How to: Right-Size Contracts using License Usage Data

Last updated: October 4, 2024

After this article...

You’ll know how to identify potential savings for your organization and remove unused software licenses, directly from the Lumos Vendors page.

Background

As your organization has grown, it’s probably become quite the challenge to stay on top of all the software contracts signed by leaders across the company. As a result, you have dozens of contracts where you’ve purchased more user licenses than you actually need.

But how do you find and correct those cases of overspending? In order to do so manually, you’d need to pull user lists from every tool’s admin page, and perform some excel magic to find users who haven’t logged in within a certain period of time. This can take hours of your time and might even cause you to question “is it worth it?”

With Lumos’ License Usage Insights, you can quickly find & “right size” these troublesome contracts, all from the Vendors page within Lumos.

Steps to Save

1. 🏦 Find Contracts with Potential Savings

If you head over to your Vendors page, you’ll notice a column called Potential Savings. This is the estimated annual savings that you can find by removing unused licenses. It is calculated as such:

We identify the set of unused accounts, which include any of the following:
1. Terminated Accounts — accounts tied to employees that are no longer employed in your organization
2. Inactive Accounts — accounts tied to active employees, but where the employee has not signed into the application for >90 days
3. Unassigned Accounts — licenses that you’ve purchased on the contract, but have not been assigned to any user. Sometimes these are called “shelfware” licenses.
For each account, we check your contract details to determine if they have any licenses, and how much each licenses costs per month
We sum the cost of all licenses tied to unused accounts, and show you the annual cost of keeping those licenses

2. 📊 View Details in the License Usage Tab

Once you’ve found a contract that is ripe for right-sizing, it’s important to dig into the details, verify that these accounts are no longer needed, then deactivate those accounts, so you can save on your renewal!

You can now get an overview of these details by clicking on “Potential Savings”. This will open a sidebar, which gives you quick insights into each of your licenses.

On this page, you will find five categories of accounts:

Active Accounts — accounts tied to active employees, that are regularly being used by those employees. These should almost never be removed!
Terminated Accounts — accounts tied to employees that are no longer employed in your organization. You should almost always remove these right away.
Inactive Accounts — accounts tied to active employees, but where the employee has not signed into the application for >90 days. In most cases, this means the employee’s account can be removed.
Accounts with No Activity Data — this usually means that Lumos does not support activity tracking for this application; however, if you see “inactive” accounts as an option, then this could also mean we don’t have enough data to determine the last time a user used their license. For example, Okta’s system logs only give us data up to 90 days, so the user could have signed in >90 days ago, or they may never have signed into the tool. We recommend reaching out to users who fall into this category to determine if they still need their license. Or better, yet, run an Access Review!
Unassigned Accounts — these are licenses that you’ve purchased on the contract, but have not been assigned to any user. Sometimes these are called “shelfware” licenses. It’s best practice to have a few extra licenses lying around, so you don’t need to constantly true up your contract, but too many can be a sign of purchasing too many licenses. You should generally strive to have <10% of licenses be unassigned.

3. 🔎 Dive Even Deeper With Advanced Usage Analytics NEW

You can now dive even deeper into App Usage data by clicking into the License Usage Page. From here you will have access to a full page report with many new ways to analyze your data:

Filter, and Pivot license usage data
Share a link to your customized views of usage data
Export your data into CSV format

Use Cases:

Gain Clear Visibility into Departmental Spend:
Empower finance teams and department leads with the insights they need to manage budgets effectively and prevent overspending
Never Send a Stale Report to Leadership:
Directly link any Lumos user to specific filtered and grouped views of license data ensuring everyone is always looking at the most up-to-date and relevant data available.
Optimize License Renewals with Accurate Usage Data:
Say goodbye to guesswork in license renewals. With visibility into the number of actively used licenses by teams, departments, and many more filters, Finance and Procurement teams can more accurately renew the correct number of licenses.

4. 😳 Click through to View Offending Accounts

After opening the License Usage tab, you’ll find that you can click through each of the graphs to determine which users have unused accounts. For example, you can select the “Inactive” Sales Cloud users, and Lumos will bring you to a list of all the offending users. From there, you can choose to deactivate them directly by scrolling to the right of the page, and selecting “Deactivate”.

FAQs

How are you calculating potential savings?

We calculate the potential cost savings of each unused license by taking the monthly cost of the license based on your current pricing, and multiplying it by 12 to get the annual cost savings.

You can view the breakdown of our calculations by clicking on the “?” icon in the License Usage tab.

Why don’t I see potential savings for all my contracts?

We can only calculate savings for contracts that charge per seat, and where you’ve connected the licenses to Lumos.

View here for a guide on how to link purchased software licenses to SaaS data collected through Lumos.

What does it mean if I have “exceeded the number of licenses purchased”?

Lumos determined how many licenses you’ve purchased based on the contract entered into the system. We determine the number of licenses that are used based on data collected from direct integrations, or an integration with your identity provider.

If the number of licenses used exceed the number purchased, we show you a warning. Usually this happens due to one of three reasons:

You’ve trued up your contract, but haven’t added the true up to Lumos. As a result, we believe that you’ve purchased less than you actually have.
Your contract supports flexible billing, meaning you can just add licenses to the platform, and your bill will automatically increase.
The way your licenses are linked to data within Lumos is inaccurate. For example, if you link Asana licenses to “Active users”, when instead they should be linked to “Paid Seats”. We may think you’ve assigned more licenses than you actually have.

Why can’t I see activity data for licenses connected to certain Okta Groups?

Due to a limitation of how we sync data from Okta, we don’t currently have a way to show activity data for licenses tracked via Okta Groups, unless the group is also set up as an Assignment Group on the app. We are working on a way to display activity data for these groups in the future!

This is saying that some of my users haven’t logged in in >90 days, but they’re telling me they signed in recently. What gives?

Lumos is limited by the quality of the data that we are able to ingest. What is likely happening is that this app is connected via an Identity Provider like Okta or OneLogin. For these types of connections, we look at the System Logs from the identity provider to determine the last time a user completed an SSO event (i.e. logged in through their IdP).

For apps where the user is not required to sign in regularly (such as Notion, Loom, or Figma), Lumos’ data may be out of date. It’s important to only act on data that you know is high quality.

Read more about how session timeouts affect data quality here.