Software Asset Management - ROI & Challenges

Date:   Wednesday , March 23, 2016

The implementation of SAM in managing IT infrastructures is slowly gaining momentum. The adaption of this business practice will reduce IT costs, curb risks related to rights, use of software and will also expand the corporate functions improving IT efficiencies. SAM provides improved knowledge, bringing a wide range of advantages such as:

• Clear insight into the utilization and value of software

• Proper Management of software licensing

• Efficient maintenance of software utilized

• Enhanced buying decisions and ability to negotiate

• Improved system protection, data reliability and data security

In recent times, most companies have realized the importance of efficient software asset management (SAM) program in controlling escalating software expenses and realizing full potential of software deployment. Organizations have started developing more awareness about their licensing environments. This increased attention can have significant affect on planning expenditure by reducing initial purchase expenses and controlling current maintenance costs.

An effective SAM implementation will have considerable impact on ROI. SAM can impact the functioning across a range of dimensions in the organization. These include:

1. Better Management of the IT Footprint: Most companies adopt active management principles for hardware assets, but tend to overlook software management. Applying similar level of sophistication in software can help the organization to substantially cut down on initial investments while reaping maximum benefit for all existing technologies.

2. Informed Decisions & Negotiating on Leveraging Software Purchases: With enhanced awareness & specific requirement for software, organizations can procure and deploy the right addition of software in the right areas. The organization\'s increased awareness will enable more cost effective purchases through tools such as volume purchase agreements or bundled services.

3. Improved Adherence to Licensing Policies: Big organizations have the tendency to overrate the ability to follow licensing compliance. SAM ensures that companies run only authorized software.

4. Better Risk Mitigation & Administration: Organizations that lack the knowledge of software implemented are unable to track potential risks. Lack of understanding and management of software environment can lead to compromised data integrity and security, customer privacy and even network susceptibility.

5. Other intangible benefits of adopting SAM would be improved responsiveness, flexibility, information flow and similar \'soft\' benefits.

A comprehensive SAM strategy helps organizations to develop long-term strategic benefits of effective management. But there are certain common misconceptions and obstacles that hamper the effective implementation of SAM by both software publishers and end-users of SAM.

Many organizations tend to be skeptical about adopting global Software Asset Management (SAM) program to gain better visibility of IT assets with the added intention of cost cutting, cost control, and risk management. SAM struggles to demonstrate value. Though the tools may be in place, effective implementation still lacks a strong foundation.

Some of the major challenges to effective implementation are as follows:

1) Attempting to Address Multiple Issues - Most organizations fail to formulate a comprehensive plan that helps them realize their vision. Though organizations plan to pay 100% attention to track the software environment, eventually they tend to loose track of prioritizing tasks such as initial vendor targets, the steps that need to be followed to get some quick wins to maintain the momentum. In most of the cases, the 80% of the software utilized in organization comprise 20% of the portfolio of the supplier. There are high probabilities that in most of the organizations, the expenditure costs include the complications of following licensing policies and also the scope for risk is greater here. The additional value derived by focusing on the final 20% of spend (and associated vendors) is often minimal. But the task of tackling all software vendors and licenses right out the door could be quite overwhelming.

2) Assuming SAM to be a one point solution - Organizations assume that adopting a solution that tracks their software environment will reap immediate results and will handle management of all software assets. Organizations tend to overlook the fact that software asset management is about people, processes and tools. If organizations fail to have the right skills set in place to manage software assets and the right mix of processes and governance in place, the reports generated will be anything more than numbers on a page. The approach and the practices adopted by the organization to monitor and manage the assets are detrimental in enabling the success and sustainable management of IT infrastructure. This practice drives cost savings, mitigate risk, and improve utilization of company\'s assets.

3) Undefined pedestal for success - Organization fail to provide definite metrics and terms to measure the success of SAM program. Software Asset Management is usually considered as a back end process where as it can be instrumental element in enabling financial and strategic IT processes of the organization as well. Creation of value scorecards that measure and report on key metrics - financial (i.e. cost savings, cost avoidance, risk avoidance), process efficiencies (i.e. technical, operations, etc.), risk avoidance (audit penalty reduction, true-up savings, etc.) and stakeholder adoption (i.e. % of assets under management, business units (BU) compliant, cross-BU buy-in, etc.) - are crucial for effectively communicating success of the enterprise. If SAM is not involved in measuring and communicating saving plans and success goals, the value of the SAM program can go unrecognized. In the absence of this, funding for SAM will become diluted and the \'cost of doing nothing\' becomes a significant, yet hidden risk within the enterprise, until a major event occurs to re-prioritize the focus.

Eventually, as companies start acknowledging the value of software asset and challenges faced due to compromised practice of actively managing asset, SAM adoption is bound to grow by leaps. In the long run, organization with restricted SAM capabilities will be very limited. On the whole, SAM represents a more proactive approach to the management of a vital strategic asset. The ability to explore the full potential of existing software through SAM will be the key differentiator of successful organizations. The companies that are able to achieve full utilization of existing assets in the most efficient and effective way, in the shortest time span will gain significant competitive advantage.