Not quite sure what “Software License Management” means? You’re not alone.
The term software license management is (unfortunately) used in the software industry to describe two different types of software solutions for two entirely separate problems.
In this article we will clarify the difference between the two types of software license managers to help you figure out which solution you might be looking for.
What Is Software License Management?
As the name suggests, software license management (SLM) is about managing software licenses.
But there’s one crucial bit of information that everyone seems to overlook when talking about SLM.
That is who’s doing the licensing: are you licensing your software to users, or have you licensed software from someone so that you can use it?
Software license management means very different things depending on whether you’re trying to manage the licenses you provide to your users/customers or if you’re trying to manage and keep track of the licenses you’ve bought from various software companies.
Basically, these two use cases are the opposite sides of the same coin.
The Two Types of Software License Management
- A software license manager can be a tool used by software publishers to issue, deliver, monitor and revoke licenses they provide to their customers. This is called software licensing - in which 10Duke specialises in.
Another term for this is “Software License Enforcement”. This article will provide a more detailed explanation of this type of software license management solution; who it is used by, how it is deployed, how it is charged for, and what key features to expect in it. - A software license manager can also be a tool used by a company that has purchased multiple licenses (typically in the thousands) from different software vendors in order to track usage and for audit purposes. Primarily this is to make sure there is alignment in the licenses purchased and the licenses needed. In the market it is generally referred to as a “Software Asset Management” (SAM) solution.
A few quick notes on what a SAM solution is and who it is for.
What Is a Software Asset Management Solution?
If you are a company that licenses a variety of software products from different companies, keeping track of these licenses can be a tricky problem. If you have too many, then you are likely paying more than you need to be.
If you have too few, then you are likely violating your license agreement with the software vendor/publisher - in other words you’re struggling with software license compliance.
This is where the Software Asset Management solution comes in. The aim of a SAM solution is to ensure that the actual usage of licenses is tightly aligned with what has actually been licensed and thereby authorized for use. These licenses are assets within the company, which is why the solution is often referred to as a Software Asset Management (SAM) solution.
For review of the various SAM solutions available and to learn more about the main SAM solution vendors, check out Gartner’s site.
Unfortunately, even good sites like Capterra (Gartner) stuff the two types of license managers into the same category that they call “License Management Software”.
On Capterra’s Buyer’s Guide license management software is described as:
“License management software helps organizations monitor and control software use and ensure software license compliance within their own business.”
You may now begin to see where the confusion comes from. The above description only applies to SAM solutions. If you’re not a large enterprise, most likely this is not what you’re looking for.
However, if you’re looking for a license management solution for software publishers - to manage the licenses you’ve licensed out - read on.
Software License Management Solution (for software publishers)
If you’re not looking for a SAM solution, then it is likely that you are a software publisher or an independent software vendor and you are looking for a solution to help you manage the software licenses you sell to your customers.
In this case, “license management” means to issue, deliver, monitor and revoke licenses for your customers.
These licenses lay out the business terms on which your customer is able to access and use the various features and functions of the software you have written.
In other words, the licenses you sell to your customers are the lifeline of your business - and you must have the ability to enforce the license terms.
This is exactly what a proper software license management system allows you to do.
What does it do?
A License Management Solution allows you to issue, deliver, manage, and revoke licenses to your software applications in real-time.
These licenses may be commercial or free, but they represent the business rules on which you have decided to allow your customers to access your software applications.
A proper license management solution also allows you to know exactly who your customers are, what licenses they hold and what features they are entitled to access.
How is it deployed?
A License Management Solution can either be deployed on premise or in the cloud (learn more about cloud-based software license management here).
Different vendors offer either one of the other options, although a couple of vendors are able to support both offline and online usage with the same solution.
How is it charged for?
Different vendors offer different charging models. Some charge as a percentage of your company's revenue. Others charge a percentage of the license revenue your company earns (but not other revenue streams you may have).
Still others charge a flat fee, either as one-off or on a recurring basis (typically either monthly or annually).
What are the core features to expect?
Core features in a Software License Management solution include the ability to:
- Issue new licenses
- Edit licenses that have been issued
- Revoke licenses
- Issue licenses to specific features of a product or product combinations
- Support a variety of license models (subscription, floating, term, perpetual, etc.)
- Reconcile issued licenses with CRM or ERP systems
- Integrate with an e-commerce engine or payment provider
- Support channel sales
- Support your customers to be able to manage their own users
- Connect to the License Manager using REST APIs
All of the features above are supported by 10Duke Enterprise - our best-in-class software license management solution that allows you to maximise revenue from your software product.
10Duke Enterprise is a cloud-based software license management solution that allows independent software vendors to configure, issue, and manage the licenses they sell to their customers.
With 10Duke Enterprise, you can control access to your software applications, but also to plug-ins, embedded software, virtual machines, devices and APIs.
It also comes with admin tools that you can use to configure and manage the licenses you sell. Learn more on our product overview section or check out the video at the bottom of this article.
Benefits of Software License Management
Reduce Revenue Leakage
Revenue leakage refers to potential revenue a company fails to capitalise on. It is unintentional and it can also go unnoticed.
With efficient software license management tools, this issue can be minimized, as you will be able to monitor and manage how many licenses are distributed and who have access to them.
