Real-world examples of common issues with software licensing

Everyday examples of common issues with software licensing in modern IT

If you manage software for more than about ten people, you’ve almost certainly seen at least one example of licensing chaos. The most common examples of examples of common issues with software licensing fall into a few patterns: too many installs, the wrong license type, fuzzy cloud usage, and poor record‑keeping.

Consider a mid‑size marketing agency with 120 employees. They buy 80 seats of a popular design suite, assuming that’s enough because “not everyone designs full‑time.” Within a year, they quietly install the suite on 130 machines for interns, contractors, and executives who “just need it occasionally.” When a vendor audit hits, the discrepancy is obvious. The agency ends up paying for backdated licenses, an audit fee, and a steep true‑up bill that blows past the original budget.

That story is not unusual. Gartner has reported for years that a significant share of organizations are either under‑licensed or over‑licensed for major software products, and vendors know it. The rest of this guide walks through specific, real‑world examples and how to recognize them before a vendor or regulator does.

Over‑deployment and untracked installs: the classic example of license drift

One of the best examples of common issues with software licensing is simple over‑deployment: installing more copies than you’re licensed to run. It usually happens gradually, not as a single big mistake.

A typical scenario looks like this:

• A company buys 50 perpetual desktop licenses for an office suite.
• Over three years, the organization grows to 80 employees.
• IT staff clone old machine images or reuse installers to get new hires up and running quickly.
• No one updates the license inventory, and the original purchase order is the only record.

By year three, there might be 70 or 75 active installs. Nobody notices until a vendor audit or an internal compliance review. At that point, the company is exposed to backdated maintenance costs or penalties.

This kind of drift is especially common with:

• Engineering tools (CAD, EDA, simulation software)
• Creative suites (video editing, 3D modeling)
• Niche vertical tools (legal research, tax software)

The fix is boring but effective: discover all installs, reconcile them against entitlements, and stop using old installers without a license check. The more often you do that, the fewer ugly surprises you’ll have.

Wrong license type: user vs device vs concurrent licenses

Another frequent example of a licensing problem is buying the wrong license model for how people actually work.

Imagine a hospital that buys 200 user‑based licenses for an electronic medical record (EMR) add‑on. In practice, the software is only ever accessed from 60 shared workstations at nursing stations and exam rooms. Because staff work in shifts, hundreds of clinicians rotate through those 60 devices.

The hospital would have been better off with 60 device‑based or concurrent licenses. Instead, they:

• Overpay for licenses that sit idle
• Struggle to reconcile which users are actually assigned
• Face questions during audits when ex‑employees still show as licensed

The reverse happens too. A sales team buys 20 device licenses for an analytics tool, but sales reps now work remotely on laptops, tablets, and phones. They constantly hit access limits and ask IT for workarounds, which can lead to:

• Shared accounts (a compliance and security risk)
• Unauthorized installs on personal devices

These examples of common issues with software licensing come down to one thing: the license metric (user, device, core, processor, concurrent session, etc.) doesn’t match how the business uses the software.

Cloud and SaaS subscriptions: subtle examples include over‑assignment and zombie accounts

Cloud and SaaS were supposed to make licensing easier. In reality, they just moved the problems into admin portals.

A very common example of a SaaS licensing issue:

• A company buys 500 seats of a collaboration platform in 2021.
• Staff turnover is high; by 2024, 300 of the original users are gone.
• Their accounts remain active because HR offboarding and SaaS admin workflows aren’t connected.
• The company continues paying for hundreds of inactive or barely used accounts.

These “zombie licenses” can quietly eat six figures a year in mid‑size organizations. Another example of examples of common issues with software licensing in SaaS is misaligned plan tiers:

• Everyone is put on the most expensive Enterprise plan “just in case.”
• Only a small subset uses advanced features (advanced analytics, compliance exports, etc.).
• There is no regular review to right‑size the plans.

Cloud infrastructure adds yet another twist: some vendors license features based on usage metrics like API calls, data volume, or compute hours. Misconfigured automation can trigger a spike in usage that suddenly pushes you into a higher billing tier, effectively becoming a licensing issue even if you never “installed” anything new.

For a sense of how quickly cloud costs and usage can spiral, the U.S. Government Accountability Office has published audits of federal cloud spending that highlight poor tracking and over‑provisioning as persistent issues (gao.gov). The same patterns show up in the private sector.

