Content Type: Article

Why Is Software Asset Management Important?

Whether you are fearing a software audit, dealing with contract negotiations with a software vendor or simply would like to save money on the software that you have deployed, software asset management can prove incredibly useful. 

It can save your company money, improve relationships with your vendor and allow you to effectively deploy new software into your system with the confidence in knowing that it is being well-handled. 

Software asset management can be confusing but that doesn’t prevent it from serving as a smart investment for any thriving business. At MetrixData360, we are experts at software asset management, and we will work with you to save your company money, for more information about Software Asset Management, check out our SAM Services page.

How to Save Money on Your Software Licensing

In times when businesses are looking to save money on software, you’ve probably heard about software asset management as an option but aren’t exactly sure what it is, which isn’t that’s surprising. While SAM can save your business thousands of dollars every year, it’s still not commonly known or understood. Because the MetrixData360 team deals with licensing compliance, software contract negotiations, and software optimization, we understand the value of SAM and how it can help save your business money. So what is SAM and why is it such a vital asset to your company?

What is Software Asset Management?

Software Asset Management (SAM) is a subset of IT Asset Management (ITAM), along with Hardware Asset Management (HAM). 

IT Asset Management deals with managing the lifecycle of technology assets to maximize their monetary value to the company. HAM deals with the physical elements of technology like desktops and servers, while SAM deals with the non-physical side of things, such as the software and their licenses. 

Software Asset Management ensures that a company is paying for what they’re using and optimizing the effectiveness of the software programs.  

Software Asset Management allows IT departments to effectively track software usage and maximize the value of software that has been deployed by tracking its usefulness throughout its lifecycle, until it is effectively retired.  

That may not sound essential and for many companies, Software Asset Management is generally ignored as a later day’s problem. This is because Software Asset Management does not deal with tangible things; it is easy to forget about and it is not often that other, more powerful departments interact with Software Asset Management. For that reason, it is commonly not given the attention that it needs  — until it’s too late.  

ITAM is usually prioritized since it handles exclusively what is considered high value systems, such as the databanks that enable a business to run effectively. If there’s a system’s issue that inhibits the in-flow of money, then it’s ITAM’s issue. Since ITAM has an immediate and apparent value, it is often given the highest priority within an IT department and it is also given the most attention when it comes to budgeting.  

For a more in-depth look into what SAM is in comparison to ITAM, check out our article ITAM vs. SAM. 

Software Asset Management as Risk Management

SAM can put you in a better position to manage risk through knowing which software vendors are supporting which products and which products or versions they are no longer supporting. 

Convincing the CFO that SAM is important can often prove the fruitless challenge of the CIO, but a necessary one nonetheless, since the CFO is often incorporated in the decision to deploy needed software. 

The CFO’s primary interest is in return-on-investments. For that reason, SAM is often seen as unimportant, since effective software asset management is nearly invisible in the day-to-day workings of a company.  

Good SAM means that nothing happens – your company is not given a few million dollars in penalties they have to pay out in a matter of weeks; you aren’t wasting copious amounts of money on software you don’t need; your department’s workday is not bogged down with useless hours spent chasing down pieces of data at the auditor’s requests; and business is allowed to just carry on as usual. 

It can seem like a useless expense when examined from that perspective, but as the old saying goes, if you’ve done it properly, no one will notice anything’s been done at all.  

However, software audits and SAM reviews can be expected from the top software vendors (Microsoft, IBM, Oracle, and SAP) at least once a year, and the costs from a poorly conducted software audit can be staggering and are almost always unbudgeted for. SAM, therefore, should be viewed as a security investment, like hurricane shutters. You put them up hoping you’ll never have to use them, but you’ll be thankful that you did when a hurricane comes. 

Software Asset Management as a Money Saver

SAM can potentially save a large chunk of an already diminishing software budget. 

If the IT department at your company is already being asked to do more with less, they’d be quite interested to know that the average company overspends on their software licenses by 60% while still being under licensed by 30% in other areas. That’s a lot of wasted software budget while still running the risk of having to pay the software vendor even more money.  

SAM is how you level the playing field, as it can track where you are underspending and overspending by utilizing the types of data which will not even be brought up on the auditor’s data sheet during a software review. 

