What is an Effective License Position (ELP), and Why Do You Need One?

Understanding and Optimizing Your License Position

Software licensing is a critical component of IT management. Whether acquired through perpetual licenses or time-bound subscriptions, managing licenses can be both complex and time-consuming. IT Asset Management (ITAM) and Software Asset Management (SAM) teams often struggle to ensure their organizations remain compliant while also staying cost-efficient.

At the center of effective software license management is the Effective License Position (ELP)—a key assessment that reconciles the licenses you own with the software you’re actually using.

What is an Effective License Position (ELP)?

An ELP is a detailed analysis of your organization’s software licensing compliance. Originally coined by Microsoft, it helps identify:

• Under-licensing – Using more software than you’re entitled to, creating compliance and audit risks.
• Over-licensing – Holding excess or unused licenses (“shelfware”), leading to wasted costs.

By aligning entitlements with actual usage, an ELP ensures financial governance and helps optimize software investments—particularly as vendors continue moving toward SaaS and cloud-based subscription models.

How to Establish an Effective License Position

Organizations can conduct ELP assessments in-house, but with complex environments spanning multiple vendors, hybrid deployments, and evolving licensing models, expert support is often invaluable. SecureITSM simplifies this process with a proven four-step methodology:

Step 1: Entitlement Position

We create a centralized, accurate record of your entitlements by analyzing:

• Purchase records, contracts, and license documentation.
• Vendor licensing portals and reseller data.
• Enterprise agreements and historical transactions.

This establishes a clear baseline before renewals or true-ups.

Step 2: Deployment Position

We inventory deployed software across all environments—on-premises, cloud, and hybrid—by:

• Scanning systems to detect installed applications, editions, and versions.
• Collecting hardware configurations to confirm licensing dependencies.
• Identifying usage patterns and deployment gaps.

Step 3: Effective License Position

We reconcile entitlement data against actual usage to reveal:

• Compliance risks from under-licensing.
• Overspending from unused or surplus licenses.
• Opportunities for license reallocation and cost optimization.

Step 4: Optimized License Position

Beyond compliance, we maximize value by recommending:

• Reallocating unused licenses to new users.
• Adjusting agreements to reduce costs.
• Upgrading or negotiating improved vendor terms.
• Right-sizing cloud and subscription-based software investments.

When Should You Conduct an ELP?

Ongoing visibility into software assets is best, but critical times to conduct an ELP include:

1. Before a renewal – At least six months prior, to align licensing with business needs.
2. Before an annual true-up – To identify savings opportunities and prevent overpayment.
3. Ahead of a software audit – To enter negotiations with confidence and leverage.
4. As a periodic health check – To detect inefficiencies, mitigate risks, and control costs.

SecureITSM: Your Trusted Licensing Partner

With SecureITSM’s expert guidance, your organization can achieve a compliant, cost-effective, and optimized license position—freeing your IT team from time-consuming audits and unnecessary spending.

Let’s ensure you’re only paying for what you truly need. Contact SecureITSM today to get started.