Think of the ideal software asset management (SAM) system as a monitor that displays what exactly drivesyour business operations. It provides a readout of all the softwareinstalled throughout the company’s computer systems, andmuch more.
SAM programs also help IT departments rein in duplicate or redundantsoftware applications. Software budget overruns and license compliancemanagement are becoming increasingly complex concerns.
Why should you care? Companies that fail to track their softwareassets tend to overspend on software purchases and often fail tomaintain licenses for all installed copies of software. Even productsthat are installed but no longer used may requirelicense renewals or encounter potential configuration conflicts. Lack of management could alsolead to financial risk from compliance violations and failed assetaudits.
“Software represents about 20 percent of the IT budget, and 20 percentof the software cost is associated with the initial purchase. Theoverall life cycle of software represents a significant portion of theIT budget. So companies that are not using SAM are wasting money,increasing their audit exposure — and they are increasing their securityand compliance risk,” David Flesh, director of IT service managementfor HP Software and Solutions, told the E-Commerce Times.
One of the primary results of having an effective software assetmanagement program in place is saving money. However, the SAM process hasmore goals associated with it that help control software overruns,according to Flesh.
For example, understanding license requirements will mitigatepenalties. Cost optimization is a key driver for getting customers toadopt a SAM program. Reaching that goal is much more difficult withoutthe automated approach SAM provides organizations.
Another key goal is control over governance issues. SAM programs helpcompanies maintain their regulatory compliance for mandates from theHealth Insurance Portability and Accountability Act (HIPAA) in thehealth industry and the the Sarbanes-Oxley Act for the financialindustry.
Picture the panic in a small IT office when discussions withmanagement arise over upcoming audits. Without a SAM program in place,the only course of action is to initiate a massive manual inventory ofinstalled software. That often means countess hours tracking downproof that only the requisite number of installations exist.
Rooting out all the versions present and verifying that all the patching andlicense renewals are in order is a massive undertaking that borders on theimpossible, conceded Ron Halversen, vice president of marketing forTriActive. His company provides asset management inventory toolsthrough a SaaS (Software as a Service) model.
“This is where you start to get control over your software,” Halversentold the E-Commerce Times.
Automation is a key ingredient for helping companies manage theirsoftware assets, agreed Flesh. It drives consistent policies andprocesses throughout an organization.
Spreadsheet Kung Fu
Tracking and managing an organization’s software assets is a heavy,resource-intensive task. Many companies are still trying to do it on adepartmental or regional office level and think they are doing a goodjob. Essentially, all they are doing is playing spreadsheet kung fu,according to Flesh.
“A lot of companies are still ignoring SAM or trying to do itmanually. They are missing the boat on minimizing expenses andoptimizing benefits,” he said.
Some companies are paying 10 to 15percent of their budgets for software on machines thatare no longer used. These companies cannot show a businessjustification for the software they are using, he said.
A recent trial run that Halversen performed on a company curious aboutwhat SAM could do for it left little room for doubt. The company of200 employees turned up 1,400 software titles.
The audit uncovered that the company’s four-person IT department had its handsfull managing software it didn’t even know was on variousmachines. For instance, the inventory found 810 antivirusinstallations with four versions — some on the same computers. Severalantispyware products were also competing throughout the company.
The problem of cataloging software is even more daunting, Haversonexplained, because software vendors are not consistent with respect to how theyname products and version numbers. For example, the software inventoryshowed four different names for Adobe products.
After implementing a SAM program at one of HP’s customer locations, alarge auto industry client realized US$7 million in savings by no longerpaying huge penalties on software licenses, according to Flesh.
Another company discovered through a SAM catalogingprocedure that it had 1,300 installations of Microsoft OfficeXP Professional on corporate computers. The company was participatingin an enterprise agreement for the deployment, but 110 of thoseinstallations were illegal copies, Halversen said.
“Our SAM cataloging procedure can even let you see how often each userruns a particular software application. This can save money when acompany sees that it does not have to continue buying certain softwareand licenses,” he said.
Locking Down Licenses
Large organizations routinely spend 30 percent too much on data centersoftware, according to Compass America, a global management consultingfirm.
“Data centers are perhaps the most mature and efficient operationaltower within IT infrastructure. Areas such as personnel productivityand hardware acquisition, storage and utilization are honed to arazor’s edge. Nonetheless, significant performance gaps persist in thearea of software spend,” Scott Feuless, Compass senior consultant,told the E-Commerce Times.
Many organizations are unable to track software expenditures byplatform, by product, or by functional use, whether in the data centeror in another area of the organization, he noted.
Companies often overlook specific factors that contributesignificantly to higher costs. These include maintenance fees forproducts no longer used, licenses for similar products offeringredundant functionality, and licensing arrangements that fail to fitthe organization’s needs or specify the costs of individual products,according to Compass.
Inefficiency of software licensing is also affected by the fact thatno single individual is generally responsible for the process.Organizations should also consider renegotiating licensing agreementsand, in some cases, rebidding entire contracts.
“The key to a successful SAM initiative is to have the focusedattention and support of senior management, a governance process ofconfiguration and financial management to apply downward pressure onsoftware costs, and the formation of cross-functional teams between ITand finance to review software licensing on a regular, recurringbasis,” said Feuless.
The introduction of cloud storage and SaaS delivery models has littleto no impact on the SAM process, according to Halversen. However, cloudtechnology does add a layer or two of fog to the picture, arguedFeuless.
Cloud technology does complicate matters in a couple of ways. First,someone is tasked with monitoring and optimizing the softwareportfolio who may not even be aware of what is being utilized on thecloud. Contracts for cloud services must be monitored under the sameorganizational umbrella as software contracts so that SAM can functionas intended to eliminate redundancy, reduce waste and promotestandardization, Feuless explained.
The external cloud scenario’s business model is to have a third partymake more money based on the number of user accounts on its system.There is no financial motivation to report underused or unusedapplications.
“The organization using the service has to be proactive in optimizingthose types of things, just as they would — or should — with internallyowned software licenses. Think of it as SAM plus outsourcermanagement,” said Feuless.
In the real world, the effectiveness of any SAM program can only bemeasured through how much money a company saves. As efficiencies comein, the software bill goes down. Thus, the SAM team gets credit forit.
“That probably undervalues the SAM effort to some extent, since a goodprocess that becomes ingrained in the organization will avoid futurecosts instead of just eliminating old ones, and cost avoidance of anykind is rarely measured very well,” Feuless said.