If you’re responsible for managing software licenses in your organization, you know that it’s a complex mix of art and science. It’s ever-evolving: Software publishers continually roll out new programs, revise contract terms and introduce new delivery models. On top of that, vendor audits mean there’s minimal margin for error in getting it right.

In my job, I spend my days helping clients keep their software licensing under control. Along the way, I’ve seen how focusing on four key areas of software asset management, or SAM, can help companies stay compliant and give their staffs the tools they need to be productive — all while keeping software and overhead expenses as low as possible.

Here are the steps that should underpin your SAM efforts:

1. Don’t renew under duress.

Many companies wait until the deadline before deciding whether or not to renew a contract or renegotiate terms. You need more time than that — especially if it’s an extensive agreement. I like to initiate these conversations about six months out so there is time to dig in and review all aspects of the existing agreement and the business has adequate time to pull data and can make sure the agreement still offers the best value.

You will want to look at how well the software fulfills current business needs. Sometimes, an app or program becomes so widely adopted that unlicensed users crop up and a correction should take place before the software vendor performs a formal audit.

The point is, there’s a lot of ground to cover, so give yourself a chance to ask the right questions and make appropriate business- and date-driven decisions.

2. Factor in the cloud.

Cloud adoption continues to be a moving target when it comes to licensing and the evolving business strategies of individual clients. I advise clients to at least look at their cloud options every time there’s a chance to revise a contract.

Under the right conditions, cloud can relieve many of the hassles of software management. By the very nature of its subscription model, it keeps unlicensed users at bay, tracks volume of use and prevents a company from lapsing into noncompliance. Plus, if headcount drops, customers can adjust the subscription on the fly to avoid unnecessary costs. And, unlike traditional perpetual-volume licenses that you must manage as a capital expense, you handle cloud subscriptions as an operating expense. By doing so, you can make budgeting easier and eliminate steep upfront investments.

Nevertheless, there are still some important nuances to consider, including hybrid cloud deployments. For example, the Microsoft Exchange subscription that’s bundled with Microsoft Office 365 lets you run the email platform in the cloud or on-premises. If you choose the cloud option, you’re all set — no other payments are required. However, if you go with on-premises, individual users will be covered, but you still must purchase any needed server licenses.

3. Watch out for shifting licensing terms.

Based on market pressures and internal business strategies, vendors tweak their terms — constantly. That means you need to keep up to date on the terms for each license and cloud subscription by reviewing them on a regular basis.

For example, a couple of years ago, Microsoft transitioned SQL Server from a per-processor to a per-core licensing model. Similarly, Windows Server went from single-processor to two-processor licensing, and now we know it’s moving to per-core licensing.

You must work through these types of changes for all of your software products and weigh the cost-benefit implications. As you do, you’ll want to factor in unique requirements within your organization, such as grandfather clauses in your existing contracts and whether the new terms give you an advantage and should trigger a license renegotiation.

4. Look for opportunities to reduce licensing costs.

This last one seems obvious, right? But because clients often focus so closely on renewals and new applications, many don’t pay enough attention to decommissioning old licenses. This is a key way that SAM tools can help. The best ones, such as Snow Software, create an accurate inventory of software running throughout a company, and meter each title to show who’s using what and how often. This information can help companies right-size their licenses by dumping unused software or reassigning to users in need.

Customers who need assistance navigating the tangled world of software management can lean on me and my colleagues at CDW. We’ll analyze your current environment, look for compliance issues and perform cost comparisons of the various licensing options to determine the best agreements going forward. That way you can focus on what’s most important: running your business. 

Lastly, did you know that a company that implements IT asset management tools can reduce its software audit rate by 32 percent? Find out more SAM stats in our Escaping the Danger Zone infographic.