If you are overspending in certain areas, it’s unlikely the auditors will bring it up to you, what does it matter to them? They’re only getting paid to find where you’re underpaying. Getting money back on your usage will mean money back into your IT departments for further innovation.  

SAM can also cut down on soft expenses like maintenance, which can become quite costly if left unattended. Overspending with maintenance can take away from the overall value, but underspending on maintenance can lessen the quality of the software and its performance. Having a handle on the expenses around the software can be as important as the main licensing costs.  

Put Power Back in Your IT Department

Software Asset Management will also allow you to track the usage of the software you already have deployed in your system; it can show you when you are under licensed so that you can address these issues internally without even having to go through the painful process of an audit. 

You can work proactively instead of reactively to the auditor’s findings. 

It will give your IT department the facts they need to prove the usefulness or lack thereof for software currently in your system. With that data they will have the power to project future usage and effectively argue for the deployment of future software. With this knowledge your company can plan where it will go with its software development.

Optimize Your Software Licenses with Software Asset Management

Knowing what is in your system will mean that when you and the software vendors meet for a contract renewal, you will be meeting on equal grounds. Your software vendors already have a good understanding of your spending and where you’re overspending; if they know more about your data than you do, they can tip the negotiations into their favor.  

Many companies end up paying far more to software vendors than they need to because they lack an accurate picture of their software spending and usage. If you lack the data to know you’re overspending by 60%, then the 20% discount offered by the vendor seems like a sweet deal, but in reality, you’re not even breaking even. 

Knowing your data will also mean that you will be able to accurately project how much software you will need in the renewed contract. Often companies take a guess at what they will consume, which is never a smart idea because you can either guess too high, which means you’re wasting money, or you can guess too low, which means that you will be exposing your company to a compliance gap in the next audit. 

Having a strong sense of your software usage will allow you to buy your contracts focused on your future spending, not based solely on what you bought in the past. Your company is growing, after all, and you want your SAM to reflect that. 

SAM Maturity Assessment: What Is It & How Is It Measured? 

We all have things we like to put off for as long as possible, such as laundry, unread emails, or getting back into jogging. For many companies, software asset management is treated the same way: exhausting and hopeless while constantly being put off until it is too late. But a mature SAM environment is far easier to maintain once it’s done, much like household chores. Taking the time now to understand SAM maturity can save you time and money in the long-run. 

First, understand that your Software Asset Management program takes time to mature. As with everything else, not being very good at something is the first step to mastering it. The same is true about your Software Asset Management; it takes time for your company to get organized and start being effective with your Software Asset Management. 

So, how can a SAM maturity assessment help to improve your SAM effectiveness?  

At MetrixData360, we know you’ll see better results if you have a firm understanding of Software Asset Management, so we’ve put together this outline that answers what the 5 stages of SAM maturity are and how to reach each milestone along your SAM journey.

What is SAM Maturity?

Having a mature SAM simply means that you are running an optimized SAM program< and you figure out just how mature your SAM process is by conducting a SAM Maturity Assessment, which provides companies with a sample view of their software asset management in present time. This allows them to have a starting point to work their way up towards total SAM optimization. 

5 Stages of SAM Maturity

Chaos

In the early stages of Software Asset Management, the data you collect will be scattered, unreliable, and incomplete. Your environment, as the name implies, is chaotic. 

SAM teams at this point are dealing with undocumented assets, calling help desks, and an inventory system that leaves the company open to paying out huge amounts should they receive an audit. Companies here are in trouble because their data is often spread across multiple spreadsheets and owned by different people (who often don’t talk). The good thing is, if a company recognizes it is in a chaotic state, it can begin to fix the situation.  

The primary job of a Software Asset Manager in this stage is simply getting a handle on what they have and understanding what quality of data they are working with. Companies at this stage are often either completely lacking in quality data, or they have insufficient policies in place to govern their IT environments, meaning this clean-up process can be time-consuming.

Reactive

An organization at this stage of SAM maturity has set up their most basic SAM environment.  

