SaaS license management: what is a SaaS license and why you need to manage SaaS licenses


Michael Fornander


September 15, 2023

We are all seeing the vast expansion and adoption of SaaS on organizational level. Every day organizations are signing up new applications, new subscriptions and new licenses, which leaves them with a lot of SaaS to manage. It is estimated that the average-sized organization has about 600 SaaS licenses to manage. But what exactly is meant by a ‘SaaS license’ and why it is important to manage licenses?

How SaaS licenses work

Unlike licenses for on-premise software, where the license is purchased for a one-time payment and the company owns the software, SaaS licenses are subscription-based. This means that you can use the cloud software while your subscription is active and duly paid for. In other words, the license goes hand in hand with the subscription.

A solid benefit of SaaS licenses is the ability to get free updates and support throughout your entire subscription period. You don’t need to worry about server infrastructure, server and software maintenance, security of data, etc. Thus, SaaS are easier to adopt and manage, compared to on-premise software. Another benefit is the ease of onboarding a SaaS, usually for an affordable monthly or annual fee.

The disadvantages of SaaS, while not being that easy to spot, can still pose a lot of challenges for the organizations. The ease of adopting a SaaS means that IT is no more centrally managing the software. Hence, employees or teams can purchase and own the SaaS they need, without even notifying IT. In fact, SaaS purchased without IT being aware are estimated at approximately one third of the entire SaaS inventory in organizations. This may cause functionality overlap and money wasted on duplicate SaaS subscriptions. If your company had previously used an on-premise software management strategy, it may have difficulties switching to a SaaS management strategy.

SaaS license management is a must for any organization

Assuming you are an average organization using hundreds of SaaS tools everyday, what could be the potential threats should you not have a solid SaaS license management strategy?

Shadow IT and wasted money

Due to the fact that SaaS is very easy to onboard and upgrade, and organizations are willing to expense SaaS subscriptions paid by employees, a big part of the SaaS inventory is signed up and owned by employees. IT is either completely unaware of such SaaS, or they are aware but have no ownership on the cloud software. All this causes shadow IT, lack of visibility on what SaaS is already owned by the company and as a result - wasted money, on SaaS that the company is already paying for.

Paying for redundant applications

With large organizations that lack a centralized catalog of company SaaS applications, it could be frequently the case that new subscriptions are signed up for software that duplicates with an app the company is already paying for. Among the top redundant apps are video conferencing software, online training software, collaboration and project management tools.

Compliance, data security and data breach threats

When software gets purchased centrally by IT, it usually goes through a careful compliance and security review. This is not the case with individual software subscriptions, however, where terms are briskly scrolled and accepted by the employee or team lead and IT is not getting a chance to review the software prior to purchase. This lack of vetting exposes the company to numerous data breach and security threats, as well as threats for non-compliance with regulations such as the GDPR for example.

Money wasted for unused licenses

With employees leaving the company, new SaaS being adopted and others abandoned, and tens of licenses used by each one of hundreds of employees, it is quite easy to keep paying for licenses that are actually not being used. And the fact that subscriptions are billed automatically makes things even worse. 

By establishing efficient and proactive strategies for SaaS subscription management, that ensure any SaaS purchases are made following approved processes and channels, you will be unlikely to face any of the above situations.

How are enterprise-level licenses different than end-user licenses?

If you have downloaded a SaaS app, which you have certainly done at least for individual needs, you should have come across a lengthy end user license agreement (EULA) screen. These are actually the terms you need to agree to, before you can proceed with using the app. Few of us bother to read this text. But even if you do, you are not really in a position to ask for updates to this agreement - you either accept the EULA terms and continue with downloading the app and instantly using it, or do not accept, and may not proceed with the download. 

When it comes to an enterprise-level agreement, however, the company is usually buying licenses ‘in bulk’. The money it spends on a package of licenses is much more compared to the price of the individual license, hence the organization has some power to request changes to the enterprise-level agreement - related to security, data privacy, support level, cost per seat and other. An added benefit is that, rather than dealing with the management of numerous individual licenses, the organization can control, from a single point, all licenses acquired under the enterprise-level agreement.

How can Viio help with SaaS license management?

Instead of investing a lot of manual effort into the management of your SaaS stack, you can use Viio automated license management platform. With Viio, you can manage the entire stack of SaaS licenses your organization is paying for, get full details about owners, usage, renewal terms and much more. Find out more on how Viio can automate your SaaS license management - in a personalized demo.

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Michael Fornander

Chief Executive Officer

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