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Megabyte Act becomes Law

By David Foxen | August 04, 2016

The long-running “Making Electronic Government Accountable by Yielding Tangible Efficiencies Act of 2016”, otherwise known as ‘MEGABYTE Act of 2016’ has been made law by the House of Representatives of the United States of America.

The new law applies to all US Federal Agencies including Administrations for food, drugs, healthcare and children/families to name a few.


The act dictates that Chief Information Officers (CIOs) of US Federal Agencies must implement policies in order to govern and manage the use, procurement and contracting of software licenses. The Megabyte Act states that the following policies and procedures must be in place;

  • Clear roles, responsibilities, and central oversight authority within the agency must be defined for managing enterprise software license agreements and commercial software licenses
  • There must be a comprehensive inventory, using automated discovery and inventory tools, to identify and manage at least 80 percent of software license spending and enterprise licenses within the agency
  • Regularly track and maintain software licenses throughout their lifecycle to assist with agency decision-making
  • Analyse software usage to make cost effective decisions
  • Provide training in software license management
  • Establish goals and objectives for the software license management program
  • Consider the whole software license lifecycle, including procurement, deployment, maintenance and retirement

Along with building a policy that needs to manage software licenses throughout their lifecycle, CIOs must also present Agency Directors with a yearly report on cost savings and cost avoidances made through effective license management.


Although the Megabyte Act only applies directly to US Federal Agencies, it is perhaps a rare example of where a national Government is leading the way in best practices for IT Governance. The requirements outlined above apply just as much to local government and commercial organizations as they do central Government.

According to the US Government Accountability Office, US Federal Agencies spend US $6 billion a year on software. As eye-wateringly high as that sounds, it represents less than 2% of the global spend on enterprise software (estimated to be US $326 billion by Gartner). That said, if we apply the 30% saving in year one that Gartner says organizations can achieve through effective Software Asset Management, then it’s not difficult to see why US law-makers might want to save US $1.8 billion on software licensing and contracts.

It will be interesting to see if any other national governments, local government bodies or indeed commercial organizations take the Megabyte Act as a template for their own software management.

Are you looking to cut back on your software spend? Why not talk to our SAM experts? Snow’s License Optimization and Consultancy Service puts the Snow subject matter experts into the heart of your SAM strategy. Our experts will work very closely with stakeholders, users and IT teams in your organization to ensure that your investment in Snow technology is maximized to support your SAM goals, minimizing compliance risk and software spend.


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