BLOGs
Software
Published June 03rd, 2016 by

Why Software Asset Management (SAM) Will Save You Money and Reduce Risks

  1. Introduction

If you have been tasked with taking control of software licensing for your organization you will probably have been faced with many acronyms: ITAM, SAM, SLO & SLOE to name but a few! Digging deeper into the exact definition of these will probably not help you much due to the overlap and almost continual evolution of each of the terms.

So, hopefully to set some context, we will start out by defining what each of these abbreviations currently means.

  • ITAM or IT asset management – “… entails collecting inventory, financial and contractual data to manage the IT asset throughout its life cycle.” (Gartner)
  • SAM or software asset management – is “A process for making software acquisition and disposal decisions. It includes strategies that identify and eliminate unused or infrequently used software, consolidating software licenses or moving toward new licensing models.” (Gartner). The Business Software Alliance (BSA) defines Software Asset Management as: the practice of managing the lifecycle of software assets within an organization. It is a set of managed processes and functional capabilities throughout the five stages of their lifecycle (planning, requisition, deployment, maintenance, and retirement).
  • SLO or software license optimization – “… minimizes the risk of unexpected costs caused by software audits and cuts total spend by enabling reharvesting and eliminating wasteful buying of licenses that won’t be fully used.” (Forrester)
  • SLOE or software license optimization and entitlement – is a term created by Gartner that effectively expands SLO by embracing entitlement. Your entitlement is your “right of use” of the software you have purchased and can change from organization to organization and vendor to vendor. It is usually defined in your license agreement

 

  1. Why organizations implement SAM

There are two main reasons that organizations look to implement a SAM program. The first is reactive, in that it will help to control costs and risks. Whereas, the second is more proactive, as a SAM program will provide the framework that will ultimately enable you to optimize the use of your IT resources and ensure a better ROI going forward.

However, the monitoring and tracking of software you are using is notoriously difficult and despite what certain SAM tool vendors may say, there is no “silver bullet” technology solution that can solve the problem. Technology will play its part. But it is the tried-and-tested mantra of people, processes and technology that will ultimately deliver.

Controlling costs and risks

Get the best use of what you already have

With a typical laptop/desktop now costing under $500, the cost of software on such devices can be as much as ten times more. This means that software is a significant component of IT spend. Consequently, ensuring your organization is able to maximize the ROI on this spend is important.

This task is not made easy by the diverse and complex software licensing models adopted by the vendors. Knowing exactly what licenses you have and who is using them will enable you to determine what software you really need and ensure no overspend or underutilization. Also, you may be over-licensed and paying maintenance costs for software licenses not being used.

Ensure compliance with government and corporate regulations and limit legal risk

Being found in non-compliance of your software license agreement can be expensive. It can also prove to be very embarrassing and a potential PR disaster. Additionally, you may be part of a larger corporation that has specific regulations on non-compliance, so ensuring you meet these will help you avoid a career limiting scenario!

The final area that needs to be considered are industry based standards. Certain sectors like health and finance have their own industry-specific rules and regulations on SAM and meeting these is necessary for business operation.

Defense against a software vendor’s audit

According to Gartner there is now a 68% of chance of being on the receiving of at least one software vendor audit each year. This is likely to rise, as margins on software get squeezed, the major vendors will be looking to maintain license revenue by increasing the proportion of revenue they get from what is effectively a captive market.

Pressure also comes from another linked source, The Software Alliance/BSA. This organisation runs compliance and enforcement programs in 60 countries taking legal action against commercial end-user license infringement. In 2012 alone, BSA investigated over 15,000 reports of unlicensed software use across the globe. BSA investigates those reports through a combination of internal resources and through an extensive network of over 80 law firms around the world.

Whichever source the audit comes from, the disruption to your business and subsequent costs in the form of true-ups and fines can be large as Mars found out to their cost earlier this year.

By implementing a SAM program it will not only allow you to limit the financial and legal exposure from audits and the BSA, it will also allow you to negotiate the best licensing options with complete confidence.

Reduce security risks

Security is another reason for implementing a SAM program. If you do not know what software is installed and running on your corporate system you cannot protect yourself against all the threats that you are exposed to.

In particular, shareware and open source software poses an increased risk as security updates/patches for these are not as regular and consistent as from the major software vendors, whose business is dependent on delivering a secure solution.

A SAM program will enable you to centralize control and introduce policies to prevent unauthorized software downloads to minimize security threats and increase stability.

Optimize IT resources

Once up and running, the implementation of a SAM program will enable you to move beyond controlling costs and risks to optimizing your IT resources for maximum ROI. Areas where this will be of benefit include:

  • Reduced costs through centralized purchasing
  • Simplification of deployment, purchasing, and support through desktop standardization
  • Implementing infrastructure optimization and standardization
  • Reduced support needs through policies and standardization
  • Implementing policies that drive more automation and improve productivity
  • Reduced redundancy while being sure all employees have the tools they need
  • Enabling IT to focus on upgrades and business goals instead of unnecessary IT complications
  • Improving system, user and help desk performance
  • Implementing comprehensive backup and recovery plans

Research by Gartner has shown that organizations that invest in a SAM program can save up to 30% of their software and hardware budget in the first 12 months alone, with incremental savings of up to 5% in the following years. As software and hardware now account for 20% of the total IT budget, this can be substantial saving.