With a discovery tool implemented to collect software inventory, a company in the Reactive stage can really begin to start drawing the map of their environment. Many software asset management tools in the market today give the impression that full compliance and complete visibility into their environment is gained after you install the product.  

However, this vastly oversimplifies how long the process will take and the type of effort that is involved in getting your software environment under control. The next step from here is to collect license data to compare against the software inventory that has been gathered. 

Receiving an audit from a software vendor in this stage will seem more like damage control, with your company scrambling to collect data and struggling to present it in a way that challenges the auditor’s findings.

Compliance Plus

Congratulations! You’ve made it to compliance! Now that a company has their licensing information as well as the software inventory, the real fun can begin as licenses and software are paired. 

At this point, a company should have the info necessary to defend themselves from an audit and the larger picture of their software environment should be getting clearer. The next steps are to apply automated reporting of software inventory and license entitlements to ensure continued compliance. 

Optimize

Now that you’re up to date with your licensing, it’s time to find some savings. Once automated reports are set up, finding spaces where your organization can save money is key. 

At this point, you should have the full view of your software environment and your focus should be on optimizing your licenses by applying the correct sized licenses to your end users, identifying unused licenses, and leveraging your existing inventory when negotiating new contracts. 

Software asset management can now prove a tool for the IT department to track the use and overall value of software assets. This will give them the data they need to advocate for needed software, retire software that no longer has value and project future usage.

Amplify Value

Your software environment is ticking along and saving you money. Now, it’s time to take those savings and make them grow. 

This stage of SAM maturity is focused on the future. Often, we have seen companies buy their software simply based on what they have purchased before but now that you have reached this stage, you can focus on where you want your software profile to go.  

Your SAM team should be reaching out to vendors and building relationships to help maintain compliance, negotiate better deals, and planning for end-of-lifecycle events. 

The savings in this stage are reaped over time – they are the cumulative year-over-year savings from knowing exactly what your organization needs by planning for the future. Once you have reached this stage, your company can make calculated spending decisions when it comes time for contract negotiations and renewals.

Benefits of a SAM Maturity Assessment

It is nearly impossible to set up an effective SAM program without knowing how mature your program already is. Each step of SAM maturity leads you to the next step, eventually guiding you to full compliance and huge savings. 

Running a SAM maturity assessment is an excellent way to mitigate risks associated with a chaotic SAM environment, such as surprise audits, large true-up fees, and production slowdowns due to improper licensing.

Implementing an Effective SAM Maturation Plan

These goals might all sound wonderfully optimistic but how are you supposed to get to that seemingly impossible goal of having your entire software estate under control? 

Getting your SAM team to a mature position is a large undertaking and can take several weeks to complete. In fact, don’t be surprised if it takes two or more years to get to the Amplify Value stage across your entire software footprint.  

According to ITAM Review’s article, Six Stages to Building a SAM Practice, one of the most common mistakes that companies fall prey to when trying to get their SAM under control, is trying to do too much too fast, leaving people feeling overwhelmed, confused, and discouraged from continuing. 

To keep you organized during the process, below are the three crucial steps to building your way to a mature SAM strategy.

Plan

The first step to bringing your SAM team to maturity is to plan. This sounds simple, but having a step by step process laid out keeps your team on track and focused on what needs to be done next. Often SAM teams just begin pulling data and trying to assign licenses without a plan, which ends up causing an already complex process to become more complex. 

Sit down with your team and draw up a roadmap to success that everyone can access. This map should detail the steps required to hit each milestone of SAM maturity, and each team member’s role in reaching them. 

Build

Now that you have your plan laid out, it is time to start building the SAM machine that will keep your organization in compliance. 

Each member of your team needs to know exactly what needs to be done. This is where you should be implementing tools to get the cleanest data you can get your hands on. 

Remember the golden rule of data during his period: garbage in, garbage out.  

The better the data your team is collecting about your instances, software editions, devices, and license types, the better your position will be once you come into compliance. Make sure that you get a SAM tool in place that can effectively monitor your software estate. If you’d like more information on making an informed decision about buying your SAM tool, visit our article What are Software Asset Management (SAM) Tools: Functions, Advantages, and Disadvantages.