Bring‑your‑own‑device (BYOD) and remote work: gray‑area examples of compliance risk

Remote work and BYOD policies create subtle examples of common issues with software licensing, especially for desktop‑class apps and developer tools.

Picture a software company with a generous BYOD policy. Developers can use their own laptops if they install the corporate security agent. The company buys 100 licenses of a popular IDE and 50 licenses of a database tool, assuming those numbers match headcount.

In practice:

• Some developers install the IDE on both a personal laptop and a corporate desktop.
• Others spin up cloud VMs and install the tools there as well.
• Contractors bring their own machines and “borrow” corporate license keys.

When the vendor’s license terms specify “one device per license” or “no sharing with non‑employees,” the organization is suddenly out of compliance even though they never meant to cheat.

Another real example of a licensing problem: a design team uses a font library licensed only for company‑owned hardware. When designers begin working from home on personal machines, they copy the fonts over. The license doesn’t allow that, and the font vendor’s audit team knows exactly how to look for it.

These examples include a mix of policy gaps and technical gaps. The solution is to align BYOD and remote work policies with the license terms you actually signed, not the terms you wish you had.

Open‑source software: best examples of misunderstandings and hidden obligations

Open‑source licensing is often treated as “free, no rules,” which is how you end up with some of the best examples of common issues with software licensing in modern development.

A typical scenario:

• A startup builds a commercial SaaS product.
• A developer adds a library licensed under the GNU General Public License (GPL) to speed up a feature.
• The startup ships the product without understanding that some GPL licenses may require sharing source code for derivative works.

Years later, during a funding round or acquisition, a legal review flags the GPL component. The company has to either:

• Replace the component (expensive and time‑consuming), or
• Open‑source parts of its codebase, which may not align with its business model.

Another example of examples of common issues with software licensing in open source is ignoring attribution requirements. Many permissive licenses (MIT, BSD, Apache 2.0) require that copyright notices and license texts be included in documentation or about pages. Skipping that step can create compliance risk when a larger customer or regulator reviews your software supply chain.

If you want a sense of how seriously this is taken, the Linux Foundation and the Open Source Security Foundation publish guidance and tools for license compliance and software bill of materials (SBOM) management (linuxfoundation.org). Those resources exist because these issues are very real for enterprises.

Virtualization, containers, and multi‑cloud: subtle examples of licensing blind spots

Virtual machines, containers, and multi‑cloud architectures introduce another class of examples of common issues with software licensing: the environment scales faster than the license model.

For instance:

• A company licenses a database server per physical CPU socket.
• Over time, they virtualize their data center.
• Now dozens of VMs run instances of that database across a cluster.
• The vendor’s terms require licensing based on the underlying physical hardware or total virtual cores, not just “instances you remember creating.”

Container platforms make this even trickier. Ops teams might spin up hundreds of short‑lived containers running a licensed agent or component. If the license is based on “nodes,” “cores,” or “active instances,” that ephemeral behavior can still count toward license consumption.

Multi‑cloud deployments also create confusion when a vendor’s license is tied to a specific cloud marketplace or region. Moving workloads between AWS, Azure, and Google Cloud without checking license portability can put you out of compliance even if your total usage hasn’t changed.

These examples include a technical dimension: discovery tools that only scan physical servers miss virtual instances, and cloud‑native tools may not see on‑prem systems. That split view makes it hard to answer a basic question: “How many copies are we actually running?”

Record‑keeping, audits, and the paperwork side of licensing problems

Some of the most painful examples of common issues with software licensing are not about how many copies you run, but about what you can prove.

Typical pattern:

• An organization has purchased licenses over many years from different resellers.
• Purchase orders, invoices, and license keys are scattered across email accounts and shared folders.
• When a vendor audit arrives, IT knows they bought the licenses, but cannot produce all the documentation.

Without solid records, you are negotiating from a weak position. Vendors may assume the worst‑case scenario and push for large settlements.

Another example of a licensing problem is misunderstanding maintenance and support terms. A company may think a perpetual license means “we’re covered forever,” but the fine print says that upgrades and security patches require an active maintenance contract. When they stop paying maintenance, they keep upgrading anyway. During an audit, the vendor treats those upgrades as unlicensed use.

