Why Software Licenses and Subscriptions should be part of IT Asset Management

When companies think about what assets make up their IT environment, the often think about things like infrastructure hardware, end-user-devices and software – things that the company has purchased and “owns”.  They often overlook software subscriptions and things that have a “term-license” associated with them like cloud resources, subscriptions to 3rd party services and other instances where the software isn’t owned by the company but instead used for a fee. As companies replace owned IT assets with things they use belonging to someone else, they need to make sure that their IT Asset Management processes and data evolve to support the full scope of the IT environment

There are 2 common terms for software that you use but don’t own and it is important to know the difference.

Software Licenses – sometimes referred to as Common Off the Shelf (COTS) software, are things that someone else created that you have purchased a license to use for a period of time.  Your company typically provides an operating environment for the software and in many cases licensed software is treated similar to software that you’ve developed in-house or purchased with the difference being that you are only “leasing” the resource.

Software Subscriptions – the most common example being cloud services offered as SaaS and access rights to 3rd party systems are things that you have purchased a right to access for a period of time but someone else operates.  

It is important to keep in mind that the license or subscription is your company’s IT asset, not the software itself.  The software is an asset of the company you are purchasing use and/or access rights from.

Why should software licenses and subscriptions be included in IT Asset Management?

  1. This type of software makes up a large proportion of the IT components in use by most businesses
  2. Licensed software resources needs to be maintained, supported and kept current on patching to avoid security risks and business impacting incidents
  3. Licenses and subscriptions have a lifecycle and require periodic renewals to avoid operational disruptions  
  4. Applying asset lifecycle management practices enables effective forecasting of IT costs
  5. When employees leave or change jobs, you need to be able to reclaim licenses and either re-assign them to someone else or stop paying for them.  
  6. Using more software instances than you are licensed for can open you up to financial liability from vendors.

IT Asset Management and Purchasing/Procurement Confusion

Perhaps the biggest challenge in performing IT asset management on software subscriptions and licenses is integrating the asset management lifecycle into company purchasing and procurement processes.  Owned software is something that is typically bought once and used for many years with replacements and/or upgrades treated as acquiring a new asset. Most IT purchasing processes have been designed and optimized to support this kind of model and struggle to support the concept of “renewal” transactions that happen more frequently and are a continuation of the original purchase

Where a lot of confusion comes into the purchasing process is failure to clearly delineate between the software resource and the (license or subscription) asset.  Renewal purchase requests are often framed by the IT department as purchase of software which is incorrect. What you are purchasing are access and usage rights for a period of time.  The easiest way to avoid this confusion is to teach your IT purchasing staff to look at subscription and license renewal as requests to “purchase access/usage rights for this software component for next month, year or whatever the period is”. This enables purchasing to treat the transaction as something they are familiar with.

Software licenses and subscriptions are becoming an increasingly important part of managing your company’s IT environment.  IT asset management processes and systems can help you ensure you have the usage and access rights needed to keep your business processes operating while avoiding financial liability for either having too many or not enough licenses/subscriptions for the resources being consumed.  

Freshservice understands that software license and subscriptions are an important part of your IT asset portfolio but can also be confusing.  The IT Asset Management solution from Fresh Service was designed to make the job easier by providing you the features and capabilities that you need without a lot of the cumbersome overhead that comes with many other ITAM solutions.  Its all part of helping you take a Fresh look at ITSM for your modern business.