Gartner recently released a report entitled ‘Cutting Software Spend Safely with SAM1‘ in which it highlights that Infrastructure and Operations (I&O) leaders can cut software spend by 30 percent if they follow three software license optimization best practices.
The report also focuses on how organizations could cut costs by recycling software licenses. The report states, “Recycling requires strong process control. However, 89.5% of I&O organizations are of low maturity. Put another way, 89.5% of I&O leaders could cut their software spending by maturing their SAM recycling and license optimization processes into their daily IT operational activities. Lower-maturity organizations will likely see higher savings.”
So, what is our opinion on the findings of the report, and how do we think Software Asset Management can add financial value?
Firstly, let’s look at the report. The report focuses on a number of key predictions made by Gartner for the future of software spend and the maturity of Software Asset Management within organizations.
- By 2019, annual spending on software licenses will decrease by 30 percent as a result of software license optimization
- 8 percent of I&O organizations are at the ‘committed’ stage of SAM maturity, one step before being proactive
- 3 percent of organizations consider their SAM function to be service-aligned
- With “worldwide total vendor software sales of $326 billion in 2016” the savings possible from software license optimizations are just too large to ignore.
THREE LICENSE OPTIMIZATION BEST PRACTICES
The three best practice methods for license optimization will not come as a surprise to any seasoned Software Asset Management professional. However, we at Snow Software believe that too few organizations are following three simple processes that can reduce software spend.
In order to optimize your software licenses, Gartner suggests the following best practices.
OPTIMIZE SOFTWARE CONFIGURATIONS
Gartner states: “Software from large publishers has complex use rights and is costly. The default configuration for most software is normally the most expensive for clients as well.” What Snow believes this is saying is that none of the ‘optimization options’ are active so the compliance and spend picture is worst case scenario.
Different software vendors have different license rights for their applications. Some enable users to install the software on more than one device, whilst others allow you to install the software on a physical machine and its associated virtual machine.
In order to optimize existing licenses and contribute towards the 30 percent cost savings Gartner predicts, I encourage organizations to be aware of the use rights for their applications, otherwise they will overspend on software licenses.
By reading and understanding the software agreement or EULA (End User License Agreement), the SAM team will be able to apply the various rules and conditions that will help them optimize their existing spend. This will help reduce compliance and financial risks significantly.
Snow License Manager can help the SAM team manage the complex use rights of software. Users can add rights such as multiple versions and editions, cross platform or secondary use rights to ensure they are optimizing their existing licenses.
RECYCLE SOFTWARE LICENSES
The recycling of software licenses is the process of removing unused or unwanted software and then meeting the demands of other users who has a business justification for the software. I completely agree with Gartner when they say, “Recycle software licenses by optimizing your daily IT operational activities,” as I believe that software should be ‘lent’ out to users on a piece of elastic.
By that I mean that the license will always belong to the organization – not the individual user. If the user does not have a valid requirement to have a license then they shouldn’t have one. The software should ping back to the SAM team for redistribution to another user who has a genuine need for the software.
I believe in the same concept for unused software. If it is on a machine and requires a license but is not being used, then it needs to be removed immediately. Having unused software deployed causes compliance and financial issues, and also doesn’t help the SAM team reach the proactive stage of SAM maturity.
Gartner state that “Recycling requires strong process control. However, 89.5 percent of organizations are of low maturity”. This suggests that software recycling is an element of SAM that is much further down the maturity line and that only a small proportion of organizations have the ability to actively recycle software licenses.
Whilst I agree that recycling software licenses requires strong process control, I disagree with the suggestion that 89.5 percent of organizations need to mature their SAM function before embarking on software recycling. The most basic of SAM functions can and do recycle software licenses – it just may be a manual task that requires regular checks on usage stats and manual removals/deployments.
Whilst recycling licenses in this manner is not ideal, at least it is something towards license optimization.
