Software Asset Management Guide: SAM Benefits & Best Practices

Software Asset Management (SAM) is essential for organizations looking to optimize software investments. As businesses grow, managing the life cycle of software—from procurement to retirement—becomes increasingly complex. 

A solid SAM strategy ensures compliance, reduces costs, improves security, and enhances operational efficiency. In this guide, we explore the benefits of SAM, best practices, and actionable insights to help your organization maximize its software resources.

What Is Software Asset Management (SAM)?

Software Asset Management (SAM) refers to the processes and tools used to manage, control, and protect on-premises software assets and SaaS throughout their life cycle. SAM ensures efficient use of software licenses, compliance with licensing agreements, and minimizes unnecessary costs. By managing software effectively, organizations can avoid overpaying for unused licenses, reduce security risks, and streamline IT operations.

What Is an Example of a Software Asset?

In SAM, software assets include both hardware and software critical to business operations.

Hardware
Hardware, such as servers, computers, and network equipment, hosts and supports software environments. SAM tracks hardware to ensure compatibility and optimize performance.

Software (On-Premises, SaaS, Cloud, and Subscription-Based)
Software assets include on-premises and subscription-based solutions like SaaS and cloud-based tools. On-premises software runs on company servers, while SaaS/cloud software is subscription-based and hosted in the Cloud. SAM is crucial for tracking renewals, usage, and compliance in these environments.

Software Asset Management vs Software License Management (SLM)

SAM and software license management (SLM) are related but distinct. SAM includes elements of SLM, such as license positioning and usage analysis to ensure compliance and optimize usage. However, SAM may not handle specific tasks like onboarding, offboarding, or license reclamation, which are typically managed by IT teams. While SAM focuses on the broader scope of software management, SLM deals specifically with licensing compliance.

The Relationship Between SAM and IT Asset Management (ITAM)

Software Asset Management is a subset of IT asset management (ITAM), which covers all technology-related assets, including hardware, software, and associated data. SAM focuses exclusively on software assets and licenses, ensuring efficient use and compliance with licensing agreements within the broader ITAM framework.

The Benefits and Importance of Software Asset Management

SAM provides key advantages that help organizations optimize software investments and improve operational efficiency.

Cost Savings

SAM prevents overages and unexpected fees by optimizing license usage, eliminating waste, and rightsizing licenses during renewals with Procurement teams. It ensures organizations only pay for what they need. 

Compliance and Governance

SAM ensures companies “use what they pay for and pay for what they use,” helping maintain compliance with licensing agreements and governance policies. It reduces shadow IT risks and avoids non-compliance penalties.

Risk Management and Mitigation

By controlling license usage and monitoring software, SAM minimizes financial risks, reduces security vulnerabilities, and helps organizations avoid fines or security breaches due to unlicensed or outdated software.

Improved Operational Efficiency

SAM automates license management, freeing IT resources for strategic work. By maximizing software value, SAM boosts productivity and employee effectiveness.

Vendor Relationship Management

SAM provides detailed insights into software usage and vendor performance, helping organizations evaluate vendor relationships and negotiate better contracts during renewals. It helps control costs and prevent overpayment by tracking license usage and rightsizing contracts. 

As SaaS models grow, SAM centralizes vendor management, giving IT and Procurement teams more control. By offering transparent data on software performance, SAM tools help foster strong vendor partnerships and ensure contract terms are met through continuous monitoring.

More Efficient Decision Making

SAM enables data-driven decision making by providing real-time insights into software usage and vendor reliability. This helps organizations avoid overpaying for underused software and renewals with underperforming vendors. With SAM, businesses can optimize software portfolios and align decisions with strategic goals, ultimately reducing costs and boosting efficiency.

Monitoring & Usage Tracking

SAM tracks software usage, helping organizations optimize underutilized tools and make informed renewal decisions to prevent waste.

Improved Security

By monitoring software installations, SAM reduces the risk of vulnerabilities and ensures consistent updates, enhancing security.

Audit Readiness

SAM simplifies audit preparation by tracking software licenses and usage, ensuring quick compliance documentation and reducing the risk of fines.

Transparency & Data Visibility

SAM provides visibility across the organization, helping executives make informed decisions on software usage and spending through real-time data.

Strategic Planning & Lifecycle Management

SAM supports long-term planning by managing software lifecycles, ensuring compatibility, and streamlining upgrades or replacements for greater operational agility.

