Prevent Software Overspend With Software Asset Management (SAM) Tools

[DaNGeROuS KiLLeR]

An estimated quarter trillion dollars a year is wasted on unused software. Here's how software asset management (SAM) tools can prevent the software overspend.

 

 

If you took all the money wasted on poorly managed software, you'd have enough money to run a small but prosperous nation. Starting bottom-up, your enterprise probably pays around $1.25 for every $1 worth of third-party software.

If you're lucky, you don't get dinged too badly by vendor audits at true-up time. In that case, you're only spending on maintenance and support for software that’s long since been wiped from the workstation it sat on. And on license renewal for a server that was scrapped two years ago in the latest round of virtualization or consolidation. Or maybe you're paying an enterprise license for a package that has only one user. Maybe you're buying two competing packages with exactly the same functionality, or software that never gets taken out of the shrink-wrap. And you probably suspect that some shadow IT practitioners, operating in stealth or unaware of their company's enterprise subscription might have just bought a second copy of the same software.

The process of controlling these ephemera is called software asset management, or SAM. Nobody knows precisely how much money is hemorrhaged each year due to shoddy SAM, but here's how Tom’s IT Pro modeled that headline figure:

Start with the broadly accepted figure of $600 billion per year spent on software worldwide, then back out the one-third which is developed by contractors and consultants (this custom work might also include stacks of wasted money, but that’s another article). That's $400 billion in over-the-counter software. If we're only realizing $1 for every $1.25 spent, then we’re getting $320 billion in value. Of course, some enterprises have active, fit-for-purpose, SAM tools -- and here’s the critical part -- that are actually being used. According to a not-terribly-scientific survey by CME Group (PDF available here), it looks like that’s maybe one-fourth of the marketplace. So in essence we have a $240 billion hole in our pocket. That’s roughly the GDP of Ireland, Hong Kong or Chile.

 

 

Calculating Software Overspend

Software waste might well be the most expensive problem in IT that nobody talks about. So maybe it’s time to start the discussion.

 

The CME survey suffers from being predicated on a small, self-reporting sample, but it raises some points of discussion. Only 27 percent of respondents were sure they paid a reduced fee for non-production, on-premises environments; that should be close to 100 percent. Similarly, 27 percent own a software tracking tool, an equal number use spreadsheets and the rest report no tool at all. The picture is a little brighter when the topic is desktop software, but even there 36 percent of organizations say they don’t keep track. Most tellingly, more than 45 percent of respondents have the SAM tools embedded in their service management suites but haven’t gotten around to turning them on.

 

 

 

Solving The Software Waste With SAM Tools And Procedures

There's a two-pronged attack to dealing with the problem: tools and procedures. Just like any other IT program. A SAM tool should accomplish the following, according Peter Alderson, SAM practice leader at British consulting firm Computacenter:

 

• Discover all IT assets on the network;
• Provide accurate hardware and software inventory;
• Reconcile purchases against actual purchasing data for the number of licenses installed or in use;
• Meter software usage;
• Advise on which users have not installed required security patches or updates;
• Provide comprehensive reporting.

So a SAM tool is part sniffer, CMDB (configuration management database), accounting package, chargeback tool, security system and dashboard. If you have ServiceNow, BMC Remedy or some other IT Service Management (ITSM) suite, SAM capability is baked in. If you’re looking for a pure-play SAM tool, the market leaders, according to ITAM Review, are Express Metrix, Snow Software and Remedy’s SAM-focused cousin BMC FrontRange Solutions.

The procedures to use these tools are actually well-defined if anyone would care to act on them. It all stems from ISO 19770 and ITIL. The ISO standard “establishes a baseline for an integrated set of processes for Software Asset Management (SAM), divided into tiers to allow for incremental implementation, assessment and recognition,” according to the standard-setting body. It prescribes software identification tagging and, although the standard doesn’t get into the stepwise detail of how to implement it, it’s largely an automated process. ITIL is thick with SAM references, mainly in the Service Asset and Configuration Management process within the Service Transition lifecycle step. But a report from BCS, the august body once called the British Computer Society Ltd., points out that many organizations don’t even consider SAM part of service management, and how that leads to inefficiencies.

 

 

 

As evidenced by this map to nowhere, there are savings to be had from SAM. Some are obvious; others have nothing to do with sending smaller payments to software vendors.

Licensure and maintenance are obvious places to begin the search for savings. A team from the German-based SAM consultancy OMTCO suggests further benefits from reduced payments related to compliance issues and migration complexity. According to a paper promulgated by Express Metrix, proper SAM could also lead to eliminating the time and trouble of conducting manual inventories and reducing help desk costs.

 

 

"Not only is [physical inventory] an error-prone and non-scalable procedure, it can be extremely time-consuming and costly …. Furthermore, organizations are limited in their ability to report on this information effectively," the Seattle-based vendor states. "Gartner Research estimates that up to 50% of time spent on a help desk call is associated with trying to determine the configuration of the user’s PC ... Other help desk costs include those issues related to supporting unauthorized applications (such as chat or P2P programs) that may introduce security or machine performance issues."

 

 

The Cost Of SAM Tools

Although this is not a business case how-to, our article on How To Build A Successful Business Case For An IT Project can help you with the basics of putting together a quantitative case for change. But let's be clear: You might already have all the tools you need to effect SAM through your ITSM suite, so there might be no incremental investment needed. And, if there is, and as long as it's less than 20 percent of your whole software budget, it's probably at least a breakeven.

Prices for SAM tools -- like prices for the assets they manage -- are a matter of negotiation. Still, a quick Web scan revealed street prices from around $130,000 down to less than $10,000. Assume, as a rough estimate, it'll cost as much in contractor time to implement a SAM tool.

But money isn't the issue; skills are. Do you have people in your organization who understand SAM? Can you find others in your market who can?

It's not glamorous work but, if your IT organization is squeezed to provide more service for the same budget year after year after year, you might soon be compelled to look at software overspend.