Industry groups like the Business Software Alliance (now part of the Software Alliance, bsa.org) have historically run enforcement campaigns and published guidance on software asset management. Their materials show the same patterns over and over: poor records, fuzzy ownership, and informal install practices.

2024–2025 trends: where new examples of licensing issues are emerging

As of 2024–2025, a few trends are generating fresh examples of examples of common issues with software licensing:

• AI and ML services: Vendors license access by tokens, API calls, or training hours. Misconfigured batch jobs or poorly written integrations can suddenly multiply usage and costs. Some contracts also restrict how you can use generated content, which becomes a licensing and legal issue.
• Usage‑based pricing: More vendors are moving away from simple per‑user models. That makes it harder to predict costs and easier to violate soft limits. For example, analytics tools that bill per event ingested can get very expensive if logging is misconfigured.
• Industry regulations: In sectors like healthcare and finance, regulators increasingly expect organizations to know exactly what software they run and how it’s licensed as part of risk management. While health‑focused sites like cdc.gov and nih.gov focus on clinical software safety rather than commercial licensing, the broader regulatory trend is toward more scrutiny of software usage in regulated environments.

These trends don’t replace the old problems; they stack on top of them. You still have to track installs and entitlements, but now you also have to understand dynamic usage metrics and AI‑specific terms.

Practical ways to avoid repeating these examples of licensing mistakes

Looking across all these real examples of common issues with software licensing, a few practical patterns stand out.

First, treat software entitlements like financial assets, not like random IT paperwork. Someone should own the license lifecycle: purchase, deployment, retirement, and audit response. That doesn’t mean building a huge bureaucracy; it means having a clear point of accountability.

Second, invest in discovery. You can’t manage what you can’t see. Use tools that:

• Scan endpoints for installed software
• Integrate with SaaS admin portals
• Track cloud resource usage tied to license metrics

Third, actually read the license terms for your high‑risk, high‑cost products. Focus on:

• License metric (user, device, core, instance, etc.)
• Virtualization and cloud rules
• BYOD and contractor use
• Geographic or industry restrictions

Finally, schedule periodic “license health checks.” Pick your top 10–20 products and:

• Compare active users/installs to entitlements
• Check for zombie accounts and unused seats
• Validate that your deployment model matches the contract

If you do that even once or twice a year, you’ll catch most of the issues that show up in the best examples of licensing failures.

FAQ: examples of common issues with software licensing

Q: What are the most typical examples of common issues with software licensing in a mid‑size company?
The most typical examples include over‑deployment (more installs than licenses), wrong license type (user vs device vs concurrent), unused or zombie SaaS accounts, unapproved open‑source components with restrictive licenses, and missing documentation for older purchases. Virtualization and cloud migrations also frequently create licensing gaps when license metrics don’t match the new architecture.

Q: Can you give an example of a licensing problem caused by remote work?
Yes. A company licenses a design tool for use only on company‑owned devices at office locations. During the shift to remote work, employees install the tool on personal home computers using the same license keys. The vendor’s terms prohibit that, so the company is technically out of compliance even though the total number of users hasn’t changed.

Q: Which examples include legal or regulatory risk beyond vendor penalties?
Using unlicensed software in healthcare, finance, or government environments can intersect with regulatory expectations around security and risk management. For instance, running outdated, unlicensed versions of clinical or billing software can raise questions during audits tied to patient safety or data protection, as discussed in broader regulatory guidance from agencies such as the U.S. Department of Health and Human Services and resources linked via nih.gov. While these sites don’t list every licensing rule, they show how seriously software risk is treated in regulated sectors.

Q: How do open‑source licenses create real examples of compliance issues?
Open‑source components can trigger compliance problems when their licenses require source‑code disclosure, attribution, or specific patent grants and those obligations are ignored. For example, incorporating a GPL‑licensed component into a proprietary product without honoring its terms can cause issues during due diligence for funding or acquisition, sometimes forcing expensive re‑engineering.

Q: What is a good example of preventing licensing issues before an audit?
A strong example is a company that runs quarterly internal audits on its top software products. They use discovery tools to find all installs and SaaS accounts, compare them to purchase records, clean up inactive users, and adjust license counts or contract terms proactively. When a vendor audit eventually arrives, they can produce clean records and usage reports, which usually leads to a faster, less painful outcome.