Software Asset Management Tools

SAM tools manage the lifecycle of software assets, from inventory to license management, compliance, and vendor relations. Saas Management Platforms (SMPs) take it further with advanced automation and deeper integrations, enabling comprehensive subscription-based software management. Let’s examine key components of SAM tools:

Software Inventory Management

Software inventory management is important for managing all your software assets and their associated spending and security risks. While traditional SAM tools provide visibility into on-premises software inventories, SMPs focus on SaaS applications. A key differentiator is that SMPs automate discovery and tracking to enable inventory management for all of your applications.

Identify Trends with Custom Dashboards and Reports

A good SAM tool should offer tailored reports for audits or executive use. Using dashboards and reports make it easier to track spending and compliance, identify trends, and prepare for audits. 

Because an SMP tracks all of your SaaS, it provides more comprehensive real-time insights into security risks and redundancies. Another key aspect is customization. By creating tailored dashboards for each stakeholder, the right people get the right data at the right time. This visibility via a single source of truth for SaaS applications supports long-term, data-driven decisions across the organization.

Risk Management

Visibility into potential financial and security risks is imperative to mitigating them. As your system of record, SAM tools keep track of data you need to evaluate an application’s risk and impact on your business. 

For instance, a SaaS Management Platform continuously monitors spending, usage, and security scores so you can flag risks in real time. It enables the SAM team to be proactive vs reactive.

Security and Compliance

Both traditional SAM tools and SMPs give you oversight into security and compliance risks. With the former, this is a manual process. Meanwhile, SMPs generate automated insights on your whole portfolio to quickly identify noncompliance or vulnerabilities. 

For instance, it identifies risks such as licenses still held by former employees or applications that don’t comply with certifications like SOC II Type 2.

Software Deployment and Configuration

SAM tools support software deployment by tracking software assets, ensuring compliance, maximizing software value, reducing IT costs, and managing the software lifecycle. On the on-premises side, SAM tools support this for your core/SAM-owned titles. 

For SaaS, an SMP supports software deployment for all subscription-based software. It also connects a software catalog to your ITSM system to streamline requests for licenses.

Access and Identity Management

SAM tools should manage user access across platforms to ensure proper provisioning. Meanwhile, SMPs integrate with leading identity management providers like Okta to provide deeper insights around access.

Automate IT Processes

Automating IT processes helps scale the efficiency of software asset management in your organization. Specifically, SAM tools automate license tracking and audits for your core/birthright applications. With an SMP, automation extends to alerting, reporting, license reclamation, provisioning, and renewals, improving IT operations more broadly.

License Management

License management is a critical SAM function to ensure license compliance and the efficient use of software assets. With 58% of SaaS licenses being unused on average within large enterprises, license management helps identify and eliminate wasted licenses.

With a SAM tool, that looks like monitoring and manually auditing usage. Meanwhile SMPs automate license management, such as insights on usage, streamlined license reclamations, provisioning, and renewal tracking. The benefit of the SMP is that you save time and reduce errors.

Integrations

Integrations give SAM pros visibility into the licensing and usage of each of their software assets. SAM tools integrations are typically limited to apps used company-wide or those with the highest spend for the organization. SMPs like Zylo offer deeper integrations for a broader range of apps for comprehensive usage tracking, breaking down license data to the SKU level.

Software Application Usage Tracking and Reporting

SAM tools help you monitor software usage and ensure only authorized access. Traditional SAM tools for on-prem offer basic usage tracking. On the other hand, SMPs elevate usage tracking with real-time data. This comes in handy as organizations optimize software portfolios and reduce costs, especially regarding renewals and upgrades.

License Provisioning and Deprovisioning

As a SAM pro, you want to ensure everyone has the license they need to do their jobs. But you also need to avoid over licensing. SAM tools help you understand what licenses are available to provision and identify candidates for deprovisioning. SMPs enhance this by automating license reclamation, helping organizations maximize license value.

Renewal Management

Without complete visibility, renewals can take SaaS managers unaware and cost the company more money than necessary. Planning for renewals means rightsizing licenses and access and negotiating rates based on actual usage. While traditional SAM tools provide limited renewal visibility, SMPs help operationalize your renewal process with centralized spend and contract data, and renewal calendar and alerts.

Software Procurement

When the business procures new software, the Procurement team becomes an important partner to software asset managers. While Procurement manages the contracts, SAM helps onboard the vendor into its system of record. Both traditional SAM tools and SMPs are both valuable systems of record to support your software procurement processes and provide vendor performance insights. The principal difference between the two is that SMPs track all new purchases, not just SAM-owned apps.

