Mitigating Compliance Risks for Service Providers via SAM Best Practices

October 1, 2015
Editorial Staff

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Editorial Staff

Most enterprises undergo a planning and budgeting phase by predicting the company’s growth as well as forecasting peak and off-peak periods before actually procuring the software necessary to fulfill the year’s operational needs.

Service providers, however, are different. Service providers are expected to scale their resources based on their customers’ requirements, but new customers subscribing to the service provider’s resources have unpredictable resource requirements. This often leads to the software procurement teams within service providers to become reactive, leading to a serious risk of non-compliance and making it even more important for a service provider to have a dedicated in-house SAM practice or to engage with a professional SAM Partner for help.

In addition to managing end users, software and hardware assets are the two major components within the service provider’s business. Proactively establishing cost structures and ongoing management best practices is critical to how service providers price their market offerings, which makes the difference between winning and losing the customers. Getting it wrong can have devastating effects on future budgeting and the company’s overall P&L.

Why Service Providers Should Be Interested in SAM

Historically, most service providers haven’t seen SAM as being essential to their business. However, these same providers are now starting to realize through expensive, time consuming audits initiated by software vendors that SAM can proactively mitigate the risk of an audit by analyzing and identifying compliance risks.

Service providers generally pursue a SAM practice in order to:

  • Identify and capture missed end user billing opportunities
  • Leverage SAM discovery, inventory, usage, metering tools to save time in reporting software usage to vendors
  • Engage with a software portfolio management expert to uncover ongoing license cost savings

Compliance Risks for Service Providers

When the service provider uses software on a pay-per use basis, the vendor usually over provisions software licenses and services to allow service providers to scale according to end customer demand. If the service provider does not report on the right number of licenses deployed, then the vendor sees the service providers as non-compliant (illegally making money) with their software or intellectual property. This can get ugly if the service provider has not maintained a documented process of provisioning these licenses and tracking these licenses after they have been deployed.

The Benefits of Using a Third-Party SAM Consultant

Having a software publisher perform a SAM engagement on your environment may lead to licensing outcomes to work in the publisher’s favor. Likewise, the lengthy learning curve required to implement your own SAM practice can often be a frustrating and time consuming process, especially if you realize only after you finally implement the SAM practice that the publisher has modified its licensing criteria.

By engaging a third-party to help guide your SAM practice, you can alleviate the stress of researching implementing the right tools for your environment. This will help you gain an independent perspective into your deployments without having to be under the watchful eyes of the publisher. Often, these SAM consultancies use multiple sources of information, most of which may be free to zero in on your effective compliance position.

Some consultancies will also negotiate with the publisher on your behalf. This can work out to be far more cost-effective than if a full blown audit was done by the vendor. Consultancies can also help you identify the requirements for developing an in-house SAM practice by gauging your current level of maturity.

These days a majority of service provider software orders are done on a monthly pay-per use basis and will require a monthly audit of systems to gather this data – which is 12 times the work of what an enterprise would experience when procuring software annually. Therefore, the administrative cost will be approximately 12 times higher with a service provider than an enterprise, so the reliance on data collection tools is much greater than that of an enterprise.

SoftwareONE’s SAM Consultants have extensive experience assisting service providers roadmap and maintain effective SAM practices. To schedule a consultation with a SoftwareONE SAM Consultant, click the banner below, complete the subsequent information, and an expert will reach out to you shortly.

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