License Management – trick or treat?

Sailing through the murky waters of License Management can be frustrating. I’ll share some ideas and pitfalls I’ve gone through with the topic in question, and I’ll make one suggestion which would help people dealing with License Management issues.

That was then…

Once upon a time there was a customer who needed certain software to run his/her business. Back in time everything was relatively easy: customer bought a software (application), which was delivered on a media like 5.25” or 3.5” floppy disk. Customer used the software as long as it was needed and later on bought perhaps a new application.

In case there was no proper software available, customer most probably contacted a software company to help specify the requirements and develop the software in question.

Plain and simple, neat and tidy. Development of hardware was so rapid that one didn’t usually reach a new version of the software until his/her workstation was already outdated.

floppy-disk-214975_640At that time, if there was need to run the software on more than one workstation either you bought another piece of the same software or (probably) violated copyrights by installing the software into a new workstation. But who was ever going to know about that, as your workstations were not networked?

Somebody then came with the idea of licensing: why to demand customers buy yet another copy of the same software, when you could just sell a ”licence” (for example a string of letters and numbers) and grant customer install the software to n pcs of different workstations?

Around the same time more and more workstations joined the network called the Internet and the first concurrent user licenses appeared to the market.

…this is now!

Nowadays it’s a jungle out there! As long as you have a small business with <5 workstations and less than 10 applications you’re doing OK. But once you run even a little bit bigger business – not to mention global scale enterprises, it’s a whole different story.

Let’s dig a little bit deeper into the world of licenses.

Licensing models

Let’s assume you are a CIO in a global scale company and it’s in your best interests to grab the best license agreement with your software vendor(s).

  • ”What should I do?”, you may ask.

Well, I have a rock solid answer that usually works: go to the basics. You should first define and specify certain basic information about the usage of the software you’re about to buy licenses for. Start with i.e. something like that:

  • amount of total users
  • amount of concurrent users
  • geographical locations of your users
  • number of servers
  • number of processors in servers running the software
  • number of cores in processors in servers running the software
  • pretty much anything, all the available information!


Number of total users is often used as a pricing basis, but there may be other situation factors as well.

Concurrent user licenses

You have operations, say, in Australia, Poland and Argentina. Your total number of users for this particular software is 9000 users. But the user base is split between the three office sites in different countries, different continents. In this case you should find out if you could agree on paying only for the concurrent users and actually save money by buying software license for 3000 concurrent users instead of 9000 total users.

Concurrent user licensing is relatively fair model of pricing the licenses. The downside is it often requires almost continuous network access. Normally it’s not a problem, but in certain field services –based work it can still be an issue today. The licensing service, which lies on a license server pings workstations at certain intervals to make sure there’s a license in place. It releases unused licenses from workstations and reserves licenses to workstations whenever needed. If you run out of licenses, you usually have to wait until someone stops using the software and the license is released into the license pool. Or you go out to buy some more concurrent user licenses.

Other licensing models

There’s a number of software where licencing costs are calculated regarding the environment they run. In other words you may need to report very detailed-level information describing your data center: number of servers (installed/using the software in question), number of processors (in the server that is running the software in question) and the number of processor cores (in the processors residing in your servers that have the software installed or are using it).

Now, I’m not going to go further into the world of different licencing models. But I want to make a question:

Why has license management been made so god damn difficult!?

It’s everything but straightforward to manage your licences. Buying can be relatively easy, if you have very deep pockets and you are willing to throw your money away. But buying just the licenses you need, for the time-period needed, and the correct amount of ’em.. you name it. It’s like a jungle out there.

 3rd parties showing up

There are companies performing license auditing in favor of the IPR owning companies. For example Microsoft performs – or their license auditing partner company does the job – a so-called ”true-up” auditing for an organization and then they report to Microsoft about the situation, and MS then tells the amount of needed new licences. In the world of volume licensing, true-up –stylish approach is quite good because the idea is that software can be installed wild and free, and then the auditing is conducted once a year to calculate the number of required new licenses. So one doesn’t necessarily need to purchase new licenses at the same time when installing new software, but accounts are being balanced annually.

 Sniffing through the environment

The auditing itself usually consists of investigating the environment. Normally the party that performs the check-up asks for certain figures (numbers of workstations, servers, cores etc.) and they often come up with a small software that sniffs through the agreed networks and creates a report regarding all the foundings (for example, databases).

Quite often the license auditing ends up with the software company presenting a bill to the customer and the customer usually doesn’t have any other choice but to pay the price, whatever it is.

Every license has its price tag

There is basically nothing wrong with this: if you want to use licensed software, you ought to pay for it. But..

..what bugs me in this scenario is the fact that customer pretty seldom has any real possibilities to question the calculations regarding the price tag. Unless customer happens to be one of the Fortune 500 companies or similar size, they don’t have a department filled with software license architects and lawyers.

Customer pretty seldom has any real possibilities to question the calculations regarding the price tag

So the set-up is often like a David and Goliath where David in fact has nothing to fight with. I’m not saying there shouldn’t be a price to be paid if you use licensed software, but the customer lacks the possibility to really check the calculations in many cases.

In addition to that, there are certain loopholes that make it possible to save some money in software licenses. For example, if a customer can prove that usage for certain software is intended to be only temporary, a very short time, or usage of the software differs somehow greatly from regular usage of the software, there might be a possibility to negotiate lower price for licenses under such use cases. However, there’s again need for department of software license architects and lawyers.

In my opinion, the ICT sector is clearly in need of actors working in favor of a customer! There should be consulting companies who take role for the customer regarding licences. These companies could provide end-to-end service for customer companies, all the way from designing and specifying the need for licenses (by evaluating the required platform solutions), then they could play the center role in purchasing required licenses, and yet they could be analysing and evaluating license auditing in favor of customer companies.

The ICT sector is clearly in need of actors working in favor of a customer

For sure, that wouldn’t be cheap. But then again, it’s very easy to waste money by buying i.e. enterprise licenses instead of standard licenses or too much licences ”just in case” etc.

If there were such actors, I’d definitely recommend using their services!

Yadda yadda

This must be – by far – the most hazy, fuzzy, unclear, inconsistent and frustrating blog text I’ve ever written. Partly because the License Management is very treacherous area and partly because I might have tried to swallow and elephant on one bite. I believe I’ll get back to this topic in the future with more specific approach to a limited section of world of License Management.

Pictures are from Pixabay.