Basically a modern SLM system allows you to control access more efficiently so that only those who have paid for the license can use the product.
This benefit of SLM applies to software publishers that get their revenue from licensing their product out to customers.
Software License Compliance
The most ideal situation is that everyone within an organisation has access to the software they need, however being under-licensed can leave an organisation open to a potential lawsuit.
A solution to this is Software Asset Management. SAM focuses on balancing the number of software licenses purchased with the number of actual licenses consumed or used.
This benefit applies to businesses that have acquired a large number of licenses from various software publishers.
However, it should be noted that if all software publishers used a license management solution like 10Duke Enterprise, there would be no need for the entire Software Asset Management industry.
This is because by using 10Duke Enterprise, a software publisher can license its product out so tightly that the software publisher always knows who has access to their product, thereby eliminating the possibility of their customer being non-compliant with their licenses.
If you are a software developer, would you rather eliminate the possibility of your customers using your product without a valid license, or waste time, money and effort suing your customer?
Software License Management Best Practices
In the past the use of license dongles and license keys were the preferred options when it came to managing software licenses, controlling access and product activation.
However, there were always clear flaws with these solutions. Relying on a physical device like a license dongle that needs to be shipped to the customer is not great due to the cost of shipping and how long the customer has to wait.
Dongles, being physical devices, can also break or get lost, and then you, as the software publisher, can only hope that the customer doesn’t use the old dongle if it is miraculously “rediscovered”...
Similarly, license keys come with obvious downsides, mainly due to how much friction they force into the licensing process for both the customer and the vendor, which is the main reason why traditional license management methods don’t scale.
Cloud-based licensing allows you to scale
Fortunately 10Duke has developed a cloud-based solution, which allows you to not deal with the costs, time and effort that come with traditional license management solutions. Instead you can automate your licensing process by taking it to the cloud.
By reducing the manual steps typically needed in licensing for both you and your customer (as described above), you can unlock revenue growth and internal resources.
Seamless integration with CRM and e-commerce
You should be able to offer a simple, quick and seamless customer experience from lead to cash, with customers gaining instant access to your product.
This will probably require the use of CRM and e-commerce systems, which will have to work seamlessly with your licensing engine, to allow customers an easy way to pay and to ensure you receive payments.
Your business systems will also need to be in sync, meaning your license management system must integrate seamlessly with other systems. 10Duke Enterprise allows you to do this as well, for example licenses can be granted from Salesforce.
Single source of truth
Centralising your software license management is a must, if you’re looking to scale up your software business. You might want to read our blog on increasing revenue with centralised license management.
Your business systems must work in tandem so that you’ll only ever have one single source of truth. Otherwise you’ll end up spending too much time solving problems and scaling becomes nearly impossible.
And if you offer multiple software applications on different tiers, and perhaps your product suite is mixed so that you offer both desktop and web-based applications, this will introduce so much complexity that managing customer licenses can easily become a very resource-heavy process.
10Duke offers you a single point of control for license, entitlement, customer and end-user administration. To accomplish all that, we have two admin tools available.
SysAdmin is a web-based admin tool that you can use to configure licensing for your product, apply license models, manage users and user groups, connect applications, and grant and manage licenses and entitlements in real-time. It is basically the control panel for 10Duke Enterprise.
If you have large customers who might prefer to manage their licenses by themselves, 10Duke OrgAdmin enables you to give your customers the ability to self-manage their purchased licenses, onboard users and control access to licenses, saving you tons of admin time.
Using these tools is another way for you to scale up your software business.
Knowing your customers is key
There are other vendors that provide SLM solutions somewhat similar to ours, but the clear advantage that comes with 10Duke Enterprise is that there is a Customer Identity solution built into the product.
A Customer Identity solution enables you to always know exactly who your customers are (and what they have licensed from you). In this unique method called Identity-based licensing, access control is tied into the authenticated identity of the user.
In addition, modern software license management tools should also give you a view into the license usage in real-time, and to record product usage data so that it can be queried.
This gives you a clear view into your customer. Once you know who they are and how they use your product, you can use those insights to drive product innovation and extra revenue.
By now, it should be pretty clear that license management can be turned into a competitive advantage, as long as you have the best systems in place.
Conclusion
Software License Management is a term used to describe two different use cases. Some people use it to refer to Software Asset Management (SAM) solutions that are used to manage licenses that you, as a large company, have purchased from a variety of software vendors. This helps you to comply with license terms and optimise your license usage.
In contrast, the term software license management is also used to refer to a solution used by software publishers to configure and control the licenses they provide and sell to their customers. Proper SLM solutions like 10Duke Enterprise help software publishers to better monetize the licenses they sell.
We hope this article will help you determine what type of solution you’re looking for!
We also hope that if you’re looking to improve how you license your software product you’ll get in touch and schedule a product demo, where we’ll talk you through everything in more detail and you can ask any questions you may have.
Are you a software developer looking to sell more? Learn more from our guides:
Should You Build Or Buy a Licensing System?
How to Monetize Software Products?
Guide to Software Licensing – Basics Explained
Software Licensing Solutions – Buyer’s Guide
Software Licensing Models – Ultimate Guide
What Is Software License Management?
Customer Identity and Access Management – What should a good CIAM solution provide?
