Australian Software Asset Management Association




Software Asset Management Benefits




There are many benefits available from implementing and maintaining an effective Software Asset Management (SAM) program. The ability to identify and then to deliver on these benefits will ensure that you have the executive sponsorship that is required to implement and effectively support a SAM capability.

The most immediate and most obvious benefit that is claimed for Software Asset Management is the management of software licences, to ensure that these software licences are being used as per the agreed terms and conditions between the organisation and the vendor. The software asset management team’s effective software licence management will place the organisation in a strong position to manage and control any vendor audit. An audit of your organisation by an external organisation needs to be managed professionally. There is a significant amount of time spent in managing both a vendor and a third party auditor, that requires the right approach, strategy and management skills, to ensure that the organisation is protected at all times. The software asset management team being the Software Asset Management subject matter experts, who are experienced in undertaking audits themselves, are the right people to effectively manage any software audit activity.

A well run and mature Software Asset Management capability is well position to protect the reputation of an organisation from a claim of non-compliance. Any organisation does not want its reputation to be damaged and it is one of those intangible items to put a dollar cost on, reputation is to some extent, priceless. This is why an organisation goes to great lengths to build a reputation and then to protect it. Non-compliance claims are either made prior to or after an audit. In having a software asset management team of professions they are perfectly placed, skilled and experience in effectively handling these reputation claims on non-compliance.

As software is a high cost item to the organisation, any initiatives to reduce those costs will receive attention and support. Typically these cost savings can be achieved through negotiation on the purchase price, centralised purchasing, re-allocating unused software, early involvement in solution design, inclusion in the change and release processes, and by reducing compliance related costs initiated by vendors.

Financial savings can be achieved through negotiating the purchase price either through formal contract negotiations or by ad-hoc procurement processes that have already negotiated the best possible price. These should be the standard approaches. Accepting a vendors first pricing offer will mean you are paying too much. In entering negotiations with a vendor remember that the vendors cost to produce is quite small, after the initial investment in developing the software. Software vendors usually operate at an 80% return on investment; therefore there is plenty of room to negotiate the price downwards.  To put this into perspective businesses that can achieve a 10% to 15% net profit in the non-IT industries, are doing well. Ensure that the ongoing maintenance costs are known and agreed to prior to purchasing, and that any future purchases have an agreed purchase and maintenance price. Be careful of any CPI built into the contract, if you cannot negotiate it out, base the CPI percentage increase on an independent source, such as the Australian Bureau of Statistics. In establishing all possible future financial costs when the contract is negotiated, it will provide budget certainty for future year’s costs. Any contract negotiation should also include changes to the vendor’s terms and conditions, as these are written in the vendors favour. 

The centralisation of procurement will bring volume discounts to the purchasing of software and enhance the Software Asset Management capability in managing the software licences. The benefit the organisation receives from being able to purchase at a cheaper rate, then being able to manage the software in the environment to ensure compliance is achieved, therefore avoiding any unfunded liability through non-compliance, is quite significant. Governance controls over a centralised procurement process is easier to manage and to standardise to ensure compliance to the organisations procurement rules than a distributed procurement process, undertaken by many individuals that may or may not be skilled to the level required by the organisation in procurement. 

Reallocate software that is installed but unused, or software that was previously purchased before but never used will bring financial savings over future expenditure and provide software to enable staff to be productive quicker. Over a period of time, most organisations have built up a large surplus of software, mostly through purchasing of more software, when they could have just reallocated unused software. By effectively managing the software and reassigning unused software based on the terms and conditions to people that need to use it, will ensure that no money is being spent unnecessary on software licensing and will provide substantial financial savings in the longer term. 

Early involvement in solution designs will bring a commercial element to decision making. Often IT technical people will only think of hardware costs and not software costs. The hardware savings are minimal compared to the software costs that virtualisation brings. These software costs are significant, most IT technical people do not recognise that every virtual instance has a software cost to it. The software asset management team need to become involved in the solution designs for physical verses virtual, in-house verses cloud hosting, the size and configuration of the solution and the subsequent software selection, to provide input into the financial and legal realities of these designs. This will provide important guidance to the solution design which will potentially contribute to saving a considerable amount of money or at a minimum, providing the budget certainty in supporting the endorsed solution into the future. 

The visibility of what software has been provided to different people in the organisation enables their managers to undertake governance over the software costs the managers team is incurring and what systems they have access to. This could drive savings in limiting software usage to only what is required to undertake their duties. In more mature organisation’s a person’s role has a pre-assigned list of software provided to them to undertake their duties. When they move roles then their previous access to software is removed and they are assigned access to software they require for their new role. 

