Understanding Software Licensing Terminology

8 Apr 2016

Do you understand software licensing terminology?


If you have been tasked with taking control of software licensing for your organization you will probably have been faced with many acronyms: ITAM, SAM, SLO & SLOE to name but a few! Digging deeper into the exact definition of these will probably not help you much due to the overlap and almost continual evolution of each of the terms.

So, hopefully to set some context for the challenging task ahead of you, Certero have pulled together what each of these license terminology abbreviations currently means (as defined by key bodies in the industry).


Software Licensing Terminology

  • ITAM or IT Asset Management – “… entails collecting inventory, financial and contractual data to manage the IT asset throughout its life cycle.” (Gartner)
  • SAM or Software Asset Management – is “A process for making software acquisition and disposal decisions. It includes strategies that identify and eliminate unused or infrequently used software, consolidating software licenses or moving toward new licensing models.” (Gartner). The Business Software Alliance (BSA) defines Software Asset Management as: the practice of managing the lifecycle of software assets within an organization. It is a set of managed processes and functional capabilities throughout the five stages of their lifecycle (planning, requisition, deployment, maintenance, and retirement).
  • SLO or Software License Optimization – “… minimizes the risk of unexpected costs caused by software audits and cuts total spend by enabling reharvesting and eliminating wasteful buying of licenses that won’t be fully used.” (Forrester)
  • SLOE or Software License Optimization and Entitlement – is a term created by Gartner that effectively expands SLO by embracing entitlement. Your entitlement is your “right of use” of the software you have purchased and can change from organization to organization and vendor to vendor. It is usually defined in your license agreement
  • NFR or Not for Resale – This could include software which is not intended for distribution e.g. testing software.
  • SKU – Stock keeping unit.
  • EULA or End User License Agreement – This is a document which spells out what you can and can’t do with your software.


Understanding Software Licensing Terminology

To improve your organization’s software licensing, having an understanding of the software licensing terminology is important. While knowing what the abbreviations are is necessary, these feed into other areas to successfully take control of software licensing.

If you would like more guidance on software license terminology or the next steps for taking control of your software licensing, please get in touch with Certero.

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