10 Software License Management Best Practices to Address SaaS Sprawl

You're the head of IT, and your Slack pings are at 10 pm. Legal lost access to a contract review tool right before a major deadline. The license expired weeks ago. No one renewed it. Worse? You didn't even know the tool existed. 

This is what license management looks like in companies grappling with business sprawl, where tool chaos and fragmented systems create license waste and risk.

Business sprawl happens when a company's IT environment grows without a clear structure: multiple identity providers, inconsistent access policies (with varying rules across departments, roles, locations, and employee types), fragmented domains, and edge-case exceptions pile up quickly.

The result? Wasted spending, security risks, and operational headaches.

To rein in such chaos, companies need a deliberate, structured approach to software license management. This guide outlines the best practices for software license management in complex, fast-moving environments—so you can stay compliant, save money, and keep IT sane.

TL;DR

• Software license management ensures the right tools are in the right hands and with proper permissions, so you avoid overspending or compliance-related issues.
• Common challenges with software license management include unused licenses, compliance risks, decentralized purchasing, missed renewals, and security vulnerabilities.
• You can optimize software licenses by centralizing tracking, automating renewals, enforcing role-based access control, and aligning license counts with your business priorities.
• Modern SaaS license management software, like Stitchflow, can help you get real-time visibility into license usage, automate approval workflows, and reclaim idle licenses.

What is software license management?

Software license management is the practice of monitoring, controlling, and optimizing the acquisition, deployment, use, and renewal of software licenses. Its purpose is to ensure that an organization uses software legally and efficiently, while minimizing costs and reducing compliance risks.

When it's working well, SaaS license management enables you to:

• Avoid penalties from unexpected vendor audits
• Stop throwing money at licenses that no one's using
• Keep your systems secure by controlling who has access to what
• Ensure teams always have the tools they need to get work done

However, traditional software licenses management practices assume a stable, centralized IT environment, which is not the reality for most fast-growing companies today. 

With departments adopting tools, contractors, and remote workers coming and going, a single source of truth for software access is lacking, and license management often falls apart.

Key challenges in software license management

Managing software licenses comes with a host of challenges that can quickly impact costs, security, and operations. From unused licenses and compliance risks to decentralized purchasing and missed renewals, here are some challenges you might have to deal with:

1. Unused and redundant licenses

Many organizations keep paying for tools assigned to former employees or inactive accounts simply because offboarding and visibility are incomplete. When this happens across dozens of apps, wasted spend quickly adds up.

‼️During one of our conversations with a customer, they mentioned 100+ licenses were assigned to suspended users because their offboarding workflows didn’t account for group-based access. 

The root issue? A lack of visibility. New tools are deployed and users are onboarded, but offboarding and usage tracking are inconsistent, leaving licenses idle and unmanaged until it’s too late.  

2. Compliance risks

Without clear oversight, organizations can easily breach software license terms—particularly with per-user or tiered agreements. Licenses may be assigned to inactive users, mismatched across tiers, or left active longer than allowed—creating audit exposure and potential legal or financial consequences.

3. Decentralized purchasing

When individual teams buy software without coordination, organizations often end up with duplicate tools and miss out on volume discounts. This, in turn, drives up costs, complicates management, and makes it harder to maintain compliance across the company.

4. Missed renewals

If you don’t track who owns each tool or when licenses expire, renewals can slip through the cracks. That means you might suddenly lose access to critical apps, scramble to renew at the last minute, or pay inflated fees—disrupting your team’s workflow and budget.

⛔One company even lost access to critical infrastructure because a developer used their personal account to sign up for Microsoft Azure, and no one knew about this when they left. 

5. Security vulnerabilities

Outdated, unmanaged, or orphaned software is a backdoor waiting to be exploited. How can you secure a tool if IT doesn't even know it exists?

Addressing these challenges requires a structured approach to software license management, leveraging automation and best practices to maintain control over software assets.

🧠Did you know inactive user accounts are one of the most common drivers of license waste? Learn why they happen, their risks, and how to fix them before they become security liabilities.

10 best practices for software license management in complex environments

Here are some enterprise software license management best practices to help you optimize spend, maintain compliance, and keep your budget under control.

1. Centralize software license tracking

Create a unified inventory of all software licenses across departments, roles, and employee types. Ideally, this is automated and continuously updated (more on that later). You can't optimize what you can't see.

"If you can't see all your licenses, you can't secure them, you can't optimize them—and you definitely can't manage them."

🎯Pro tip: Include internal tools and open-source systems in your catalog. Even if they don’t require paid licenses, tracking them helps you maintain visibility, security, and compliance.

2. Eliminate unused and redundant licenses

Regularly auditing software usage helps organizations identify and eliminate redundant licenses. By consolidating tools with overlapping functionalities, businesses can reduce costs and simplify license management.

Platforms like Stitchflow make this easier by automatically identifying underused licenses across your entire stack—even those without SSO/SCIM—and letting you reclaim them with just a few clicks.

💡License utilization vs. entitlements

It’s important to differentiate between what licenses are entitled (assigned) and what is actually utilized. Tracking only entitlements can hide wasted spend, while monitoring true usage gives you actionable insights to optimize your license portfolio.

📚Also read: How to Manage External Users in Modern IT Environments

3. Automate license renewals and monitoring

Manual tracking is a recipe for missed renewals. Use tooling to set automated alerts for renewal dates—ideally with enough runway to renegotiate contracts or consolidate vendors when needed.

