InfoWorld — Call it a license to steal.

Software licensing agreements have always been rife with pitfalls. And the rise of virtualization, subscription-based pricing, and various open source models has made the software licensing game even more complex.

[ In "The service and support shell game," InfoWorld contributing editor Paul Venezia laments the bundling practices that force you to pay for more than you need. ]

Most enterprises are not fully aligned with their licenses, say experts. Some organizations are using more software than their licenses legally allow; many are paying too much for software that's underutilized.

The wrong pricing model, usurious maintenance fees, incomplete asset management, poorly defined terms, and failure to account for business change can cost you big over the long haul.

Here's how to avoid the most common licensing mistakes.

Shelfware: Use it or lose it The best-known licensing gotcha is paying for software that's gathering dust on a shelf. Fortunately, this is less of a problem than it used to be.

Scott Rosenberg, CEO of Miro Consulting, says that in recent years CIOs and CTOs have gotten a lot smarter about software asset management.

"For the most part, shelfware is a minor concern and a low priority for most IT organizations -- until a software vendor audits or the executive management team asks IT to cut costs," he says. "Finding the time, resources and subject matter expertise are the major hurdles to avoiding shelfware."

Three out of four organizations say they buy more licenses than they actually use, according to a November 2009 survey by Flexera Software and IDC. Many enterprises have so many different applications, each with its own licensing policies and terms, that it's hard to keep track of what they are using and who's using it.

An even bigger problem? Software that's been installed but never used, says Kris Barker, CEO of IT asset management firm Express Metrix.

"Under most licensing models, installation is the definition of a license in use, but that does not mean the application is actually being run," he says. "While taking a software inventory is now a routine chore for most IT departments, tracking/metering usage is the tougher nut. Blended inventory and usage data is the only way to optimize your software purchases."

The first step is to carefully inventory the apps you've licensed as well as how they're being used and who's using them. You might then be able to trade unused licenses for new software from the same vendor, or reduce annual maintenance fees, which can cost up to 30 percent of the original purchase price.

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