Software Contract Management

Contract management is essential for maintaining compliance and staying ahead of renewals. While SAM tools track contract terms and renewal dates for core/birthright software titles, SMPs track them for all applications. The added benefit with SMPs is the ability to get automated alerts to help optimize contracts based on real-time data.

Vendor Management

Vendor relationships are critical to driving business value of your software tools. When it comes to vendor management, traditional SAM tools focus on top vendors. Typically these are your top spend applications in use across the entire organization. On the other hand, SMPs track all software vendors and provide visibility into key data like usage and contracts to proactively manage that relationship.

How to Choose the Right SAM Software

Choosing the right SAM software is critical for optimizing software investments, ensuring compliance, and improving efficiency. We recommend asking these five questions when evaluating a SAM tool. Consider the following factors:

Flexibility to Manage Software Holistically

With on-premises software and SaaS in many environments today, one tool simply isn’t enough. You need both a traditional SAM tool and SMP to manage software holistically. SMPs offer more flexibility and integrate seamlessly with various SaaS applications.

At Salesforce, the SAM team uses multiple tools to manage on-prem and SaaS. Hear from former Senior Director, Global ITAM Jason Owens below on why this powers more holistic software management.

Scalability as Your Business Grows

As your organization grows, your SAM tool must scale effectively. SMPs excel in managing expanding SaaS portfolios, for hundreds and even thousands of software titles. Scalability is important to ensure continued performance toward business goals.

Integration Capabilities

Robust third-party integrations are vital for streamlining software management processes. Look for SAM tools that integrate with key systems like procurement, HR, and finance to streamline decision-making. The quality of integrations is more important than the quantity. SMPs like Zylo provide deeper usage integrations to get license, user, and SKU-level utilization data.

Automated Discovery

Automated discovery is essential for detecting and inventorying new software. Most traditional SAM tools are manual, and typically only find what SAM already manages. In contrast, discovery with SMPs is always on, continuously scanning for new SaaS applications. For an SMP like Zylo with financial discovery, it is most helpful in uncovering expensed software purchases – or shadow IT.

Access Controls for Security and Compliance

As a SAM pro, protecting the business is of utmost importance. Look for tools with robust access controls to ensure only authorized users can access sensitive software. Further, role-based controls prevent unauthorized use. SMPs make it easy to understand who has access, where there are gaps, and creating and enforcing policies to keep your environment secure.

Automated Renewal Tracking

As we covered before, SAM tools in the on-prem world are light on renewal features. While that may work for those software titles, you need more robust functionality for SaaS. An SMP provides a one-stop-shop for renewal tracking. Look for a tool with automation features to build a renewal calendar and send alerts to stakeholders. This not only helps you prevent waste but also streamlines your renewal management process.

Experience and Reputation

Choose vendors with a proven track record and positive reviews to ensure reliable, scalable solutions. Look at review sites like Gartner Peer Insights. 

Support and Training

Ensure the vendor provides strong customer support and training resources. Vendors offering dedicated support can ensure smooth implementation and troubleshooting.

Pricing Model

Traditional SAM tools typically require a heavy financial investment and extensive additional investment for service implementation. SMPs tend to be lower in cost and don’t require extensive time and money to set up. Understand the tool’s pricing model, whether based on licenses managed, company size, or features used. 

If you’re just starting up a software management program, we recommend starting with SaaS. In addition to a lower cost to get started, the time to value is quicker – in weeks or months versus quarters with a traditional SAM tool.

The Disadvantages of Spreadsheets & Why SAM Software Is Better

Using spreadsheets to manage software assets may seem simple, but it leads to inefficiencies, hidden costs, and compliance risks. SAM software automates and centralizes software management, offering greater accuracy, control, and visibility. Here’s why SAM software is superior to spreadsheets.

Licenses Are Easy to Overlook

Spreadsheets are prone to errors, making it easy to miss renewals or underused licenses. SAM software automates license tracking, alerting teams to upcoming renewals and unused licenses, helping avoid costly overages.

Data Quality Is Questionable

Spreadsheets rely on manual updates, increasing the risk of outdated information. SAM software provides real-time data accuracy by automatically updating license usage, compliance, and inventory, improving decision-making.

