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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