License Management

Software & LicensesAlso known as: Software License Management, Software-License-Management, License Management, License Administration
In brief

License management (also called software license management) is the ongoing administration of a company's software usage rights from purchase and assignment through to cancellation. It distinguishes between paid, assigned, and actively used licenses in order to control costs, prevent under-licensing, and align renewals with actual demand.

Key Takeaways

  • Paid, assigned, and used represent three distinct license quantities.
  • An assigned license does not by itself prove active usage.
  • The license model determines whether counting is based on named users, concurrent access, or devices.
  • ISO/IEC 19770-3 defines a data schema for license entitlements and their counting metrics.

How does license management work?

License management regularly compares three quantities for each piece of software. Discrepancies between them reveal where licenses are missing, available, or sitting unused.

  • Paid: the number of licenses according to the contract or invoice
  • Assigned: licenses allocated to specific individuals or accounts
  • Used: assigned licenses showing verifiable activity within the observed period

Why is license management important for small and medium-sized businesses?

In small and medium-sized businesses, license costs recur every month but are rarely reviewed in one place. Without license management, licenses for departed employees keep running, teams buy the same tool twice, and contracts auto-renew unchallenged. A simple check ahead of each renewal is often enough to catch these cases.

Who is responsible for license management within a company?

License management is a shared responsibility across IT, Finance, and business departments. IT knows the accounts and assignments, Finance knows the contracts and invoices, and the departments know who genuinely needs a tool. What matters is designating a clear owner for every application.

Example: License Management in practice

Real-world example

Example: An online retailer with 70 employees pays for 40 licenses of a project management tool. 36 are assigned, and 29 of those show activity over the last 30 days. After checking with the team, 4 assignments belonging to departed employees are revoked and the license count is reduced to 33 at renewal.

License Management vs. Software Asset Management (SAM)

AspectLicense ManagementSoftware Asset Management (SAM)
ScopeUsage rights and license quantitiesEntire software estate across the lifecycle
Core questionDo our licenses match actual demand?Which software exists and how is it governed?
ComponentsContracts, assignments, usageAdditionally inventory, installations, and processes
ClassificationSub-area of SAMUmbrella discipline

License management is the part of Software Asset Management that focuses on usage rights and license quantities, whereas SAM governs the entire software estate.

How does Sovaro help with License Management?

How Sovaro helps

Sovaro flags licenses with no usage for 30 days and stores contracts, renewals, and notice periods alongside each subscription. If a license is missing during onboarding, Finance approves it.

Frequently Asked Questions about License Management

Sources

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