Software asset management (SAM) is software that finds every application installed on a company's servers, laptops and cloud accounts, matches it against the licences the company has bought, and shows what is overpaid and what is unlicensed. It is also called licence management or software licence optimisation.
A licence is the legal permission to use a piece of software. Each licence is counted in a fixed way, called its licence metric. Some software is licensed per named user. Some is licensed per device. Server software, such as a database, is often licensed per processor core, which is one of the separate calculating units inside a processor. So the same program can need very different numbers of licences on different machines.
SAM works in four steps. First, it discovers what is installed. Small programs on the laptops and servers, and connections to the cloud accounts, report every installed application. Second, it recognises each one. "Design Suite Pro 2023" and "DS Pro v23" are the same product, so SAM records them as one. Third, it reads what the company has bought, from purchase records that procure-to-pay software sends. Fourth, it compares the two. The result is the licence position: for each product, how many licences are needed and how many are held.
Consider an auto-parts maker in Aurangabad with 1,500 staff. SAM finds a design program installed on 240 laptops. The company holds 200 licences. So it is using 40 copies without a licence. But SAM also shows that 70 of the 240 copies have not been opened for 90 days. The IT team removes those 70 copies. Now 170 copies are installed and 200 licences are held, so the company is within its licences, with 30 spare for new joiners. It does not need to buy more. SAM also notices that a database server was upgraded from 16 to 32 processor cores last month. Under that database's licence, the upgrade doubled the number of licences needed. The IT team can correct this before it becomes a problem.
Why does this matter so much? Large software makers audit their customers. In an audit, the maker checks how its software is used. If it finds unlicensed copies, the customer must pay for them, often at the full list price. This makes unlicensed use expensive to get wrong. Unused licences are a quieter cost. The company pays for them every year, and nobody notices.
SAM sends its findings to two teams. The finance team sees what to stop paying for. The IT team gets tasks, such as removing unused copies, as tickets in its IT service management (ITSM) software. Rented online applications are tracked in a similar way by SaaS management. Phone lines and data feeds are tracked by telecom and technology expense management.