Headline Feeds
Think of the ideal software asset management (SAM) system as a monitor that displays what exactly drives your business operations. It provides a readout of all the software installed throughout the company's computer systems, and much more.
SAM programs also help IT departments rein in duplicate or redundant software applications. Software budget overruns and license compliance management are becoming increasingly complex concerns.
Why should you care? Companies that fail to track their software assets tend to overspend on software purchases and often fail to maintain licenses for all installed copies of software. Even products that are installed but no longer used may require license renewals or encounter potential configuration conflicts. Lack of management could also lead to financial risk from compliance violations and failed asset audits.
"Software represents about 20 percent of the IT budget, and 20 percent of the software cost is associated with the initial purchase. The overall life cycle of software represents a significant portion of the IT budget. So companies that are not using SAM are wasting money, increasing their audit exposure -- and they are increasing their security and compliance risk," David Flesh, director of IT service management for HP (NYSE: HPQ) Software and Solutions, told the E-Commerce Times.
Key Goals
One of the primary results of having an effective software asset management program in place is saving money. However, the SAM process has more goals associated with it that help control software overruns, according to Flesh.
For example, understanding license requirements will mitigate penalties. Cost optimization is a key driver for getting customers to adopt a SAM program. Reaching that goal is much more difficult without the automated approach SAM provides organizations.
Another key goal is control over governance issues. SAM programs help companies maintain their regulatory compliance for mandates from the Health Insurance Portability and Accountability Act (HIPAA) in the health industry and the the Sarbanes-Oxley Act for the financial industry.
Customer Benefits
Picture the panic in a small IT office when discussions with management arise over upcoming audits. Without a SAM program in place, the only course of action is to initiate a massive manual inventory of installed software. That often means countess hours tracking down proof that only the requisite number of installations exist.
Rooting out all the versions present and verifying that all the patching and license renewals are in order is a massive undertaking that borders on the impossible, conceded Ron Halversen, vice president of marketing for TriActive. His company provides asset management inventory tools through a SaaS (Software as a Service) model.
"This is where you start to get control over your software," Halversen told the E-Commerce Times.
Automation is a key ingredient for helping companies manage their software assets, agreed Flesh. It drives consistent policies and processes 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 a departmental or regional office level and think they are doing a good job. 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 it manually. They are missing the boat on minimizing expenses and optimizing benefits," he said.
Some companies are paying 10 to 15 percent of their budgets for software on machines that are no longer used. These companies cannot show a business justification for the software they are using, he said.
Horror Stories
A recent trial run that Halversen performed on a company curious about what SAM could do for it left little room for doubt. The company of 200 employees turned up 1,400 software titles.
The audit uncovered that the company's four-person IT department had its hands full managing software it didn't even know was on various machines. For instance, the inventory found 810 antivirus installations with four versions -- some on the same computers. Several antispyware products were also competing throughout the company.
The problem of cataloging software is even more daunting, Haverson explained, because software vendors are not consistent with respect to how they name products and version numbers. For example, the software inventory showed four different names for Adobe (Nasdaq: ADBE) products.
Cost Factor
After implementing a SAM program at one of HP's customer locations, a large auto industry client realized US$7 million in savings by no longer paying huge penalties on software licenses, according to Flesh.
Another company discovered through a SAM cataloging procedure that it had 1,300 installations of Microsoft (Nasdaq: MSFT) Office XP Professional on corporate computers. The company was participating in an enterprise agreement for the deployment, but 110 of those installations were illegal copies, Halversen said.
"Our SAM cataloging procedure can even let you see how often each user runs a particular software application. This can save money when a company sees that it does not have to continue buying certain software and licenses," he said.
Locking Down Licenses
Large organizations routinely spend 30 percent too much on data center software, according to Compass America, a global management consulting firm.
"Data centers are perhaps the most mature and efficient operational tower within IT infrastructure. Areas such as personnel productivity and hardware acquisition, storage and utilization are honed to a razor's edge. Nonetheless, significant performance gaps persist in the area of software spend," Scott Feuless, Compass senior consultant, told the E-Commerce Times.
Many organizations are unable to track software expenditures by platform, by product, or by functional use, whether in the data center or in another area of the organization, he noted.
Other Factors
Companies often overlook specific factors that contribute significantly to higher costs. These include maintenance fees for products no longer used, licenses for similar products offering redundant functionality, and licensing arrangements that fail to fit the organization's needs or specify the costs of individual products, according to Compass.
Inefficiency of software licensing is also affected by the fact that no single individual is generally responsible for the process. Organizations should also consider renegotiating licensing agreements and, in some cases, rebidding entire contracts.
"The key to a successful SAM initiative is to have the focused attention and support of senior management, a governance process of configuration and financial management to apply downward pressure on software costs, and the formation of cross-functional teams between IT and finance to review software licensing on a regular, recurring basis," said Feuless.
Cloudy View
The introduction of cloud storage and SaaS delivery models has little to no impact on the SAM process, according to Halversen. However, cloud technology does add a layer or two of fog to the picture, argued Feuless.
Cloud technology does complicate matters in a couple of ways. First, someone is tasked with monitoring and optimizing the software portfolio who may not even be aware of what is being utilized on the cloud. Contracts for cloud services must be monitored under the same organizational umbrella as software contracts so that SAM can function as intended to eliminate redundancy, reduce waste and promote standardization, Feuless explained.
The external cloud scenario's business model is to have a third party make more money based on the number of user accounts on its system. There is no financial motivation to report underused or unused applications.
"The organization using the service has to be proactive in optimizing those types of things, just as they would -- or should -- with internally owned software licenses. Think of it as SAM plus outsourcer management," said Feuless.
Dollar-Sign Measurements
In the real world, the effectiveness of any SAM program can only be measured through how much money a company saves. As efficiencies come in, the software bill goes down. Thus, the SAM team gets credit for it.
"That probably undervalues the SAM effort to some extent, since a good
process that becomes ingrained in the organization will avoid future
costs instead of just eliminating old ones, and cost avoidance of any
kind is rarely measured very well," Feuless said.
