A hidden treasure and cost-saving potential lies in unused software

Many companies are trying to cut costs but overlook the value locked in unused software licenses. As cloud and subscription costs rise, these licenses can free up budget or reduce future IT spend. What often looks obsolete is still a transferable asset with real financial value.

Today, hardly any company can do without the need to seek cost savings while also securing funds for further development and investment. Yet few realize the potential hidden in unused software licenses. Greater awareness of this potential could benefit many companies; however, it is a complex issue. That is why we have decided to prepare an entire series dedicated to this topic.

In recent years, most companies have been under pressure from major changes driven by significant shifts in supply and demand chains – whether caused by the pandemic, international conflicts, efforts toward sustainability, environmental responsibility, and higher efficiency, or, last but not least, growing customer demands. All these influences further intensify and accelerate the already prevailing trends of robotization and digitalization, driven by the push to implement Industry 4.0.

None of the above – mentioned trends can be implemented without the support of information and communication technologies (ICT). Investments in this segment are therefore continuously increasing, further reinforced by the need to ensure protection against cyber threats.

Some time ago, a certain degree of investment savings was brought about by the rise of the phenomenon known as the cloud. From the perspective of software vendors, this meant greater certainty of recurring revenues, as until the emergence of this trend they had to repeatedly convince customers to purchase new versions, whereas subscription – based usage provides them with almost guaranteed annual income. From the users’ perspective, the transition to software as a service (SaaS) was – and in many cases still is – advantageous. It does not require massive upfront investments, is far more predictable from an accounting perspective, and allows for easier adjustment of the number of licenses as the size of the company changes, whether through growth or downsizing.

However, partly due to the rise of another phenomenon we call artificial intelligence (AI), the costs of building data centers and related infrastructure, including energy infrastructure, are also increasing. Hand in hand with this comes a gradual but steady rise in prices for online services. Many companies are beginning to realize that, in the long term, cloud services may not be cost – effective for them. In other words, the costs of software delivered as a service have long since exceeded the total investment that would have been required for on – premises (“in – house”) software and hardware, which would still be sufficient even after many years. Continuing subscription payments therefore place an unnecessary burden on them. But how can they find a way out?

A hidden treasure lies in unused software

First of all, it must be said that this article – and the series that will follow – is not aimed against cloud services. For many companies or specific areas of their operations, the cloud is an excellent tool. It is undoubtedly appreciated by startups, which can grow much more easily and quickly thanks to it, as well as by companies that frequently face market fluctuations and must respond by adjusting staffing levels.

We will address this perspective in more detail later, to make orientation easier for you. For now, it is sufficient to state that a so – called hybrid model is beneficial for most companies – meaning that it is more suitable for them to own and operate some licenses, while renting others.

In any case, even companies for which the transition to the cloud has clearly paid off – and there are many – usually have not resolved the question of what to do with their original licenses. Similarly, many licenses lie idle on unused, broken, or completely decommissioned computers and servers. Many licenses also remain unused due to workforce reductions. And honestly, can you say with certainty that your company does not have software that is no longer used, even though it is still fully functional and another company could easily use it for many more years? Most companies have no idea what percentage of such licenses they hold, what value is hidden in them, or even where exactly that value lies.

Many companies are looking for ways to reduce costs and secure funds for necessary investments, while often overlooking the potential hidden in their unused software licenses. We are talking specifically about so – called perpetual licenses. Many companies purchased them as a one – time investment in the past, but no longer use them today because they have switched to subscription models or cloud solutions.

Jakub Šulák, founder and CEO of Forscope

According to his estimates, unused software in Czech industry alone represents at least billions of Czech crowns in value. These licenses still retain their value and can be sold. Typically, these are current versions of software or at most one or two previous generations (for example, Microsoft Office versions 2024, 2021, and 2019). Naturally, this does not apply to licenses designated as OEM (Original Equipment Manufacturer), which are sold at a discounted price together with hardware, are considered an integral part of it, and are therefore non – transferable. From a business perspective, it is also generally not worthwhile to deal with standard retail licenses (FPP – Full Packaged Product), as they cannot be effectively managed within larger organizations.

