Could you list every software licence your company pays for right now, without opening a spreadsheet? If not, you likely have more licences than people managing them.
As software stacks grow, it's easy to lose track of unused licences, upcoming renewals, and changing vendor terms. Without proper oversight, businesses end up overspending, increasing compliance risks, and creating unnecessary complexity.
Software Licence Management (SLM) is a core part of software asset management, helping organisations track, manage, and optimise software licences throughout their lifecycle.
→ 💻 Read our article on different types of software licences
What Is Software Licence Management?
Software licence management means keeping track of, managing, and making the best use of the software licences your company owns.
This includes knowing what licences you have, who uses them, making sure your company follows vendor rules, and only paying for what you really need. There are several types of licences, and each type needs its own way of tracking.
Perpetual licences are bought once and can be used forever, though you might pay extra for maintenance or support. Subscription licences are most common for SaaS. You pay for them monthly or yearly, and they end if you don’t renew.
Finally, per-user licences go to one person, while per-device licences are linked to a specific computer, no matter who uses it. Concurrent licences, however, let a set number of people use the software at once, sharing a pool of available seats.
Most companies use a mix of these licence types. As your software list grows, tracking them by hand gets harder.
Main Types of Software Licences
Software licences generally fall into three main categories, proprietary software licences, open-source software licences, freeware and shareware licences.
Each type has its own rules for cost, how you can use it, whether you can see the source code, and how you can share it.
1. Proprietary Software Licences
Proprietary licences let you use software based on the vendor’s rules, but you can’t see the source code. Access might be limited by user, device, or other factors.
Microsoft 365, Adobe Creative Cloud, and Salesforce are common examples.
Before you agree to anything, check how many users are allowed, any extra licence costs, and the renewal terms so you don’t get surprised by extra charges.
2. Open-Source Software Licences
Open-source licences let you see, use, change, and share the source code, but only under certain rules. Linux, Apache HTTP Server, and PostgreSQL are good examples.
While open-source software can reduce licensing costs, some licences require attribution, disclosure of modifications, or redistribution under the same terms. Track the licences your teams use and review their requirements carefully.
3. Freeware and Shareware Licences
Freeware is usually free to use forever. Shareware lets you try it for a while or with limited features before you have to pay.
Since it’s easy to start using these tools without IT’s approval, they can lead to untracked software and shadow IT. Set clear rules and make sure important tools are managed properly.
Why Licence Management Matters For SaaS-heavy Companies
Most companies now use dozens or even hundreds of SaaS tools, often bought by different teams without going through a central process.
Without a tracking system, it’s hard to know how many licences your company pays for, which ones are being used, or when they renew.
This lack of visibility leads to wasted money and compliance risks.
What Are The Risks Of Poor Licence Management
Poor licence management doesn’t just waste money. It can also cause compliance and security problems, often showing up during audits or surprise renewal deadlines.
- Overspending on unused or duplicate licences
It’s common to find licences still assigned to people who have left, tools bought by different teams for the same job, or subscriptions no one remembers. These all cost money and usually go unnoticed unless you audit your software regularly.
- Compliance and audit exposure
Vendors check your software use against your contract. If you use too many seats or the wrong licence type, you might have to pay extra or face penalties. Without good records, even a simple audit can become a stressful and expensive process.
- Security risks from shadow IT
When teams buy tools without IT knowing, called shadow IT, those tools don’t get security checks or follow data rules. This can lead to hidden risks, like weak passwords or unpatched software, that IT can’t fix.
If you want more information about this risk, read our article about shadow IT.
8 Tips To Manage Software Licences Efficiently
Here are some best practices for managing software licences in your company. They can help you save money, stay compliant, and keep your budget on track.
1. Monitor and automate licence renewals
Tracking licences by hand often leads to missed renewals. Use tools to set up automatic reminders for renewal dates, giving you time to renegotiate contracts or combine vendors if needed.
Another point to keep in mind: disconnected apps, and shadow IT, can easily slip through the cracks, leading to unexpected expirations, last-minute purchases, or wasted spend.
We recommend using a SaaS management platform to keep track of these apps.
2. Eliminate unused licences
Regularly checking how your software is used helps you find and remove extra licences. Combining tools that do the same thing can save money and make licence management easier.
It’s important to know the difference between licences that are assigned and those that are actually used. If you only track assignments, you might miss wasted spending. Watching real usage helps you make better decisions about your licences.
Platforms like Najar make this easier by automatically identifying underused licences across your entire stack, and letting you reclaim them with just a few clicks.
3. Centralise software licence tracking
Make a single list of all your software licences, covering every department, role, and employee type. It’s best if this list updates automatically. You can’t improve what you can’t see.
Consolidation isn't just about cutting cost. When three teams each pay for a different tool that does the same job, you're also managing three vendor relationships, three renewal dates, and three security reviews for one function.
