Software license management (SLM) is arguably one of the most critical functions performed by IT teams. Historically, many discussions of IT management have focused on physical resources such as servers and endpoint devices. However, these are merely hosts and delivery mechanisms for the assets users actually use and that in fact run most businesses: software. The pervasiveness and business criticality of software make managing it a top priority for every IT team. And those management challenges begin with the licenses that govern software costs, access, and responsibilities.

What is Software License Management?

Broadly, “software license management” refers to the processes and tools your business uses to control and document the software products your business uses, and where and how they are used. SLM is essential to ensure your business complies with every relevant enterprise license and end-user license agreement (EULA).

More specifically, software licenses lay down the contractual particulars and specifics that govern how software may be used and how its provider is to be compensated. A typical agreement specifies the number of licenses purchased, how those purchases translate into permitted installations, and what happens if licenses consumed exceeds those purchased. Effective SLM tracks all of this and delivers features that can help your business avoid non-compliance with your software licenses, and the penalties that accompany each compliance breach.

The Roles of Software License Management

SLM is a critical element of what is known as software asset management (SAM), which is, in turn, an essential part of IT asset management (ITAM). SAM is basically all of the tools and processes needed to manage, control, and protect all of your software assets across their entire lifecycles. Effective management of and compliance with software licenses is clearly required to achieve the goals of SAM.

ITAM is also a collection of specific functions and tasks. These can include but are not limited to those listed below.

Each and every one of these depends largely on software, and every piece of software is governed by a license. So SLM is both a primary element of ITAM and a set of practices that must embrace all ITAM software tools.

Why does Service Level Management matter?

SLM is a critical element of effective ITAM. This also makes SLM a critical success factor for other IT initiatives, especially IT service management (ITSM) and IT operations management (SLM). SLM is also important to cybersecurity efforts, overall IT management, and maximizing the business value of the IT estate.

Effective SLM also delivers some specific additional benefits to IT and to the business as a whole.

Cost management: 

Software is particularly prone to overprovisioning, the purchase of “extra” licenses that are intended to guarantee availability but often go unused. The goal is to avoid the cost and difficulties of quickly acquiring and deploying additional licenses when a shortfall is discovered. However, overprovisioning can quickly become a major yet largely invisible cost. SLM helps keep the number of licenses being paid for closely aligned with the number the business actually needs.

Credible compliance and audit protection: 

Leading business software vendors have for years viewed the opportunity to “true-up” their customers’ software license contracts as significant revenue sources. This is because variances between contractual terms and actual software use almost always result in over-budget costs, fines, or both for the business being audited. SLM is the first and best line of defense against audits and other challenges to license compliance. And those challenges can be costly.

Better cybersecurity: 

Rogue software and older software versions with out-of-date security features provide ready entry points for ransomware and other malware. Effective SLM can improve cybersecurity by identifying, reducing, or even eliminating unauthorized and under-protected software from your IT estate.

More agility: 

Supporting multiple versions of software and keeping older software versions running and secure can challenge already-limited IT resources. SLM can help your business identify and retire older software versions, and focus its IT resources on current editions.

Types of Software Licenses

The continuing evolution of IT is paralleled by the broad range of software license types available today. The same business may need to manage licenses for software running on individual on-premise servers, software running on one or more public clouds, hybrid software, or commercial elements embedded within custom-built applications. And different types of software are often provided under different types of licenses. Below is an alphabetical list of some of the most common commercial software license types.

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There are additional types of software licenses beyond the commercial variants listed above.

Your business may also need to manage licenses for mobile applications, subscription-based software-as-a-service (SaaS) products, application programming interfaces (APIs), or components of consulting projects. And each of these may have specific variants, conditions, or exceptions. If you have access to contract-savvy legal counsel, you will more than likely need to include those experts in your software contract negotiations and SLM efforts.

Service Level Management: Challenges and Enablers

Beyond the challenges outlined above, there are three broad classes of challenges to success with SLM or any other significant IT initiative. Below are just some likely challenges to your success as you pursue your SLM journey.

 SLM: Organizational Challenges

SLM: Technological Challenges 

SLM: Cultural Challenges 

Enablers of SLM success can generally be grouped into the same categories as the challenges outlined above.

SLM: Organizational Enablers

SLM: Technological Enablers

SLM: Cultural Enablers

Service Level Management: Best Practices

There are multiple prerequisites for consistently effective IT operations management. You may pursue these in an order that differs from the list below, but each item on the list is essential to your SLM success.

