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Seven Best Practices for Managing Software Licenses

Learn what software management is, the pros and cons of software license management, and the best practices for software license management.

July 14, 2023

Organizations often purchase software to meet their daily needs, but as they grow, so do their requirements for ready-made solutions. Every software comes with a license or compliance regulations that the vendor or manufacturer attach to it, allowing organizations to use the software for a specific period. Managing these licenses is crucial for staying productive and informed. In this tutorial, you'll learn what software management is, the pros and cons of software license management, and the best practices for software license management. So, without further ado, let's get started! 

What Is Software License Management?

To define software license management, let's begin by understanding what a software license is. A software license is simply a document that provides guidelines for the use and distribution of software. 

So, software license management—SLM for short—means the process of controlling, tracking, auditing, and managing the use of software within an organization. This entails monitoring and tracking the software from installation to usage and even procurement and renewal of the license, ensuring compliance with the regulations and guidelines set by the software manufacturer. 

Why Is Software License Management Important?

Software license management is crucial for several reasons, including legal compliance, security, efficiency, productivity, and cost savings for your organization. 

  • First, managing software licenses ensures compliance with regulations set by software manufacturers, preventing lawsuits and penalties for unauthorized use of the software.
  • Software license management helps maintain productivity and efficiency by ensuring that you don't lose track of software due dates that may lead to access denial.
  • Proper software license management can help you economize on software purchasing costs by planning for your software needs and considering alternative options.
  • Software license management optimizes software usage by providing usage pattern information and license tracking data.
  • Lastly, SLM ensures that organizations use only authorized and secure software, preventing malicious attacks and software breaches, which are commonly caused by unlicensed software.

Potential Setbacks of Software License Management

Although software license management provides numerous benefits, there are still some setbacks associated with its implementation. 

Cost of Implementing a Software License Management System

One of these setbacks is the cost of implementing a software license management system. As previously mentioned, software license management involves keeping track of the inventory of all software licenses within an organization. This requires the development or purchase of a system that can aid in tracking this inventory and providing reminders for license due dates. It's not possible to manually track a large number of software licenses, so the cost of implementing a software license management system can be significant and may depend on the size of the software license portfolio. 


Managing software licenses can be a time-consuming and difficult operation, especially for large firms with various domains and multiple software licenses. As an organization grows, so will the requirement for software licenses. This increase in complexity requires additional resources to manage it. 

Compliance Risk

Software licensing management can be hazardous if not performed effectively. Failure to comply with software license agreements can result in legal action, fines, and damage to an organization's reputation. To avoid compliance difficulties, licensing management necessitates great attention to detail and thorough monitoring, which means dedicating a lot of organizational resources. 

Best Practices for Software License Management

Organizations can implement various best practices for software licensing management, but the primary aim of each practice should be to prevent penalties resulting from non-compliance and other related issues. Here are seven fundamental best practices for software license management. 

1. Begin by Documenting Your Procurement Process

This is the first step in software license management. Begin by documenting where the software was purchased, who purchased it, when it was purchased, and other relevant details, such as when it is due. Ensure that you create documents for all software purchased in different units of the organization. Additionally, verify that your organization has established standards for documenting software licenses so that there's a uniform format throughout the organization. Implementing this initial phase early on can make it much easier to keep up with as your organization—and the complexity of its licenses—grows. Don't have a procurement process? Try using a tool like Wrangle that automates procurement with a workflow in your company's Slack workspace.

2. Make a Centralized Inventory List of All Software Licenses

Some organizations, depending on their structure, may have distributed procurement departments (i.e., each department has its own procurement). In this situation, a centralized list of all software licenses purchased across all departments is required to help identify what software is installed in each department and whether it's licensed or unlicensed. 

3. Understand All Software License Agreements

Make sure to read the license agreement for any software you use to ensure you understand the terms and conditions, which may include usage restrictions, limitations, duplication, and so on. A detailed understanding will ensure that you know what path to take when establishing your software license management procedure. 

4. Implement a Software License Management Tool

After compiling all of your organization's software licenses, the next step is to implement a license management tool to assist in managing, tracking, and optimizing the use of software licenses. This may also include creating an automated license management task, such as license renewal, compliance reporting, and reminding users when a software license is about to expire. 

"The next step is to implement a license management tool to assist in managing, tracking, and optimizing the use of software licenses."

5. Make Sure You Regularly Track License Usage

To ensure compliance with licensing agreements and avoid penalties, organizations need to monitor and record how they use software licenses. Therefore, regularly tracking license usage is crucial to ensure that your organization isn't using more licenses than it has paid for. 

6. Keep Your Software License Accurate and Up to Date

Check that the information on the software license inventory list is correct and up to date. For example, information in the inventory list might include newly purchased software, expiration dates, and license number. This will help ensure that all licenses in your organization are tracked and will provide real-time information about when licenses need to be renewed or upgraded. 

7. Train Employees About Software License Management

Organizations should train employees on the importance of software license management so that they're aware of the policy and procedure. Start by teaching employees in procurement the importance of software license management and the cost associated with improper management. This will enable them to properly document all purchased software. Additionally, provide training to employees who use the software and instruct them on the consequences of not adhering to the standards. This will ensure that employees use the software appropriately and do not violate any policies. 


In this post, we've discussed what software licensing management is, why it's necessary, and some of the drawbacks that can come with it. We also shared some best practices for software license management. If you wish to automate tedious tasks or streamline your processes, Wrangle is a powerful platform for ticketing and workflows. Wrangle assists organizations in streamlining workflows by gaining better visibility and control over their digital assets.

You can use Wrangle to help your business manage software licenses. Unlike traditional platforms, Wrangle allows users to request access to software licenses directly in Slack through tickets and workflows. Your users’ requests for software can be connected to your onboarding and off boarding processes. 

This post was written by Ibrahim Ogunbiyi. Ibrahim is a data scientist and an IT support specialist. He loves writing anything about data and IT operations.

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