It’s time for a better approach to software asset management. Companies spend a lot on the software they use to conduct business—typically from 35% to 55% of their IT budget. For many, though, managing those software assets effectively can be compared to patients going to a doctor for treatment of pain. They know they’re in pain; they know where the pain is coming from; but they don’t know what is causing it nor exactly how to fix it.
So, consider a few software-related pain diagnostics:
- Has your organization ever been audited by a software publisher?
- Has your organization seen software spending increase in a way that is out of proportion to your business growth?
- Does your organization purchase and/or renew software licenses without knowledge of your actual need and usage?
These can be big problems for companies, and the stakes in effective software asset management can be high. Complex contracts, extensive software licensing options and changing usage rights, combined with a growing range of software titles and vendors, make it extremely difficult for an organization to stay compliant and optimized.
Improper use of software or failure to comply with license use rights can penalize the business, undermine its reputation and result in millions of dollars in penalties. Companies need to do a better job of controlling software costs, eliminating compliance risks, and optimizing their software licensing portfolio to meet business needs. Fortunately, industry-leading software asset methodologies and multiple tooling options now exist that enable companies to achieve optimized licensing agreements.
Phases in the journey
In Accenture’s experience, one way to begin is to pick one contract that is causing pain, then analyze and optimize that using leading analytic tools, supported by experts with extensive licensing knowledge and years of industry experience who understand the complexities of software asset management. In addition to the immediate benefits of the optimization, it’s a way to demonstrate value to corporate leadership. Consider a single contract costing, on average, $20 million per year. Taking two or three million off that is likely to get the C-suite’s attention. The savings can then also fuel additional software optimization activities.
With that momentum, companies can begin the next phase, which is to introduce more mature processes as well as automation and a software analytics program. Companies can also look at their infrastructure from a licensing standpoint as they migrate to a cloud platform.
Benefits of optimized software asset management
Benefits of a stronger and more comprehensive approach to software asset management include:
- Cost savings: Companies can more effectively identify precise, actual software usage; eliminate unused or infrequently used software; consolidate software licenses; and move toward better licensing models. These actions can add up to more than 25% cost savings. Effective software asset management not only helps companies avoid overspending but also lets them forecast their IT budget more accurately.
- Cost avoidance: Many organizations end up spending millions of dollars on underutilized licenses. Better visibility into your license usage means you only buy what you need, while gaining better insights into your organization’s software requirements. Better licensing coordination makes the license transfer, acquisition and disposal process easy and efficient. This eliminates the possibility of violating compliance terms.
- Avoid fines and penalties: Most organizations receive at least one audit request each year. But with effective software asset management, any application license deficits can be identified and addressed in advance, avoiding financial risk.
- Optimize the software portfolio: With more effective tools and methods, companies gain a 360-degree view of their existing IT investments. These insights are extremely useful in aligning IT investments with business objectives. Additionally, software metering and usage data allow business leaders to more accurately forecast their future IT needs.
- Repurpose rather than buying new: With employees moving positions all the time, effective software asset management provides a cost-effective framework to identify which licenses can be re-harvested, leading to less spending on new licenses and less pressure on the IT budget.
A Middle Eastern bank was able to realize several of these benefits through better software asset management. Working with Accenture, they identified millions in cost savings in less than six weeks by running full reconciliation of their licenses against inventory, eliminating unused and under-used licenses, and consolidating and bundling products. These actions resulted in a substantial reduction of the contract cost, allowing the bank to realize a 10X ROI on their investment.
Conclusion: Easing the pain of software asset management
Ongoing innovations will continue to revolutionize software asset management. Blockchain technology, for example, can simplify the traceability of licenses, and, therefore, the auditing function so all can see where each license is assigned. This has the potential to save organizations millions of dollars per year in the management of their software license portfolios. All in all, the methods and tools available to companies both now and in the future will go a long way toward easing the pain of software asset management.