  1. Understanding SAM challenges

It is likely that your organisation will have started down the road of implementing a SAM program and so the first challenge will be to understand where you are on this path. This will better help you understand the actions you will need to take next.

Based on the ISO framework and the SAM processes standard, ISO/IEC 19770-1, Microsoft has developed a SAM Optimization Model that seems to have been adopted in various forms across the SAM industry.

This model provides a set of criteria to make consistent SAM assessments and recommendations, and can help your organization become more agile through better use of resources, even in times of
changing business conditions.

 

Once you have worked out where you are on this model, you will then be faced with more tangible challenges.

Broadly these can be grouped into three categories:

  • Hardware inventory
  • Software license entitlement
  • Organisational

Hardware inventory challenges

Today’s IT environment is complex and wide ranging for even the smallest organisation. From mobile devices, like smartphones and tablets, through traditional desktop and laptops computers, servers and the datacentre to the cloud, there are a myriad of devices to identify and inventory.

All of these will be running software with different versions and editions (sometimes even on the same device), making your job even more difficult. The issues surrounding discovery could fill an entire article on its own.

Software license entitlement challenges

Aside from what are termed the mega-vendors (Microsoft, IBM, Oracle & SAP) there are a multitude of large, medium and small vendors offering software your organization is in all likelihood using.

Every vendor has a different model for licensing and how it allocates your entitlement to use their software in different environments. One current hot area is virtualization and thin clients. Many organizations implement these technologies as a way of saving money, but completely fail to take into account the implications this can have on their licensing agreements. As a result they end up non-compliant with additional costs and penalties that can far outweigh the initial savings.

Usually, these instances of non-compliance are only discovered at the time of a vendor audit leading to unexpected costs and possible penalties.

Organizational challenges

Many organizations have recognized the need to address the management of their IT estate and have typically used an ITAM tool to understand this. Whilst such tools will provide some information on your software assets, it will not be of sufficient detail and intelligence to be of much use for SAM purposes.

Older SAM tools require different feeds to produce data in different files accessed through varied UIs and typically only provide point-in-time, rather than dynamic data. All of which cause the job of collecting and analysing SAM data to be time-consuming and onerous.

Matters can be further complicated by the lack of sponsorship of a SAM program from a senior employee. This results in a bottom-up, rather than top down approach and can lead to a dilution of the anticipated benefits due to inconsistent adoption across the organization.

  1. The benefits of SAM

The benefits of implementing a SAM program will be realized across the entire organization. But there are 3 major areas we will focus on here.

IT

IT will be the major beneficiary of SAM in that having full visibility of all your software assets will enable you to streamline their entire lifecycle, ensuring that budgeting is accurate and that upgrades and new deployments are carried out efficiently and to plan with no surprises.

It is estimated that currently, IT staff that are tasked with SAM spend some 70% of their time collecting and analysing the data to produce a point-in-time report that is immediately out of date. This is mainly due to the manual methods they have adopted or the use of inappropriate or older ITAM/SAM tools that are incapable of providing dynamic and real-time information.

Going forward, implementing a SAM program with a modern tool will enable you to optimize your license position, rationalize your hardware and software and effect cost savings in both capital and operational areas, like support, that will provide a compelling ROI.

Legal/vendor

It is a sad fact that for many organizations their software vendor will know more about their software estate than their own IT staff. This leaves you in a very exposed situation when an audit takes place. The necessary disciplines and procedures that a SAM program brings will prevent this situation and enable you to not only prove your compliance (and prevent penalties) but negotiate an improved deal with the vendor going forward.

You will also be able to better manage your spend on software maintenance as you will know exactly which software assets actually require maintenance.

Purchasing/procurement

A SAM program will enable your organization to gain improved efficiencies through providing effective centralized control that will ensure you can implement cost-effective procurement procedures. These will greatly simplify reporting, budgeting and the acquisition of IT assets.

The increased visibility of your software estate coupled with the improvement in your entitlement knowledge will enable you to optimize your license purchases by ensuring that unused licenses can be re-harvested and reused elsewhere in the organization.

Hopefully this article will have demonstrated to you the value of implementing a SAM program in your organization. In the next article we will give you an outline of how you can actually go about this process.

If you have any questions please contact us.

Russell Fry

Global Head of Marketing at Certero
Russell Fry is Global Head of Marketing at Certero whose IT asset management platform – AssetStudio – helps organizations implement successful SAM programs’.

Latest posts by Russell Fry (see all)

Our rankings are completely independent, transparent, and community driven; they are based on user reviews and client sentiment. These software companies had to earn their way up and didn't just pay their way up.

View Rankings of Best Software Companies