By Ed Chopskie
IT Asset Management (ITAM)—and by extension, Software Asset Management (SAM)—is regarded with cynicism and for good reason. Industry experts believe that more than half of enterprise ITAM programs fail to align with business needs. In addition, they note that less than a quarter of all companies have implemented a workable approach to ITAM. Drilling down, an even smaller number have attempted to manage their software assets.
However, ITAM/SAM shouldn't be written off. When ITAM/SAM programs are successfully implemented, they have proven to be a good tool for running IT operations more efficiently. Additionally, they are becoming even more important, given today's strict licensing compliance environment and increased software spending. The larger question is how to deliver on the promise of ITAM/SAM. You can do this with targeted "quick-start" projects that are designed to produce the results organizations need while avoiding the protracted and expensive implementations traditionally associated with large ITAM/SAM projects.
Just what is IT Asset Management (ITAM)?
ITAM is a portfolio approach to measuring the technical, financial, and service condition of an organization’s IT infrastructure. ITAM leverages the physical attributes of an asset with service and financial data that support its management throughout its lifecycle from procurement to disposal or re-deployment.
The goal of ITAM is to reduce IT costs, improve customer satisfaction, and increase business performance.
Why ITAM has failed
According to a 2004 Chaos Report by the Standish Group, only 29 percent of all software projects come in on-time and on-budget. ITAM projects, in particular, are a target for failure as they require significant time and capital requirements, as well as process changes.
The most commonly reasons for the high failure rate of ITAM projects—and these encompass SAM—are:
- Complex tools, mountains of data, little strategic information
- Lengthy implementation
- ROI that doesn’t deliver until 24+ months out
- The need to redesign business processes
- Lack of management commitment
- Distributed IT and purchasing environments
- A tendency to disregard the business value of more limited implementations
Despite the negativity and skepticism surrounding ITAM—much of it well-founded—enterprises need to get a grip on their software assets. According to Software Magazine, revenue for the Software 500 grew more than 14 percent in 2004 and 16 percent in 2005, a sure sign that organizations continue to invest heavily in licenses and maintenance.
In addition, given the vigilance of the Business Software Alliance (BSA) and the Federation against Software Theft (FAST), improving license compliance alone delivers significant benefits. Recently, in an effort to recruit whistle-blowers, the BSA ran Website banner ads that offered rewards to those who reported potential compliance issues.
Using proven quick-start methodologies, enterprises can start rationalizing their software investments. And when they have better knowledge of what they have in-house, they're in a better position to re-negotiate agreements with vendors—ultimately reducing support, maintenance, and licensing costs through software asset consolidation.
So, just what is SAM?
Let's take a more in-depth look at this all-important sub-set of ITAM.
BDNA views SAM as policies and processes designed to maintain an accurate software portfolio inventory, reconcile it with purchasing and license data, create a foundation for optimizing software investments, and minimize compliance issues.
While license compliance is often the major driver for SAM, cost and operational issues are also vitally important. As organizations continue to spend significantly on software, they should also be able to pinpoint potential savings. Unlike large lifecycle SAM implementations, it's possible to reduce costs and risk through implementing targeted quick-start projects that do not require major business process changes.
Best practices: The quick-start approach to SAM
The best place to start is by focusing on your top 20 software vendors, because they typically account for at least 80 percent of software expenditures.
Executing the following four steps for each vendor should provide a foundation for reducing licensing and maintenance costs 25 percent through consolidation, while ensuring compliance.
Step 1: Compare license data to actual inventory.
The attempt to reconcile licenses to purchase records usually demonstrates that there is no "single source of the truth." Software asset, purchasing, and license data exists in the silos typical of distributed IT organizations—asset management repositories, fixed asset management systems, and spreadsheets.
The outcome of this exercise should reveal license inconsistencies, maintenance contracts that can be terminated, and redundant functionality.
An aside: When you compare your information with the vendor’s, there may be major discrepancies. Vendor and reseller records are notoriously inaccurate and should be treated as data points if you are able to locate your internal purchasing records.
When there are discrepancies between vendor records, internal purchasing records, and the physical inventory, it's often a sign of major process deficiencies. If you can live with resolving these discrepancies on a periodic basis, you may not want—or need—to make major process changes.
Step 2: Analyze installed software titles and cross-reference usage data and licensing terms.
When this step is completed, you should know where you can consolidate instances of enterprise software, such as SAP or Oracle, and where you can remove underutilized desktop titles.
Software, like the servers it runs on, is often underutilized—offering major opportunities for rationalization and consolidation. For example, by analyzing actual usage data, Motorola was able to reduce its Oracle instances 70 percent.
Step 3: Analyze individual installations of software titles, cross-referencing version and age
If your enterprise is geographically dispersed, has decentralized procurement, or has gone through a merger or acquisition, you will likely discover many individual installations of major software titles for versions that are no longer supported. The Department of the Navy, for example, discovered it was running hundreds of Microsoft NT servers and paying for extended support. Similarly, many shops discover they are running older, unsupported versions of software. This usually results in higher support costs, security risks, and potential downtime.
Step 4: Analyze installed software titles for redundancies
During this analysis, many companies find they have a large inventory of software titles that deliver similar functionality. With a better knowledge base, they can create software title standards, monitor acquisitions, reducing complexity and total cost of ownership over time.
Small is beautiful
In today’s enterprise environment, launching a traditional software asset management initiative is increasingly less likely to occur. However, significant gains are possible from quick-start projects that are much less ambitious in scope. The ability these projects have to create a reliable SAM base is particularly important where:
- Software vendors and trade organizations accelerate audits and threaten more.
- Software vendors are increasing their revenues by more than 10 percent a year.
It's possible to optimize compliance and cost savings without embarking on a protracted and expensive journey. In fact, it may be more practical—and ultimately more effective—for companies to institute an annual four-step program than to invest in the major business process changes necessary to implement full-scale lifecycle ITAM.
Ed Chopskie is Vice President of Marketing for BDNA Corporation.