Vendors quickly become aware if an organisation is managing or not managing it's software. Your role is to manage software licensing to the extent that a vendor believes there are very low returns if they were to audit you. Vendors who undertake audits need to have a return on their audit investment. A benefit of Software Asset Management is that the more mature the organisation capability, the less likely the vendor will obtain a return from their audit. If you can achieve a successful, mature Software Asset Management capability within your organisation, then this will reduce any unfunded liabilities you will have from a potential over deployment. 

There are other benefits to be obtained that go beyond just financial benefits, these go to the efficient and effective operations of IT in your organisation. These benefits include security, service management, architecture and solution design, IT visibility and productivity. 

Service management processes of change management and release management are significant control measures in stopping the deployment of unauthorised software. It is important that the software asset management team become involved in these service management processes. For change management and release management the software asset management team should become an approver of all proposed changes and releases. By being an approver this will ensure that the software involved in a deployment is licensed and it will effectively stop the unauthorised release of software. Capacity planning benefits in knowing what software is deployed, who is using it, what are the trends in software usage will also be obtained through the capability provided by Software Asset Management. Like capacity planning, business continuity planning also benefits from Software Asset Management. Business continuity needs to understand what are the IT requirements to ensure that an organisation can still provide business services to customers, after an incident has affected those services. To enable IT services, Software Asset management provides visibility to the software assets deployed in the environment and should also have provided the contractual mechanism to enable additional software to be deployed during a business continuity incident. Involvement with service management processes will raise the profile of software asset management in one of the important control gates and users of software in IT. 

Organisations that manage software would also be effective hardware asset managers. Software discovery tools initially rely on discovering the hardware prior to the software. Hardware asset management is not as complex as Software Asset Management, and there are many similar processes between hardware asset management and software asset management. Efficiencies and organisation effectiveness can be improved in aligning both hardware asset management and software asset management. There are numerous benefits in aligning both hardware management and software management. 

The benefits of a dedicated Software Asset Management capability is that the requirements to be compliant to legally binding terms and conditions is not left to staff within the organisation, that is not their prime responsibility. Usually these teams have no skills or experience in software asset management. Software Asset Management is highly complex and cannot be done on a part time basis. All organisations are audited at one time or another, and to have a highly professional team that does manage the software assets within the organisations environment, and is skilled and prepared for audits, will bring immense benefits to that process, compared to part time staff who have no knowledge, no experience or no skills. 

Many organisations have outsourced either their infrastructure or applications, or both to other organisations but in some cases have maintained ownership of the software. To ensure that the actions of the outsourcing organisations do not place your organisation at a compliance risk, a Software Asset Management capability is required to provide governance and direction to the outsourcers. An outsourcer’s behaviour can be greatly influenced by a Software Asset Management capability that will monitor and reported on the outsourcer. This will enable the organisation to take appropriate measures with the outsourcer, if the outsourcer is placing the organisation into a compliance risk. 

As a result of improved visibility of software products by the deployment of Software Asset Management capability, this can lead to the standardisation of software products to provide a capability to support the organisation. The software asset management team is ideally placed to provide the expertise in understanding the costs of and the associated terms and conditions of each software type in determining which software should be retained and which software to be decommissioned. The software asset management team could use this opportunity to renegotiate pricing and terms and conditions with vendors, which may also lead to the selection of what software, will be retained. The software that is being decommissioned, the software asset management team will be able to determine what the organisations responsibilities with the vendor are and ensure these responsibilities are met, thereby effectively nullifying any vendor audit activity. Standardisation of software achieves a systemic saving and productivity improvement throughout the organisation. This was previouslydiscussed on the financial benefits in knowing what software is allocated to staff, it is also beneficial for staff to be assigned the right software to do their jobs. By providing visibility to what software is being used, it will enable the decisions to be made on version standardisation, data interchange requirements and improved information sharing. Staff that have the right software assigned to them are more productive. 

Benefits from the standardisation of software from a IT perspective means there is less software to support. This results in a reduction in the diversity of required skill sets to support and enhance the software. The interoperability requirements between many diverse systems is lessened, the diversity of security testing, patching and monitoring is reduced. The standardisation of solution designs and architecture is achieved and this results in there being less software to be managed by the software asset management team. Financial benefits are achieved through better pricing due to larger volumes of purchasing from fewer vendors, which has a flow on effect of negotiating better terms and conditions. 

This article covered a lot of ground in identifying the various benefits and required actions to achieve those benefits for Software Asset Management. These benefits are real and can be systemic through the IT department of your organisation. The actions required in how to achieve these Software Asset Management benefits are to be discussed in far greater detailed in the topic specific articles and in-depth information articles. 


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