Maintain

Now that your SAM team has brought your organization into compliance, it’s time to set up a maintenance program. Luckily, now that your environment has been cleaned up, maintaining compliance and a strong ELP is much easier than working from a chaotic state. 

Focusing on the future is imperative for good SAM maintenance. Preparing for end-of-lifecycle by beginning negotiations early, planning for growth in the company and the licenses that will be necessary for new employees, and creating positive relationships with vendors are all imperative to good SAM maintenance. 

Within your company, foster a strong software awareness mindset, since SAM isn’t a one time thing; it must be an ongoing demonstration of discipline and dedication.

A Better SAM Solution

We know that building a mature SAM position is a daunting task; there are many stages that need to be handled accurately since mistakes at one stage can cause further disruptions down the line, and the amounts of money at stake can reach into the millions of dollars. 

Fortunately, MetrixData360’s SAM Compass program can help to ease that burden. Our robust Software Asset Management as a Service offering is perfect for organizations that need the expertise of a licensing team, without the headache of training.  

While crafting a mature SAM position is no overnight task, an experienced team can do it in a fraction of the time due to the steep learning curve faced by any new people to the field – license agreements are complex contracts, often spanning across several documents. Luckily, our team here at MetrixData360 has experience with all major licensing formats from the major software publishers. 

If you would like any more information about building a SAM team or maturing your SAM strategy, please read through the educational materials in our learning center, or feel free to reach out to our Director of Client Success and we’ll get back to you in 24 hours.

These are scary times we live in; toilet paper is hard to come by all of a sudden, we’re all staying home if we can, and washing our hands for at least 20 seconds (although that one you probably should have been doing already). The Software publishers are showing a lot of grace towards their customers and prospective clients during this time; they have not been aggressive in their sales, they are delaying renewals, and have limited their audits.

Despite their leniency now, the long-lasting effects that COVID-19 could have on our global market could means that software publishers may be desperate to make up for their loss of sales during this pandemic. In these uncertain times, many of our customers are asking what will this mean for their software budgets? We know that the organizations that come out of these messes with minimal damage are the ones that act fast and work twice as hard. At MetrixData 360, we like to keep you informed about how you can curb the damage of this crisis.

Areas to Reduce Software Costs During a Crisis

• Maintenance Contracts

At a time when it is necessary to be wise with our spending, examining your maintenance contracts is a great place to start. If you are running old versions of the software in question, your maintenance is nothing but an expensive support policy. Remember, software publishers make 80% margins on Support/Maintenance, so be sure it is something you need. We have seen more than one customer paying hundreds of thousands of dollars to run a version that is five years old, with no plans to upgrade, and having placed only two or three support calls on the product in a year, as opposed to once per quarter.

• Subscription Contracts

The devil is in the details, so read your contract over to see how and when you can reduce your license counts. If the timing isn’t right for your contract to be rearranged, brainstorm ways to get your vendor to negotiate with you. It is likely that they will only become more unwilling to reduce counts as the crisis nears the end.

• Pre-Committed Cloud Spends (Particularly with AWS/Azure)

Heading to the Cloud? Since being able to work remotely is more important than ever before, it may be tempting to rush any Cloud deployment your company may be planning. However, rushing to the Cloud is how many of our clients wind up with wasted spending, which is the last thing your company needs right now. Since the transition to the Cloud has often resulted in unforeseen spikes in cost, see if you can put off any scheduled Cloud deployment to prevent you from paying for any unforeseen Cloud costs during this time of crisis. Tell the vendor that you would like to move your deployment to next year or the year after, to free up your business to focus on more short-term cash flow. If your company is already situated in the Cloud, make sure you are only paying for what you need, if you discover anything you are not using, shut it off, so that you can stop paying for it.

• Consider Renewing and/or Extending Your Contracts Now

Contract negotiations are expected to get tougher following this crisis, as software vendors struggle to recover lost sales. Therefore, it’s important to get ahead of this, open-up a negotiation of new terms and conditions with your software vendors as soon as possible to see if they are not willing to renew, or at least extend your contract, given the tumultuous nature of the situation. In order to conduct a successful contract negotiation, you will need to have accurate inventory data and the ability to determine the future needs of your company (as best you can, given the circumstances). This is achieved through following an effective software asset management process.