From the perspective of software brokers – companies capable of purchasing unused software and offering it where it can still serve well – the main potential for hidden financial reserves lies in products from major software vendors (so – called Tier 1 or Level One vendors) such as Microsoft, VMware, Oracle, Autodesk, or Adobe, where there is a strong market for both buying and selling. On the other hand, it is not worthwhile for them to focus on local or overly specialized programs, nor on software that requires constant updates (such as accounting systems), where older versions quickly lose relevance.

Software from local vendors or software with narrowly specific localizations is difficult to sell due to the limited target market. As a result, it is unlikely that a broker would be willing to purchase such products at an attractive price – if at all.

Overcoming barriers: myths and reality of software resale

Why, then, do companies not sell their unused software? There are three main reasons:

The legality myth

The most common concern is that selling secondary software is illegal or contrary to contracts with major vendors. This is incorrect. The European Court of Justice ruled years ago that the resale of secondary licenses is legal, and contractual clauses prohibiting it are invalid as they contradict the law.

The legal basis for this practice was established by the Court of Justice of the European Union (CJEU) in the case UsedSoft v. Oracle (C – 128/11), which confirmed that software may be resold under certain conditions after its initial sale. This ruling applies directly across the entire EU market, including the Czech and Slovak markets, and provides organizations with legal certainty when transactions are carried out transparently and with proper documentation.

“Even Microsoft has removed such clauses from its contracts. Although they may still appear in older contracts (8–10 years old), they are not legally enforceable,” Jakub Šulák adds regarding this persistent myth. Companies often retain this outdated information, which prevents them from unlocking the potential of their valid licenses.

Licensing chaos

As mentioned above, many companies also struggle with a lack of visibility into their own licenses. They do not know which licenses they are actually using, which are redundant, and which are overused. The Forscope CEO warns:

This ‘mess’ not only represents a risk of penalties during an audit, but also prevents the identification of redundant software with sales potential.

Yet there are specialized tools available for software asset management.

Fear of process complexity

Selling software may seem like a complicated and demanding process. In reality, if a company has at least a partial overview, most of the work is handled by a specialized broker. Sulak assures:

It can be compared to trading shares – no one trades directly, but through a broker or an exchange to simplify the entire process. The broker tells the selling party exactly which documents are needed and carries out a detailed legal due diligence, often on three levels, to ensure 100% legality and correctness of the delivered licenses,

Practical aspects of selling and buying software

Another reason why companies do not sell “used” software is that they still use part of their licenses and do not realize that it is possible to sell only a portion of a license set. This option is also supported by rulings of the European Court of Justice.

Companies considering the purchase of “second – hand” software, on the other hand, often fear buying from multiple sources, or that a broker might sell them software assembled from licenses originating from different sources. We asked Mr. Šulák about this as well. His response was as follows:

Yes, if a buyer needs a large number of licenses (e.g., 2,000), they may come from two or three different sources. However, this is not a complication for the buyer. The broker ensures that all information and licenses are available in a single portal. There is always only one installation file (because the software is the same), and as for volume license keys, Microsoft itself allows the use of a single key for all licenses, even if they originate from multiple contracts. The buyer receives legal documentation proving legality from all sources, but this does not complicate IT management – in the event of an audit, they simply present multiple sets of documents.

As can be seen, both the sale and purchase of secondary software conceal significant potential. Many companies have millions stored in unused licenses, while others could save millions by purchasing them. Since we have already used so many fashionable terms to describe current trends, it is hard not to label the process described here as software recycling.

Do you have questions after reading this article? Are you considering whether it is better for you to use software as a service or to own licenses? Are Mr. Šulák’s claims truly valid, or is there a catch somewhere? What do lawyers say? What about software vendors, who undoubtedly lose part of their revenue when unused licenses are returned to circulation? And what about security?

All these questions – and many more, such as whether the possibility of safely using the aging Windows 10 is truly coming to an end and whether there is no alternative but to migrate to a new version – will be answered in the individual installments of the follow-up series. You will encounter it in Technický týdeník at least throughout this year. Read the original article here.