Software asset management has its own vocabulary, and vendors, auditors and consultants do not always use it the same way. This glossary explains 60 of the terms you will meet most often, in plain language, grouped by theme. Bookmark it, and use it to agree definitions with IT, procurement and finance before you start.
Five terms to agree on first
What a contract allows you to use. Everything else is compared against it.
What one license covers. Without it, quantities mean nothing.
When your renewal options close. Usually 30 to 90 days before the renewal date.
Entitlements minus consumption, per product: surplus or deficit.
Savings confirmed by a changed invoice or contract, not just identified.
How the core terms connect
Core concepts
Software asset management (SAM). The practice of managing software licenses, usage, compliance and spend across the software lifecycle. See what SAM is.
IT asset management (ITAM). The wider discipline covering all IT assets, hardware and software.
Hardware asset management (HAM). The part of ITAM that manages physical devices: laptops, servers, network equipment and mobile devices.
SaaS management. SAM applied to subscription software delivered over the internet.
FinOps. A practice for managing the cost and value of technology spend, originally cloud infrastructure, now extending to SaaS and licensing.
Software estate. All the software an organization owns, uses or pays for.
Software lifecycle. The stages software passes through: request, approval, procurement, deployment, use, renewal and retirement.
Licensing and entitlements
Entitlement. The right to use software granted by a contract: product, quantity, metric, term and conditions.
Proof of entitlement. Documents proving you own a license, such as an order form with evidence of payment.
License metric. The unit a publisher uses to count use: per user, per device, per core, per employee, or units consumed.
Named user. A license assigned to one identified person.
Concurrent user. A license counted by the number of people using a product at the same time.
Per device license. A license covering one device, regardless of how many people use it.
Per core or per processor license. A license based on the compute capacity of the server running the software.
Core factor. A multiplier some publishers apply to the number of physical cores, depending on processor type.
Subscription. A license for a fixed term, usually renewed annually or monthly.
Perpetual license. A license that does not expire, usually paired with an annual maintenance fee for updates and support.
Maintenance and support. The annual fee for upgrades and vendor support on perpetual licenses.
Enterprise agreement. A volume agreement covering an organization's use of a publisher's products, typically for a multi-year term.
Enterprise-wide metric. A metric that counts every employee or user in scope, whether or not they use the product.
Downgrade rights. The right to use an earlier version than the one you licensed.
Use rights. The terms that define how, where and by whom software may be used.
Bring your own license (BYOL). Using licenses you already own on a cloud provider's infrastructure.
Positions and compliance
Effective license position (ELP). A comparison of entitlements with consumption, showing surplus or deficit per product. See our ELP guide.
Over-licensed. Owning more licenses than you use.
Under-licensed. Using more than you own, which creates audit exposure.
License compliance. Using software within the terms of your entitlements.
Software audit. A publisher's formal review of your license compliance.
Audit clause. The contract term that gives a publisher the right to audit you.
Indirect access. Use of a system through another application or interface, which some publishers count as licensable use.
Shadow IT. Software bought or used without the knowledge of IT or procurement.
Usage and optimization
Deployment. An installation or assignment of software to a device or person.
Utilization. Licenses in active use divided by licenses paid for.
Shelfware. Software that is paid for but not used.
Inactive user. A person with a license who has not used the product within a set period, often 90 days.
License reclamation. Removing licenses from people who do not use them so they can be reassigned or cancelled.
Re-harvesting. Another term for reclaiming and reusing licenses.
Right-sizing. Matching each user to the edition or plan their work requires.
Tiering. Choosing between editions or plans at different price points.
Consolidation. Reducing the number of products that do the same job.
Application rationalization. A structured review of the application portfolio to decide what to keep, replace or retire.
Software normalization. Mapping raw software names to standard publisher, product and version names.
Software recognition. Identifying what a raw inventory record actually is.
Contracts and renewals
Renewal date. The date a contract or subscription renews.
Notice period. The time before the renewal date by which you must give notice to cancel or change terms.
Notice deadline. The last day you can give notice; often the most important date in a contract.
Auto-renewal. A clause that renews a contract automatically unless notice is given.
True-up. A periodic reconciliation, often annual, in which you pay for additional licenses deployed during the term.
True-down. Reducing license counts at an anniversary or renewal, where the contract allows it.
Price uplift. An increase in price at renewal, sometimes capped by contract.
Co-terming. Aligning several contracts to the same end date.
Order form. The document that lists products, quantities and prices under a master agreement.
Master agreement. The overarching contract that sets legal terms for all orders with a vendor.
Finance
Spend under management. The share of software spend recorded and monitored in your SAM system.
Run-rate savings. Savings that repeat every year, such as a lower renewal value.
One-time savings. A single avoided cost, such as a true-up you no longer need to pay.
Cost avoidance. A cost that would have occurred but was prevented, such as a price increase you negotiated away.
Showback. Reporting software costs to the teams that use the software, without charging them.
Chargeback. Allocating software costs to the budgets of the teams that use the software.
Planned vs actual. A comparison of budgeted software spend with real spend, usually month by month.
Total cost of ownership (TCO). The full cost of a product over its life: licenses, implementation, support, training and retirement.
Standards
ISO/IEC 19770. The family of international standards for IT asset management, including management system requirements, software identification tags and an entitlement schema.
How MI One helps
Sources
- ISO/IEC 19770 family of IT asset management standards. https://en.wikipedia.org/wiki/ISO/IEC_19770
- FinOps Foundation, "What is FinOps?" https://www.finops.org/introduction/what-is-finops/