Get your leadership on board 

SLM success requires a major, sustained commitment of resources to achieve and sustain. Executive buy-in and support can ease pursuit of that commitment. Executive support can also help navigate cultural changes and minimize or overcome any encountered resistance.

Stay where you are for now (as much as possible) 

Continuing to acquire and pay for expensive software with inadequate license management resources is literally throwing good money after bad. To the extent that it is possible to do so without hampering critical business operations, freeze, then document and rationalize your software acquisition processes. At the very least, make them more transparent and accountable before “unfreezing” those processes.

Know what you have 

Identifying and documenting everything relevant about all the software running in your business may be the single largest challenge to effective SLM. You need accurate, comprehensive, up-to-date knowledge about all of the most critical software running at your business (even if this requires manual, in-person information gathering). You need a manageable knowledge base of all of your software license information, and robust solutions for discovery and inventory of that information across your entire IT estate. If your business doesn’t already have one or both of these, your SLM goals might help justify acquiring them. Depending on the size and complexity of your IT estate and available management resources, your discovery may begin with a manual audit of your software. And prepare to conduct regular internal audits of your environment, to avoid vendor audits and penalties.

Define and prioritize your goals 

Your primary SLM goals should be to ensure compliance and avoid audits that lead to penalties. Beyond those goals, your business should focus on ensuring it is getting maximum value out of every software investment. Every business and IT estate is a unique combination of IT elements, incumbent processes, available resources, and business goals. And different elements of your business may have goals or constraints unique to them as well. All of this must be taken into account as you plan and pursue your SLM efforts. For every shared software package in your IT estate, assess who’s using what, how much they’re using it, and its value to your business.

Choose your SLM execution method(s) carefully 

If you choose multiple IT or software management methods, you may also need to consider multiple paths to deployment and execution. Alternatives include dedicated management staff, consultants, and vendor-provided “inventory management as a service.” Evaluate candidate methods closely. If external expertise is involved, pay particular attention to relevant experience and transparency regarding costs.


Ensure that your SLM plan is informed by your business’ goals for IT and its own digital transformation. Also make sure your SLM plans reflect inclusion of input from all stakeholders and key influencers.

Clean up your data

SLM decisions must be based on the best available information about the software running in your environment. Before moving too far down any particular SLM solution path, ensure your current management data is as accurate, complete, consistent, and up to date as possible. You may need to reformat legacy data before it can be used by your chosen SLM solutions. You may also need to refresh or replace any incumbent ITAM, ITSM, or other management tools that cannot “play well” with your chosen SLM solutions. And you definitely need tools and processes that help to keep software license information accurate, comprehensive, and up to date.


Automation ensures that tasks are performed consistently, eliminates human repetition errors, and frees skilled workers for more complex and valuable tasks. Automation can significantly aid discovery, mapping, inventory, and reporting, all tasks critical to effective SLM. Automation can also help you discover new software and address its software license management requirements as soon as possible after that software is added to your environment. Automated features can also help IT prevent installation of prohibited or rogue software, and conduct periodic scans to keep track of hardware and software updates.


Wherever possible, integrate SLM with other IT management functions, especially but not limited to ITSM and ITAM. Avoid acquiring or deploying multiple tools to perform tasks for which you already have available features or solutions. This is particularly important where data collection and analysis and reporting are concerned. If your business isn’t already using a configuration management database (CMDB) to consolidate IT management data, your SLM and IT management integration efforts could justify the investment and effort.

Learn from others 

Trade associations, industry events and publications, online industry groups and forums, and even vendor web sites can provide knowledge valuable to your SLM efforts. Take advantage of every opportunity to avoid repeating mistakes already made by others.


Make sure all directly involved in SLM efforts at your business receive comprehensive initial and periodic follow-up training in your chosen solutions and processes. Communicate with them and your key business stakeholders regularly, to create an inclusive culture of SLM awareness across your business.

Partner carefully 

To deliver sustained benefits to your business, your SLM commitments must be both high-level and long-term. Your chosen solution and service providers must be equally committed to your business’ success, with SLM and beyond. You must ensure that those providers have the strength and relevant experience to deliver on the commitments they make to your business, now and in the future.

What’s Next for Service Level Management?

Four of the highest-profile focus areas for IT are artificial intelligence (AI), machine learning (ML), the Internet of Things (IoT), and digital transformation. All four are likely to affect and be affected by the continuing evolution of software license management.

