How Software License Creep Can Affect The Bottom Line

Nearly every company utilizes software these days. However, many companies aren’t as versed in the ins and outs of license provisioning as they should be. Without understanding how licensing works, businesses set themselves up for pitfalls in their software utilization that can cost them thousands of dollars per month. 

If you own a business or hold a prominent role in one, you need to understand software license creep and how it affects your bottom line so you can take back the reins and stop this unnecessary misuse of the company’s finances.

What Is Software License Creep?

When you purchase any software, you agree to follow the terms the developer has established for installing, distributing, and making modifications to the software. This ensures the developer receives fair compensation for the software they created and is a way to protect intellectual property.

When you purchase software licenses for a business, things can quickly become complicated. You typically pay for a certain number of licenses, which means you can only install the software on the specified number of devices or create the number of logins you paid for. If you don’t carefully monitor who on your staff is using the software, you can run into a situation where you have more people using the software than you paid for or vice versa.

Software license creep occurs when the number of licenses you own for a specific software program doesn’t align with the number of employees using it. Although this may seem like something any business with an IT department would notice and prevent, it frequently happens without your company’s IT staff noticing. What’s worse, the results of software creep can cost businesses a lot of money.

How License Creep Happens

Software license creep is a fairly common issue in the business world. It happens for various reasons, often without the company even realizing it. 

Sometimes, license creep occurs due to rapid business expansion. A company may experience a business boom and decide to hire several employees rapidly. The business may account for all the new computers and other necessary tangible items when this happens. Still, the company may not think about purchasing additional user licenses for any software these employees will use. Or, even if they think about it, they may decide to have employees share logins to cut costs. Either way, this causes license creep since the number of licenses does not align with the number of users working in the program.

As people leave the company, license creep can happen. An employee may have been around for several years and could have been the only person using a specific program. If no one takes over that license, you are paying for software that isn’t getting used.

If your company operates with each employee is responsible for installing their software onto a device, you may experience license creep due to unmonitored self-installs. As people install and remove software, you should figure out how many people are using a specific program to know whether or not you have the correct number of license provisions. This can lead to license creep in either direction, with either more people using the program than the business paid for or fewer people using it. Either way, it can cost the company money.

How License Creep Impacts the Bottom Line

It may seem like license creep isn’t a huge deal. However, it costs a business money. Over time, these costs can add up. It can also impact the bottom line in unexpected ways.

If a business is paying for more licenses than it is using, the company is essentially throwing away money. Many software developers charge monthly or annual fees to maintain your license. Depending on the number of excess licenses the company is paying for or the number of programs the business has extra licenses for, this can cost the company thousands of dollars per month. 

Inversely, a company with more users than licenses can also cost the business money. Many developers have built-in authentication measures that check the number of people using a program against the number of permits the company has paid for. When it finds a business employing more than it has paid, it may flag the user and require payment. Sometimes companies will receive invoices for these excess users or even a letter stating they need to pay a fine. In some cases, developers may revoke access to the program altogether. All of these scenarios cost the company money.

Finally, if a company isn’t keeping up with who has specific programs installed on their devices, there’s a chance that people who no longer work for the company still have access to programs. Maintaining these licenses also costs the company money, and it can take months to spot these issues, let alone correct them. It can eat away at staffing hours in addition to the license fees themselves, and this impacts a business’s expenses in a big way.

How Can Businesses Avoid Software License Creep? 

Software license creep is a complex issue. Therefore, the solution is also multi-faceted. However, it all starts with a proactive approach.

If you are concerned about license creep and how it impacts your company’s bottom line, then you need to develop clear protocols and documentation for onboarding and offboarding. This will allow your IT department to keep a running record of all your software licenses and which employees use which programs. You can also keep track of renewals, expirations, and when updates are needed to account for each license every step of the way.

You also need to understand the licensing policies for every piece of software your company uses. This includes web-based programs and software that requires installation directly on devices. Knowing what is and is not allowed with user access and how to add or remove users can help you save money in the long run. 

If this all sounds like a lot to keep up with, you’re not wrong — it certainly is. However, there are companies out there that make software management and user provisioning a breeze. 

For example, Tools4ever.com is dedicated to helping small to medium-sized businesses with identity access management. By using Tools4Ever, companies can easily manage user provisioning and licensing. This eliminates the risk of license creep through automated provisioning, access governance, and other vital features. 

Don’t Let License Creep Eat Away at Your Profits

The goal of any business is to minimize overhead and maximize profits. Unfortunately, issues like license creep can quickly eat away at a company’s earnings if they don’t get it under control in a timely fashion. 

Once companies understand the threat license creep poses and how to control it, they can stop money from spilling out and improve the bottom line.