Implementing Software Asset Management (SAM)
New software management approach
In the coming years, businesses around the world are expected to increase expenditure on software; in 2018, it should grow by approx. 10 percent. Purchase decisions are often affected by such factors as innovation, digitisation, an opportunity to gain competitive advantage or increase stakeholder value of an organisation. The risk of rapid increase in software maintenance costs, IT management requirements or the number of cyber risks cannot be overlooked, though.
Implementation of Software Asset Management - SAM may be a source of enormous business benefits. An appropriate strategy supported by well-designed processes and procedures can help a business to both identify and effectively manage risk, often ignored or deemed immaterial. Many firms fail to optimise their software or manage it effectively, though.
A survey held during the latest Deloitte SAM Academy meeting among Software Asset Managers and other individuals dealing with the issue indicated that:
- 76 percent of respondents implemented an appropriate SAM strategy with the related processes and procedures only partially or did not implement them at all;
- 45 percent of organisations did not monitor their licence compliance on a continuous or regular basis;
- 96 percent of respondents considered their firm’s SAM awareness as low or medium.
Reluctant implementation of software management initiatives is caused by the continuous technological progress being accompanied with growing complexity of licence agreements and challenges associated with integration of systems and data. Interestingly, SAM project should receive priority treatment for the same reasons. Effective software management requires continuous improvement of processes that need to be adjusted to requirements resulting from the growing volume and complexity of the used software and its underlying licences. Moreover, enterprises must face security threats arising from unauthorised use of software or a breach or contractual terms regarding such use, to say nothing about quite frequent occurrence of redundant costs related to unused subscriptions, software or support services. For example, 22 percent of purchased software is never used and 58 percent of firms pay for software they never make use of.
Nevertheless, many IT managers incorrectly perceive SAM as a something “nice to have”, not as a key component of effective IT and cybersecurity management strategy. IT directors who do not invest in an effective software management strategy and do not organise a dedicated SAM team may expose their companies to an array of serious legal, financial, operational and image-related risks.
For this reason, businesses that make broad use of software should consider re-designing their software management processes and perceive the related activities as strategic IT initiatives.
A new look at software management strategy
Optimisation of expenses related to software purchase, installation and use over its entire life cycle should be the key objective of a SAM strategy. The need to limit cyberthreats, supplier audit risk and tighten cooperation with suppliers requires special attention as well.
Answering the following questions is a good starting point to justify certain initiatives in this respect and get into action:
- Do software costs in my firm grow faster than other IT-related expenses?
- What is my vision of success and how can I implement an effective SAM strategy?
- Do I have an appropriate team in place, capable of successful implementation of software management activities?
- Does the currently used technology allow my people to achieve the assumed outcome?
- How can I measure return on investment that supports the need to implement the SAM projects I am pursuing?
Investment in an effective software management plan may bring a significant return. On average, approx. 30 percent of IT budget is used for software. Based on our observations and calculations, savings expected from SAM implementation may range from 5 to 25 percent of total application costs.
In many cases software management is not perceived as a strategic initiative as enterprises do not pay attention to potential financial and operational benefits, or software audits are not costly enough to make them act. Currently, implementation of a SAM initiative provides organisations with additional benefits due to the scope of use, complexity and costs of licensed software, which translate into growing interest in the related activities.
Regardless of whether your firm has already implemented a software management project or is considering such an option, it is high time to take a closer look at its assumptions, refresh them or even revamp the entire process.