Cloud-Based Software Is Not Centralized

Spreadsheets make tracking cloud software difficult due to manual entry, and they only contain the apps you know about. SAM software centralizes on-premises and cloud data, reducing shadow IT and making management easier.

SAM Involves Multiple Stakeholders

Managing software involves IT, Procurement, and Finance teams. Often, organizations have multiple spreadsheets with conflicting information, creating silos of data. SAM software fosters collaboration by providing transparency to all stakeholders.

License Metrics Are Complex

Software license metrics can be complex, with different licensing models, user counts, and usage restrictions to consider. SAM software simplifies this complexity by automatically calculating license usage, compliance, and costs based on predefined metrics. This reduces the risk of non-compliance and ensures that your organization is using licenses efficiently.

Monitoring & Tracking Software Usage

Spreadsheets lack the functionality to track software usage accurately. SAM software continuously tracks software usage, allowing organizations to identify trends, optimize license usage, and eliminate waste. This level of insight is essential for making data-driven decisions about renewals, reallocations, and software upgrades.

How to Get Started with a Software Asset Management Program

Implementing a Software Asset Management (SAM) program can feel overwhelming, but following a structured process ensures success. Organizations can efficiently manage their software assets, optimize usage, and ensure compliance by aligning with best practices and leveraging the right tools. Below is a step-by-step guide to getting started with SAM.

Step 1: Assessment

The first step is assessing your current software environment. This includes identifying all software assets, both on-premises and cloud-based, and evaluating their usage, licensing, and compliance. Use this assessment to pinpoint areas of inefficiency or non-compliance that need attention. Ongoing discovery is critical for maintaining the benefits of visibility and sustaining SaaS cost savings. 

Step 2: Document and Standardize Your Procurement Processes

Standardizing procurement processes helps prevent shadow IT and ensures all software purchases go through the appropriate approval channels. Documenting this process enables your organization to maintain control over software acquisitions and avoid unnecessary spending.

Step 3: Auditing Software Licenses and Subscriptions

Conduct a thorough audit of your software licenses and subscriptions to ensure compliance with vendor agreements. This step helps identify licensing gaps or opportunities to reclaim unused licenses, reducing costs and improving efficiency.

Step 4: Clean Up and Organize Your License Inventory

Organize your software licenses into a centralized repository, making tracking and managing them easier. SAM software simplifies this process by automatically updating your inventory in real time, ensuring all licenses are accounted for.

Step 5: Determine Software Usage

Understanding how software is used across your organization is crucial for optimizing your assets. Use SAM software to track software usage patterns, identify underutilized applications, and make data-driven decisions about renewals or decommissions.

Step 6: Implementation

Once you have assessed and organized your software assets, it’s time to implement your SAM strategy. This includes configuring your SAM software, training your teams, and integrating the tool with other systems such as procurement and HR for streamlined management.

Step 7: Software Asset Tracking

Tracking your software assets in real time ensures that your organization stays compliant and efficient. SAM software allows you to continuously monitor software usage, renewals, and compliance status, making it easier to stay ahead of potential issues.

Step 8: Monitoring and Optimizing Software Usage

Once your SAM program is in place, it’s important to continuously monitor and optimize software usage. SAM software provides real-time reporting and insights into usage patterns, helping you identify opportunities for cost savings and improved efficiency.

Want to learn more about the steps to maturing your SAM program? Hear what Joe Ryder, experienced SAM pro and Senior Manager, Software Asset Management at McKesson, had to say on our SaaSMe Unfiltered podcast.

Software Asset Management Best Practices

Following best practices is essential to maximizing your SAM efforts. Here are the primary ways to stay on top of them.

Regular Audits

Regular audits are critical for ensuring your organization complies with software licensing agreements. Audits for on-premises software focus on determining license positioning, while audits for SaaS applications are more about optimizing license usage and governance. SAM software helps streamline audits, allowing for continuous monitoring and real-time updates.

Training and Awareness

Educating employees about SAM policies and procedures is crucial for maintaining compliance and optimizing software usage. Regular training ensures that staff understands how to request, access, and use software appropriately, reducing the risk of shadow IT and non-compliance. SAM software also facilitates executive reporting, informing leadership about software usage and costs.

Software Lifecycle Management

Managing the entire lifecycle of your software assets is essential for optimizing usage and minimizing costs. Below are the key stages of the software lifecycle that should be addressed in your SAM strategy:

Needs Assessment

Evaluate your organization’s software needs to ensure that you are investing in the right tools for your teams.

