SaaS Management
Erin Geiger, Director of Content at Lumos

What Is a SaaS License

Software as a service (SaaS) applications offer a lot of exciting features for businesses. Learn about the pieces of SaaS agreements and how to ensure that your team gets the most value and functionality.

Captain America has his shield, Thor has his mighty hammer, and Iron Man has a suit of high-tech armor to get the job done when the world needs saving. But when it comes to the business world, too many teams are left ill-equipped to deal with one of the greatest, cloud-enabled villains: the ever-growing, ever-confusing, and ever-money-sucking tech stack. The worst part? As a multitude of new SaaS offerings hit the market, tech stacks grow in size and cost, wreaking havoc on your organization’s budget and efficiency. Without the proper tools, you’ll feel like you’re up against Thanos with only a rubber band to aid you, and we all know how that ends.

There’s a better way to approach SaaS management. In this blog, we show how to find your secret weapon to combat an overwhelming tech stack and optimize your SaaS license management. What’s in it for your organization?

  • Less stress from a confusing configuration of applications
  • Fewer hidden costs from forgotten subscriptions
  • Reduced security risks from unmonitored system access points

Let’s dive in! 

What Is a License in SaaS?

Businesses can use software as a service (SaaS) applications by purchasing a license. SaaS licensing models typically operate on a subscription basis. In this model, users pay a monthly or yearly fee in exchange for access to the software. Purchasing software licenses is beneficial for businesses who want to spread out their costs rather than making a single, large investment in a program. SaaS models also tend to come with ongoing support, so if something goes wrong, license holders can get help as part of their plan.

A classic SaaS license example in the business world is customer relationship management (CRM) software. Companies can use Microsoft Excel, Planhat, or one of the many, many other options on the market to track and leverage customer data without needing to develop their own system.   

Within the broader category of SaaS, there are different types of licenses. What are the 5 types of software licenses? They include:

  • Public Domain License: Users can access the software freely for personal or professional use.
  • GNU Lesser General Public License: This license is similar to public domain, except users who modify open-source components don’t have to share their code.
  • Permissive License: This license has more restrictions than public domain on how users can modify and distribute open-source programs.
  • Copyleft License: These licenses are similar to public domain licenses, except users who modify open-source components are required to share their code. 
  • Proprietary License: These are the most common types of licenses in B2B SaaS deals. With a proprietary license, the publisher retains the rights for modification and distribution. End-users are only permitted to use the software and not to make any changes or share the programming.

Five types of licensing models include:

  • Subscription-Based Licensing: This structure is one of the most common models for SaaS licenses. Customers pay a recurring monthly or annual fee for access to the software.
  • Freemium Licensing: Users can access the basic features of the software at no cost, but must pay to use additional premium features.
  • Pay-Per-Feature Licensing: This model lets users purchase specific features or modules a la carte rather than providing a base set of features. 
  • User-Based Licensing: Businesses must purchase individual licenses for each user that will access the software. 
  • Concurrent/Floating User Licensing: Rather than paying for each individual user, businesses will pay for a set number of users that can access the software at one time.

The SaaS licenses you have impact your team’s productivity, satisfaction, and profitability. By optimizing your tech stack, you can cause positive change throughout the rest of your organization.

What Is a SaaS License Agreement?

A SaaS license agreement is the contract between the publisher and the end-user that defines obligations for both parties. These documents go into more detail than the license category, and contains information such as:

  • Delivery Model
  • Ownership
  • Payment Structure
  • Referral Programs
  • Terms & Conditions

In other words, the SaaS license agreement contains the fine print. When you have a lot of applications to keep track of (the average business has 130, according to Statista), it’s easy to miss the details. That’s where Lumos can help—more on that in a moment.

What Is Meant by Software License Management?

SaaS license management is the process of evaluating your SaaS license agreements and optimizing your tech stack. The benefits of proactive software license management include:

  • Reducing subscription costs
  • Improving security
  • Simplifying processes for your team

The key question that this process seeks to answer is, “Is this SaaS platform worth renewing?” To find the answer, you need data. Lumos allows you to easily visualize costs, usage stats, and access points to determine which applications are worthwhile, and which aren’t.

Lumos: Your Key To a Simplified Tech Stack

The good fight against legacy IT systems starts with organizing your SaaS licenses. The best tool for this battle is Lumos because it allows you to see all of your SaaS licenses in one place. You also get insights into key data, such as how much each of your subscriptions cost and how much your team actually uses each application. With this information, you can evaluate which SaaS licenses can stay, and which need to go. When you cut out unneeded applications, you don’t just save money, you reduce the amount of places sensitive information exists, which strengthens your cybersecurity.

Ready to simplify your tech stack and cut your SaaS spend? Getting started is as easy as booking a demo.