Another point to keep in mind: disconnected apps—and shadow IT—can easily slip through the cracks, leading to unexpected expirations, last-minute purchases, or wasted spend. We recommend using a SaaS management platform that covers the gap left by your IDP to keep track of these apps. 

Stitchflow, for example, promises 100% coverage across all apps using what we call a “connected IT graph.” It continuously maps every resource in your environment in real time, capturing the relationships between systems, apps, and users. 

👉 Want to uncover gaps in your SaaS management automation? Take this free 5-minute quiz to identify offboarding issues, SCIM gaps, and SaaS access blind spots your IDP might be missing.

4. Establish clear procurement policies

A structured software procurement policy prevents different teams from purchasing duplicate or unneeded tools. Centralized purchasing ensures cost efficiency and compliance with company-wide standards. This can help you:

• Avoid SaaS sprawl: Prevent purchasing tools that overlap with existing licenses.
• Control costs: Gain leverage for bulk purchases, negotiate better deals, and stick to budgets.
• Standardize for compliance: Make sure every software acquisition meets organizational requirements and follows a consistent process.

5. Use role-based access control (RBAC) to avoid over-provisioning

Assigning software licenses based on user roles ensures that employees can access the tools they need without over-provisioning. RBAC prevents over-provisioning, reduces security risks from unnecessary access, and cuts unnecessary license costs. 

It also simplifies audits and license management by clearly mapping which roles require which tools, making it easier to onboard new users or offboard departing employees without leaving orphaned licenses behind.

If you want to set up an access control matrix to track apps and license usage, then we suggest trying Stitchflow’s free Access Control Matrix. 

It provides unified visibility across all apps and users, lets you filter by assigned or missing access, and helps IT admins quickly spot gaps, revoke unnecessary permissions, and standardize access. You can also download the matrix as a CSV to share with your team.

Embed video of the Access Control Matrix and CTA button

6. Regularly review vendor agreements

Software vendors often update licensing terms, typically in response to rising operational costs, changes in usage patterns, or new feature releases. These updates can introduce unexpected fees, stricter usage limits, or altered access policies.

⛔ Take Cursor’s Pro plan, for example—users were caught off guard by new limits and automatic charges, sparking confusion and refunds. 

By reviewing agreements regularly, you can stay on top of changes, understand new cost structures, and renegotiate terms if needed—preventing surprises and ensuring your team can rely on the tools they need without disruption.

7. Integrate license management with IT service management

Software license management (SLM) is most effective when integrated with ITSM processes. While SLM ensures licenses are purchased, assigned, and tracked efficiently, ITSM provides the workflows and ticketing structure to manage software requests, license reassignments, and compliance. This can help you in two ways:

•  Automatic license reclamation workflows: Once a license is available, you can create ITSM tickets to reassign them to a new user or device via automated approval workflows
• Device-led license tracking: You can create a centralized repository that maps each physical device to the software installed on it, giving full visibility into software allocation optimization opportunities

💡For example, you can connect your SaaS management platform—like Stitchflow—with a service desk like Jira and set up license reclamation workflows. Once a user leaves, Stitchflow can automatically generate a ticket in Jira to reclaim the license.

8. Ensure compliance through continuous monitoring

Regularly tracking license usage helps you catch discrepancies before they become compliance issues. Without it, audits can expose untracked software, outdated entitlements, or shadow IT. Continuous monitoring keeps your records accurate, adapts to changing vendor terms, and ensures you only pay for what your team actually uses.

‼️For example, Gulf Coast Pain Consultants faced a $1.19 million fine after a former contractor accessed their EMR system three times after termination, using patient data to submit fraudulent Medicare claims.

9. Use modern software license management tools

Manual spreadsheets can’t track thousands of users, multiple apps, and dynamic cloud environments. Modern tools for software license management (like Stitchflow), on the other hand, provide:

• Real-time license utilization tracking: See which licenses are actively used versus assigned, so you can reclaim idle ones.
• Automated renewals and alerts: Get notifications before contracts expire and identify opportunities to consolidate vendors.
• Role and access-based management: Map software access to user roles to prevent over-provisioning and reduce security risk.

This means you get full visibility, reduce wasted spend, maintain compliance, and simplify the software license management process across even the most complex environments. 

📚Also read: A Step-by-Step Guide to Software License Optimization for Modern IT Teams

10. Align license management with business needs

As companies grow and evolve, so do their software requirements. By regularly reviewing licenses and analyzing app usage trends, you can identify underused tools, reassign or retire licenses, and plan for future growth. 

This ensures every software dollar directly supports business priorities, prevents waste, and gives leadership confidence that the organization’s software stack scales efficiently without overspending.

Optimize SaaS license management with Stitchflow

For companies navigating business sprawl, software license management is more than saving on software licenses; it ensures security, streamlines operations, and supports scalable growth. And tools like Stitchflow make this process of managing software licenses easier by addressing the “last mile” problem—identifying apps that your regular IDP, like Okta, misses. 

Stitchflow centralizes license data from all apps into a single dashboard, combining real-time visibility, automated renewals, and user access management. You can:

• Consolidate license data across all apps, including legacy, non-federated, and manually managed tools
• Continuously tracks usage, access, and license allocation to prevent waste and over-provisioning
• Get AI-powered insights to identify which accounts should be deactivated, reassigned, or retained
• Detects and resolves hidden or inactive accounts, reducing security risks

Stitchflow customers typically reclaim over 20% in software spend through smarter license management. Turing, for example, found 150+ idle licenses—reclaiming for $60K in annual SaaS savings

Book a free pilot with Stitchflow and discover exactly which licenses are idle and reclaim wasted spend.