4. Establish clear procurement policies
Define a clear, consistent process for requesting, approving, and purchasing software. This prevents duplicate or unnecessary tools, reduces shadow buying, and ensures every purchase meets company requirements. Centralised procurement helps you:
- Avoid SaaS sprawl: Reduce overlap by steering teams toward approved tools and licences.
- Control costs: Consolidate spend, negotiate better pricing, and keep purchases within budget.
- Standardise compliance: Apply the same security, legal, and licensing checks to every acquisition.
5. Integrate licence management with IT service management
Software licence management works best when it’s part of your IT service management (ITSM) process.
SLM handles buying, assigning, and tracking licences, while ITSM gives you the workflows and ticketing to manage requests, reassign licences, and stay compliant. This helps you in two ways:
- Automatic licence reclamation workflows: Once a licence is available, you can create ITSM tickets to reassign them to a new user or device via automated approval workflows
- Device-led licence tracking: You can create a centralised repository that maps each physical device to the software installed on it, giving full visibility into software allocation optimisation opportunities
6. Tie licence access to employee lifecycle events
Most wasted licences trace back to the same cause: access that was never revoked. When someone leaves, changes roles, or moves teams, their software access should update automatically rather than waiting for someone to notice.
Connect your licence management to HR events directly. New hires get provisioned based on role, departures trigger automatic revocation, and internal moves prompt a review of what access still makes sense. This closes the gap between assigned and actually-needed licences that manual audits catch too late.
7. Use modern software licence management tools
Spreadsheets can’t keep up with thousands of users, many apps, and changing cloud setups. Modern software licence management tools, like Najar, offer:
- Real-time licence utilization tracking: See which licences are actively used versus assigned, so you can reclaim idle ones.
- Automated renewals and alerts: Get notifications before contracts expire and identify opportunities to consolidate vendors.
- Role and access-based management: Map software access to user roles to prevent over-provisioning and reduce security risk.
With these tools, you can see everything, cut down on wasted spending, stay compliant, and make managing software licences easier, even in complex setups.
8. Align licence management with business needs
As your company grows, your software needs will change too. By checking your licences and how apps are used, you can spot unused tools, reassign or remove licences, and plan for what you’ll need next.
This way, every dollar spent on software supports your business goals, avoids waste, and gives leaders confidence that your software setup can grow without extra costs.
Use SaaS Tools To Manage Your Software Licences
A good licence management platform gives you a real-time list of all your licences, tracks usage automatically from actual tool activity, sends renewal alerts based on contract dates, and offers reports that both finance and IT can use without extra work.
Licences you don’t track can waste your budget, either through unused seats or renewals you overpay for. As you add more software, the gap between what you pay for and what you use gets bigger, and compliance risks grow too.
You can fix this by always knowing what licences you have, how they’re used, and when they renew.
Najar gives IT, procurement, and finance teams one place to manage licences, reclaim unused seats, stay ready for audits, and have the data needed for renewals. Find out what you’re really paying for and start saving money.
Manual Vs Automated Licence Management
Tracking licences by hand works for a few tools, but it doesn’t scale. Once you have dozens of SaaS subscriptions, updating spreadsheets takes more time than using a dedicated platform.
Manual (spreadsheets, email) | Automated (licence management platform) | |
Visibility | Fragmented, owner-dependent | Centralised, real-time |
Usage tracking | Rare, retrospective | Continuous |
Renewal alerts | Manual calendar reminders | Automated, in advance |
Compliance risk | High, hard to audit | Lower, audit-ready records |
Time investment | High, ongoing manual upkeep | Lower after setup |
→ 💻 If you want more information about cutting SaaS spend, read our guide on SaaS cost optimisation.
Najar Keeps Your Licences Under Control
Najar is a spend management platform designed for growing companies and enterprises dealing with lots of software and scattered purchases. It gives you full control and the benefits of an in-house procurement team, without needing to hire more people.
- Licence and contract visibility: You can manage the whole procurement process in one place, from purchase requests to contract management and renewals. Even small purchases that usually get missed are now tracked.
- Expert vendor negotiation: Najar’s procurement team finds vendors and negotiates pricing, terms, usage rights, and support for you.
- Cross-team alignment: Collaborative approval rooms help finance, IT, and legal teams stay in sync on every purchase, even small ones that might otherwise be missed.
- Regional expertise: Najar specializes in Europe, offering detailed vendor data and strong local support for European customers.
- Tail spend control: Unmanaged small purchases add up over time, bringing more tools, renewals, and blind spots. Najar gives you full visibility to spot shadow buying before it becomes an issue.
On average, Najar customers save up to 36% on software costs, with some saving more than 45%. They also see a 7x return on investment and save over 300 hours of manual procurement work each year.
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If you want more information about managing your full software stack, read our article about SaaS portfolio management software.
Take Control Of Your Software Licences
Software licence management is no longer a spreadsheet problem when you can clearly see what you own, use, and pay for.
Najar brings all this information into one platform, so you don’t miss renewals or pay for the same thing twice.
Find out how Najar can help you manage your software licences.
