Software Asset Management (SAM) Blog

In my last blog post, I looked at why board level approval is essential for a successful Software Asset Management (SAM) program. Unfortunately, SAM is not automatically on the board agenda for most organizations today, which explains why so few enterprises have yet integrated SAM into their Business As Usual activities.

The challenge for the SAM program manager is to how to communicate to the board why SAM needs to be on the agenda.

There are two key messages that will get the board’s attention and two that won’t!

The threat of director’s fines and prison is a common reason for implementing SAM but is somewhat hollow as, in practice, it’s often far too hard to prove in court. Using cost savings to justify SAM is also problematical as it can be hard to predict exactly where the cost savings will coem from until you have the SAM program well underway.

The two messages that will get the boards attention are Corporate Governance and Risk Management. With increasing emphasis on good Corporate Governance, Software Asset Management can be shown to have a small but important role to play in meeting compliance requirements. Many financial directors don’t really understand the risk to the business that un-managed software poses, either from a large unbudgeted cost or disruption to business operations due to license compliance activities from the software vendors.

In the current economic climate, all major software vendors are increasing their license compliance activities as a means of maximizing revenues, so now is a good time to take the SAM message to the board!

As well as the message that SAM is essential to do and do well, the board will want to see a business plan that shows the costs to identify and manage the risk and an estimated return on the investment from improved efficiency and license optimization.

This business plan is very difficult to create from scratch, especially if you’re embarking on a SAM program for the first time.  Luckily, there are a few resources that can help. FrontRange SAM Essentials provides a wealth of help and documented best practice guidance in putting together a business case and can be used to communicate the benefits of SAM to senior management.

According to the BSI/ISO 19770-1 SAM Standard, for SAM to be effective, the board has to sign up and acknowledge its responsibility for corporate governance relating to software licenses and software assets. The board also needs to periodically review and approve the risk assessment relating to software assets with reference to regulatory and licensing non compliance, excessive spending and organisational processes and procedures.

Selling SAM to the board can be tough, especially when you can’t accurately gauge exactly where the savings are going to come from.  However, with tools like FrontRange SAM Essentials, this task can be significantly eased with the aid of documented best practices and clear project management goals.

This blog is primarily concerned with managing software, but it’s worth remembering that Software Asset Management (SAM) is inextricably linked with other areas of IT operations, not the least the help desk or service desk.

Why? Because as we all know, creating an accurate software inventory is a critical part of SAM. And while you’re creating the software audit, any Discovery tool worth its salt should also be delivering a complete configuration audit of all PCs, servers and workstations on the network.

For ‘pure’ SAM, this hardware information might seem like redundant information. But it can actually deliver significant savings to in your service management efforts. According to Gartner and other industry analysts, the average help desk call lasts around 14-17 minutes. Approximately 42 percent of this time is spent assessing the current location, configuration, user details and software audit of the PC in question.

By having the full PC audit information automatically available to your helpdesk user – either as a fully integrated solution (like Centennial Discovery within FrontRange HEAT or FrontRange ITSM, for example) or automatically queried from the asset repository, organizations can dramatically reduce the length of individual helpdesk calls, leading to significant ITSM improvements.

So don’t view SAM in isolation, always remember that the efforts that go into managing software more effectively can also provide significant benefits in other areas of IT operations.

It’s an unpalatable fact of life at the moment that large numbers of organizations are downsizing, undertaking forced mergers or having to fundamentally shift their business focus in order to stay alive.

While all of these activities are conducted with the explicit aim of driving down costs in the business at the same time as (hopefully) increasing profitability, there is one area of cost that is often overlooked – the software owned by the organization.

According to research from McKinsey, software licenses are expected to account for 35 percent of the total IT budget in 2010. This represents a significant expenditure for any organization.

In fact, the concept of ‘owning’ software in this context is actually something of a misnomer. As any software licensing specialist will state, you don’t actually ‘own’ software, you buy the ‘right to use’ it. Nevertheless, if your business has experienced a reduction in workforce (whether through downsizing or perhaps merger) or a change of structure, then there’s a very high possibility that you’re currently paying for more software than you are actually using.

Whatever your actual or expected software usage was when the licenses were originally purchased, volume license agreements agreed or support and maintenance agreements established – the chances are that you’re now using less. As such, it’s perfectly logical to consider renegotiating your license agreements as part of your ongoing cost saving strategy.

But you can only do this when you are confident that you know exactly what your present license position is, what software is currently installed on the network and how it’s being used.

And that’s why – contrary to what many people might think – investing in Software Asset Management (SAM) actually makes even more sense in a recession.

If you want to enter into a renegotiation with a vendor, you need to do it from a position of strength. And that means being in possession of the cold hard facts about software installations and usage across your entire network.

Having this information gives you a number of options to explore. First, you can ensure that any unused software dormant on PCs is removed (in most cases, it only needs to be installed for it to need a license, whether it’s being used or not). Then, armed with information on how many licenses are going unused, you can then make decisions about re-deploying those licenses to other parts of the business (where licensing terms and conditions allow) or using the up-to-date usage information to renegotiate volume license or leasing agreements. And don’t forget support and maintenance; according to Forrester Research, organizations can typically waste as much of 10 percent of their total support and maintenance payments on software that isn’t being used.

Back in 2006, Gartner estimated that the average organization was over-licensed on around 30 percent of their software estate. Today that figure is likely to be much higher – and that’s a real cost to the business that it doesn’t need.

The Business Software Alliance (BSA) has simultaneously announced legal actions in both the USA and UK, totalling a reported US $256,000 (UK £155,000). According to BSA media releases, an industry materials firm in Florida and three separate businesses in London, UK were all found to be using unlicensed software.

Although the companies in question reportedly co-operated fully with the BSA in its investigation, the scale of the financial agreement is a strong indicator that the industry watchdog is taking a firm line with organizations that can’t prove they have a responsible and proactive approach to Software Asset Management.

The actual cost of the software is likely to be a relatively small percentage of the overall settlement, showing that getting your house in order prior to an audit is a much more cost-effective option.