Procurement

Standardize the procurement process to ensure all software acquisitions go through the appropriate channels, preventing shadow IT and unnecessary spending.

Deployment

Deploy software efficiently by leveraging SAM tools to manage installations, configurations, and user provisioning.

Maintenance

Continuously monitor software usage, apply updates, and ensure licenses remain compliant throughout the lifecycle.

Renewal

Track upcoming renewals with SAM software to avoid missed deadlines and overpaying for underutilized software.

Retirement

When software is no longer needed, SAM software helps decommission applications securely, ensuring that licenses are reclaimed and data is handled appropriately.

Overcoming the Risks and Challenges of SAM Implementation

Implementing a software asset management (SAM) program presents challenges, from dealing with shadow IT to maintaining compliance. Here’s how to manage common risks effectively.

Shadow IT

Business units and employees manage 72% of software spending and 83% of apps. With large enterprises spending an average of $264M annually on software, that’s potentially $219M that’s untracked. SAM software provides centralized visibility to eliminate the risks posed by shadow IT. With a legacy tool, that visibility is typically limited. In contrast, SMPs excel at shadow IT discovery, especially those focused on financial discovery like Zylo.

SaaS Sprawl and Tracking Licenses and Renewals

Large organizations use an average of 650 SaaS applications, with 10 new apps added monthly. This leads to sprawling licenses and renewal management issues. Legacy SAM tools typically manage what you already know about. Their lack of ongoing discovery prevents you from detecting unsanctioned app purchases, which end up unmanaged. The right SMP provides visibility and automated alerts for new purchases, license usage, and renewal tracking to prevent overspending and missed deadlines.

Ensuring Continuous Compliance

At large enterprises, 73% of expensed applications have a “Poor” or “Low” risk score, according to Zylo data. If your software doesn’t meet compliance certifications required by your internal policies, you risk noncompliance with that policy and potential regulations, which can carry hefty fines. SAM software continuously monitors your software environment for compliance, reducing the risk of penalties and security vulnerabilities.

“In today’s workplace, the breadth of tooling and flexibility is great for productivity. But it means IT, Cybersecurity, and Finance teams must enable it without putting the enterprise under more stress or risk of a malicious or inadvertent breach or loss of data, let alone inefficient spending.”

— David Willis, VP of Technology Integrations at Netskope

Unused or Abandoned Software Licenses (Zombie Accounts)

Software waste can come in the form of zombie apps – apps bought but no longer used – and unused software licenses. Zylo data shows that the average enterprise uses just 58% of licenses, equating to $127M in waste annually. SAM tools help identify and reclaim unused licenses, preventing wasteful spending.

Duplicate Subscriptions

Another source of wasted spending, duplicate subscriptions are a sign of inefficient purchasing. They also create data and work silos that hinder collaboration. SAM software flags redundant subscriptions, allowing you to consolidate or eliminate duplicates.

Noncompliance with Licensing Agreements

For SaaS, monitor license positioning with real-time data helps you stay ahead of potential overages and noncompliance and avoid costly penalties.

FAQs about Software Asset Management

What does software asset management do?

SAM manages and optimizes software assets, ensuring compliance, tracking licenses, and reducing costs.

What does a SAM tool do?

SAM tools automate license management, monitor software usage, ensure compliance, and track renewals.

Is software asset management part of ITIL?

Yes, SAM is part of ITIL under IT asset management, ensuring IT services are managed effectively.

What is the ROI of SAM?

SAM saves costs by reclaiming unused licenses, avoiding noncompliance fines, and optimizing software renewals.

Why is software asset management important for businesses?

SAM helps businesses control costs, ensure compliance, reduce security risks, and improve software usage visibility.

How can software asset management help reduce costs?

SAM eliminates unnecessary licenses, optimizes software usage, and prevents noncompliance fines.

What are the key components of a software asset management program?

Key components include inventory management, license tracking, compliance monitoring, and vendor management.

What tools and technologies are commonly used in software asset management?

SAM and SaaS management platforms automate license tracking, compliance monitoring, and software usage reporting.

The Future of SAM Is SaaS

Software Asset Management is critical in today’s SaaS-heavy environment. Using the best practices we outlined above, you can reap the rewards in cost savings, better compliance and security, and visibility into your app stack. Discover how Zylo’s platform can help your organization scale efficiently, streamline procurement, and unlock the full potential of your software assets.