable traits to better qualify and organize user types. So for example, if you were to build a Persona for “Developers” you might include the specific developer applications in use (variable), plus consumption requirements (binary) to identify people that require developer workspaces, even though they may not be in a typical developer role.
3. Actively Monitor Employee Software Usage for Cost Bloat
A one-time software usage audit will yield valuable data, but that won’t be enough to maintain an accurate picture of software-cost bloat. Employees’ software usage changes over time so your IT team should continuously monitor it and search for potential cost reduction opportunities.
With dashboards that non-invasively monitor software usage, IT teams can visualize under-utilized software and determine next steps to potentially reduce software costs. This doesn’t necessarily mean getting rid of licenses that are under-utilized; they can start by engaging with employees directly and provide best practices for better software use, and then determine which licenses are truly wasting money.
4. Layer Employee Sentiment onto Usage Data to Make Better Data-Driven Decisions
Considering the last tip, it’s important to keep the following in mind: just because a software is only used occasionally doesn’t mean it isn’t vital to a particular employee.
That’s why it’s important to combine the usage data with employee sentiment data. Corroborating employee feedback with employee software habits makes it easier for IT leaders to reduce costs without causing any inadvertent disruptions to employee productivity.
5. Regularly Repeat Previous Steps to Renew, Reduce, or Reallocate Software Licenses.
The previous four steps make up a surefire process for software license optimization – but must be performed regularly based on changing employee habits and processes.
Employee personas should be re-examined and updated over time. Software usage audits should become a recurring initiative, particularly as IT leaders enter renewal negotiations with software vendors. Repeating this process will ensure that an organization’s software suite is continuously improving in terms of the value it provides for employees at the lowest cost possible.
How Nexthink Makes Software License Optimization Easy
Nexthink helps IT to discover all aspects of the software in the enterprise like utilization by user, time of utilization, usage pattern, parallel licensing, and more. Specifically, with Nexthink’s powerful combination of end-to-end visibility and intuitive data visualizations, IT Teams can:
- Discover and Meter their employees’ software utilization using our unique software metering dashboards and custom configurations. In addition, we offer solutions to track license usage ratio for SaaS applications. IT teams can instantly retrieve the list of users who have been provisioned a license but have either used the application sparingly or not used it at all.
- Reduce under/unutilized licenses with automated Remote Actions and Employee Engagement campaigns that gather user feedback and consents.
- Re-Allocate recovered licenses to users that need them with automations and Employee Engagement campaigns. Nexthink’s remote actions can trigger any SCCM task sequence, or application and program.
See how Nexthink makes software license optimization easier in this quick 2-minute video:
If you are interested in learning more about how Nexthink can help you with your software license optimization project, request a demo today.
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- Reduce Software Licensing Costs Through Usage-Based Application Optimization with Nexthink
- Fast Track Your Software License Optimization with Usage Data
- Uncover How Your Employees Experience Their SaaS Applications in Real-Time
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