For an average mid-sized company, managing software assets with a keen eye for cost control can equate to millions in savings. In our experience, however, 7 out of 10 companies lack the elements necessary to derive such cost savings and often willingly accept a fogged windshield as a defense mechanism to auditors. Is crossing your fingers and hoping that software publishers don’t notice the best strategy to cost savings? No, because there’s a better way that also happens to be legal. By addressing the following deficiencies, organizations can drive large cost reductions and reduce the risk of an audit while supporting a top 5 CIO priority:
Inability to Reharvest Software
Often a substantial challenge for organizations, the inability to manage software throughout the asset lifecycle and re-use licenses that have already been paid for results in unnecessary spend, upwards of 15% of the annual software budget. A recent study suggested that 36% of all software spend goes wasted and finds $2.1 million in savings for every 10k desktops.
Lack of Discovery & Repository Capabilities
Accurate software deployment and entitlement data forms the basis of trustworthy data and can be an invaluable source of information to eliminate unnecessary spend. A technology company with over 13,000 employees saved $6 million over three years through greater transparency and governance of its software assets.
New Virtual World
Virtual environment use rights allow an application and operating system to be installed and used on a physical & virtual machine, making license management increasingly important. Not only does an organization need to know the applications installed, but it also needs to know the underlying hardware given the license type and policies in effect. By helping a mid-sized customer understand Oracle’s partitioning rules, we helped mitigate over $50 million in software exposure.
Closed to Open-Source
The shift to the cloud is having a huge impact on software costs. Software asset managers must be aware of the implications open-source software poses for their organization and be able to evaluate new opportunities to leverage these robust, cheaper alternatives. Open-source software used in some of the largest customers include Nagios, CentOS, Bacula, MySQL and others.
Many companies default to owning licenses for a single version, most commonly an Enterprise license. This may be the result of an all-you-can-eat agreement with a publisher. However, buying by the drink can often be far more economical, especially considering Enterprise licensing can be 3x the annual cost of alternatives and 75% of users never use the advanced Enterprise features.
It’s fairly common to see a lack of controls over purchases, especially in large organizations that have grown via acquisition or have chosen a decentralized model. Often this autonomy goes unchecked and leads to overlapping software products, sub-optimized negotiations, additional security risks and other problems. For a telecommunications customer, we uncovered $8.6 million in savings opportunities from software that was not part of the standard architecture.
Roughly 39% of software installed on computers around the world in 2015 was not properly licensed*. This statistic poses a hefty risk for organizations of any size. Without investing in proper ITAM processes and technologies to ensure compliance, fines and license true-ups can add up to millions when organizations can least afford it. For companies with about $4 billion in revenue, the average audit true-up cost is $1.6 million.
SoftwareONE is uniquely positioned to help our customer’s realize substantial cost savings. Our software asset management practice is larger and more sophisticated than any other, including the Big Four auditors. Talk to your customers about their SAM maturity in these areas, and if they answer yes to any of these difficiencies, let’s talk.
*BSA Global Software Survey, May 2016