AI, ML, and SLM

AI and ML tools are already being used to help improve the management of entire IT estates. Both technologies will likely be integrated into future solutions for IT asset management generally, and for SLM specifically. AI and ML will help to improve discovery, relationship management, and compliance management. Such improvements will both spur and require the transformation of how IT assets, including software, are viewed and managed. The same technologies are likely to enhance future software auditing tools as well.

The ultimate goal of the IoT is to bring connectivity and intelligence to devices beyond computers, tablets, and smartphones. So-called “smart” devices now range from door locks and power outlets to sensors that help govern the distribution of utilities such as water and power.

SLM and the IoT

The IoT is causing explosive growth in the number of connected devices, and the security and management needs of those devices. The number of connected devices today is already estimated to exceed the number of humans on Earth. Predictions for the number of connected IoT devices in 2020 range from 20 billion to upwards of 50 billion.

Your business may already be experiencing a growing population of IoT devices. Perhaps there are already connected cameras and video monitors in conference rooms and public areas at your facilities. Or smart appliances in your kitchens and break rooms, manipulated by smartphone apps. Or IoT-enabled sensors in your warehouses and throughout your supply chain. 

Unfortunately, many if not most of these devices rely on software that may or may not be manageable with today’s SLM processes and tools. The software that supports a smart, connected video monitor may be provided under a traditional license, but sensor software is unlikely to be. 

IoT device makers have struggled with software licensing issues for years. As far back as 2015, respected technology industry analyst firm Gartner warned IoT device makers that they needed new license entitlement and management (LEM) solutions. “We expect that by 2020, a failure to put in place a LEM system will result in a 20 percent drop in potential revenue generated from software for device manufacturers connecting to the IoT.” Some IoT device makers are building or considering online “app stores,” but there is not yet any industry consensus on how best to issue and manage IoT software licenses.

IoT and IIoT growth are spurring the creation of new IoT-enabled software and security platforms and architectures. The IoT is also beginning to change how software licenses are structured, as client-server and cloud computing have done. Software License Management is likely to continue to evolve as long as new technologies are integrated into IT estates. The better your SLM processes and solutions are today, the better prepared you and your business will be for the future, whatever it brings.

SLM and Digital Transformation

Every business is pursuing or considering some form of digital transformation. This is a business imperative because digital technologies are transforming how almost everything is built, bought, and sold, and how customers and partners expect to do business.

In July 2019, Cloud Computing News reported on a recent Gartner survey of some 473 business leaders of companies with annual revenues of $50 million or more. “Eighty-two percent of Gartner's survey respondents agreed that they had a management initiative or transformation program underway to make their companies more digital.” That represents a 62-percent increase over the previous year.

Digital transformation starts with and focuses intently on IT. And software is how the effects and benefits of digital transformation are delivered to users, customers, partners, and the business. As digital transformation efforts proceed, software choices are likely to evolve frequently and rapidly. Software licenses and contracts must be managed well to keep pace and maximize the value of those efforts.

Software License Management: Your Call to Action

Software is the ultimate user interface. It is how users access the resources they need to do their work, and how business leaders both deliver value and measure the value of their IT investments. Software is where the goals and aspirations of IT and business decision-makers meet the realities of users, customers, and partners.

How well software meets needs and expectations directly determines the actual and perceived value of the entire IT estate. And how well software licenses are managed directly affect that actual and perceived value. Effective SLM maximizes the business value of IT, by reducing costs and improving agility and cybersecurity. It also strengthens the IT foundations of any business, making that business more ready and able to cope with and take advantage of new technologies and opportunities.

IT management efforts at your business must include a laser focus on software license management. Success with SLM will improve all other IT management efforts, and get and keep the IT estate closely aligned with business needs and goals. 

Freshworks: Your Partner for Effective SLM

Since 2010, Freshworks has believed businesses like yours deserve better software. Software that’s ready to go, easy to set up and use, and requires minimal customization. All of our products live up to this promise and are backed by our world-class support. And the best part is, you don’t have to break the bank to get them working.

Today, over 150,000 companies trust our software to run their business. And since 2014, Freshworks’ Freshservice solution has helped many of those companies transform how they manage and support their IT environments and users. Freshservice delivers comprehensive, yet easy-to-use ITSM, including asset, incident, and release management features and a flexible service catalog. Freshservice also includes integrated software asset management (SAM) features that can help improve your SLM efforts.