How to Turn Your Software Licensing into a Strategic Asset

By: Brian Williams | January 31, 2023

Most people groan when they hear the words “software licensing”. Licensing can be complicated, and usually businesses will continue with their current licensing portfolio simply because it’s working – preferring not to take the time and resources to dive deeper. 

Although software licensing isn’t glamorous, it plays a critical role in keeping your organization competitive. In this article we will cover three simple steps you can take to make the most of your licensing investment – moving it from a business pain to a strategic asset. 

Step 1. Examine Your Portfolio

In today’s “as a service” world, no software vendor is simply selling one thing. Software providers like Microsoft and IBM are more invested in selling licenses as bundles. Multiple licenses and subscriptions rolled up into a neat little package sounds great, right? But in this licensing model, if Bundle A only has a few of the subscriptions you need, then you must also purchase Bundle B. Now you have more than you anticipated. 

This is why examining your portfolio and taking a software inventory is important. Start by asking yourself, “What do I own?” While the question is simple, the answer may not be. We recommend asking your licensing provider / partner this question. They will be able to help you improve your license management by giving you a complete breakdown of all your software license entitlements (what exactly you own or have access to). At Core BTS, we constantly find that our clients are surprised to learn everything that’s included in their licensing portfolio.

Step 2. Justify or Make Changes  

Now that you know exactly what you have in your portfolio, the next step is to start having strategic business conversations and begin optimizing licensing. From these conversations, you should be able to determine what is important to your business. This will allow you to either justify your current portfolio, upgrade licenses, or begin to eliminate those licenses that are unused or underused.  

Use Case Scenarios

Let’s say you purchased both Bundle A and Bundle B from your provider. Bundle A has ten components, but you only use four. Bundle B has three components, but you only use one. After talking with your licensing partner, you find that one of the unused components in Bundle A can provide the same functions as the single component you were using in Bundle B. By fully understanding the capabilities of each bundle, you are now able to eliminate the need for Bundle B altogether – ultimately providing cost savings.

On the other hand, after talking with your licensing partner you may find that – although Bundle B has a duplicative solution to Bundle A – Bundle B’s solution performs significantly better and provides an improved experience for end users. This gives your business a competitive edge. With this information, you can go to your boss or CFO and justify the additional license costs that come with purchasing two different bundles. 

Know What You Need with COMPASS

Even with these scenarios in mind, we understand that evaluating and making changes to your licensing portfolio is easier said than done. To help simplify this process, at Core BTS we take our clients through our proprietary COMPASS program. This assessment allows us to map out a strategic plan to help clients maximize their Microsoft licensing portfolio.

Step 3. Measure Utilization 

A key component in effective software license management is being able to measure utilization. Software licensing is extremely dynamic. Technologies and software are constantly evolving, and it’s critical to your business that you are renegotiating your contracts in a way that will add value in the future. Having the ability to not just know what you own and what you’re using, but also to measure that utilization and understand its value, creates a very powerful way to approach how you negotiate these contracts.

Use Case Scenario

In a recent use case, we had a client who was set to renew a large Microsoft enterprise licensing agreement. Six weeks before the renewal date, the client received a copy of the renewal quote and was shocked to see a significant increase in licensing costs. In order to gather more information, we took the client through a full COMPASS assessment. This allowed us to help the client set metrics and measure current license usage and projected utilization for the upcoming three years of the new agreement. With this usage data, our client was able to renegotiate a more effective license position with a lower price – saving them nearly $6 million (or 25% of the quote) over the next three years – all while maintaining the relationship with their licensing provider. 

Maximize Your Licensing Investment

When it comes to software licensing, there is no one right path to follow. Every business is unique and will have its own set of needs and priorities. Following the three steps above will help you improve your software license optimization and will allow you to be more strategic as you prepare for your future.

At Core BTS, our team is highly skilled in evaluating your business needs and helping you maximize your licensing investment. To learn more about how we can help your organization turn your software licensing into a strategic asset, fill out the contact form below and we will follow up with you to schedule a meeting.

Brian is a seasoned professional with 20+ years of experience driving exceptional business outcomes. As Core's Microsoft Licensing Director, he specializes in helping our clients reach their business targets through assessments, strategy direction, and technology recommendations.

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