• Look at Maintenance Costs Compared to Rebuy Scenarios

Sometimes it is better to rebuy a whole new license compared to paying for upkeep – especially when it comes to old support contracts that have annual increases. After several years, simply rebuying the license can give you greater value.

• Look for Spots that IT Can Re-Architect to Save License Costs

The internet is currently speckled with articles for how to keep yourself busy at home and organizing is one of them. The same thing can be applied to your IT Infrastructure. Clearing out all the clutter and reorganizing your space to be more cost-effective right after your return to the office is a great way to realize potential savings. See if you cannot create a dev cluster, or group older versions on the same hosts/clusters, for example.

• Review Contracts and All Clauses that Speak to Licensing or Costs

While you are self-isolating or social distancing, you can review your software contracts. Perhaps you can save money on Disaster Recovery, or on a dev/test product that you’re paying for full production licenses for. There may easily be alternative licensing types that can save you money that you never even thought of before or perhaps you can negotiate a special use clause for this situation.

• Unneeded Licenses Under Support

If you have licenses that are supported by your company that aren’t needed or used, you can negotiate a one-time trade in. This can get you things you can use or will need in the future.

• Review Your IT Environment for Duplicate Functionality

Look for areas where you have two products serving the same function such as security software, consider using the Security licenses from MS instead of Symantec/McAfee, for example. Now is a good time to start consolidating vendors to streamline your licensing structure.

• Review Usage / Metering / Functionality

Now is the time to reclaim licenses and put them back in stock for future needs. See if you can negotiate out unused subscriptions or licenses from maintenance contracts or consider moving employees from Advanced to Standard suites to decrease costs. It’s more important than ever that you pay for only what you need.

BONUS – Annual Price Increase in Support

If you have an annual price increase, try your best to negotiate it out of your contract. If you signed a multi-year deal with increasing year over year prices, negotiate for the current year’s price, given the situation.

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Software Asset Management to Save Your Business Money

During this time of crisis and the time of recovery that will be necessary afterwards, software asset management for your business might seem like an expensive luxury, but in fact, it has the potential of granting your company massive Return on Investment. Now is not the time to have an under-licensed or over-licensed software environment, which with any way you tip it, you will risk losing money either through paying heavy auditing fines or through paying for too many licenses. By successfully implementing software asset management you gain the following:

1. 1. • Control Over Your Software: your spending is no longer dictated by what the software publishers tell you, whose primary motivation is for you to spend more and more money with them. Instead your spending is dictated by your company’s needs and growth plans. This means no more wastage as companies without a proper software asset management process implemented are expected to have roughly 30% of their software licensing environment be either wasted or underutilized.
      • Reduced Security Risk: Could you imagine a security breach right in the middle of this chaos? That would be quite the when-it-rains-it-pours situation. As we covered in our article, How SAM can Improve Your Cyber Security, Software Asset Management can reduce the risk of your company facing exposure to a software breach, since hackers will often use old, unaccounted for software as a way to wriggle into your environment. Software asset management can be a valuable asset for your IT security by providing visibility into your licensing and usage, exposing any malicious activity.
      • Accuracy and Peace of Mind: These troubled times can lead to a lot of uncertainty and software asset management can at least take your software off of your mind. If you know what is in your software environment, and you know that it is doing its job in the most effective way possible, then you will be ready and capable should you be faced with an audit.

For more information on what Software Asset Management can do for your company, check out our article, What is Software Asset Management?

A Message From MetrixData 360

We recognize that it is important that we do what we can to get through this. We need to slow the spread of the virus by staying home whenever possible and by practicing social distancing.

At MetrixData 360, we take this pandemic quite seriously and we extend our deepest gratitude to public health officials, researchers and team members on the front lines and to the world governments who have taken extensive action to battling this pandemic. It is important for businesses to be aware of the long-term effects that this virus could have regarding your software licensing environment. Software asset management can save your company money at a time when it is important to be responsible with how funds are allocated. For more information on how MetrixData 360 can support your business through this economic turmoil, you can contact us and we’d be happy to answer any of your software licensing related questions.