LEVERAGE SAM SOLUTIONS
There used to be a time when you could get away (just about) with managing your software assets through a spreadsheet. Those days are long gone – sophisticated SAM solutions are now required in order to optimize and utilize your existing software assets, and ensure that SAM keeps evolving and maturing.
Software Asset Management solutions play a central and integral part in cutting software spend. As Gartner states “A SAM tool can automate, accelerate and improve manual processes,” I believe this contributes to the reduction in the time and effort required when optimizing existing software assets.
SAM solutions play a major role in the optimization of software configurations and the recycling of software licenses. The solution can help you optimize existing licenses by ensuring you are tracking usage and have the right configuration for a specific license or application. For example, the application may allow secondary use rights whereby a user can have the software installed on both a laptop and a desktop. Without the right configuration settings the SAM function may believe that the user needs two licenses to cover both devices.
Configuration settings such as multiple versions and editions, downgrade and upgrade rights, virtual environment use rights and understanding the relationship between virtual and physical machines all play a big part in license optimization. Snow License Manager provides you will all of the information you need in order to optimize existing licenses, and ensure that all of the license configuration settings are set up correctly.
When it comes to recycling software licenses, through Snow’s Automation Platform users can reclaim unused software and then redeploy the software to a new user automatically. The SAM team can set the parameters for how long software should remain inactive on a user’s machine before it is automatically removed, and then through a Amazon style shopping experience a user can request software that they need to fulfil their role.
All of the changes made by the Automation Platform can be viewed within Snow License Manager so the relevant stakeholder has visibility on compliance, optimization and associated costs. This then frees up the SAM teams’ resources, enabling them to focus on other tasks.
SAM solutions are incredibly powerful and provide organizations with information and data to make informed decisions about the software estate. The SAM team need to focus on not only optimizing their existing licenses, but also optimizing their SAM solution to ensure they are getting the right data and they are using all of capabilities available to them.
SAM IS STILL EVOLVING
I was really interested to see how organizations class their own SAM maturity. The majority of organizations (64.8 percent) would consider their SAM team to be ‘committed’ – as in they are implementing SAM and starting to address any ‘mess’ that they may have found at level one.
Organizations appear to be struggling with the jump from ‘Committed’ to ‘Proactive’, as only 10.2 percent of organizations would consider their SAM function to be proactive. I believe having proactive SAM is where you will start to see the most benefit from SAM as it becomes a business enabler and helps future planning.
The elite and mature SAM setup, whereby SAM is service-aligned or a business partner, resulted in just 0.5 percent of organizations. That’s understandable, as Software Asset Management is still evolving and maturing in organizations that implemented it years ago, and some would argue that SAM is still maturing as a business function.
Finally, what really made me think was the fact that according to Gartner 24.7 percent of I&O organizations are at the ‘awareness’ stage – the very first steps into Software Asset Management. Whilst on the one hand I think that it shows that organizations are starting to look at SAM as a key driver for success, but on the other, I would like to know how long organizations feel they are spending at this stage of SAM maturity.
Software Asset Management is maturing; there is no doubt about that. As more organizations see the need and benefit for SAM, the higher the percentage of organizations at the ‘awareness’ and ‘committed’ stages. The real challenge is then maturing your SAM function further to become a proactive business function, rather than one that is only reactive.
START REDUCING SOFTWARE SPEND TODAY
With the likes of Snow License Manager, and Snow’s Automation Platform, you can start to save money on your software investments today. As Gartner has suggested, there is still 24.7 percent of organizations who are at the earliest ‘Awareness’ stage of their Software Asset Management Maturity Level, so you won’t be the only one starting your SAM journey.
In my opinion, following the three best practice processes for optimizing your existing licenses, and with the help of Snow Software solutions, you too can start to take the proactive steps to reduce your software spend by up to 30 percent.
Within the report, Gartner provides an example of savings: “Assume an enterprise with annual revenue of $2 billion per year. From Gartner’s IT Key Metrics Data (ITKMD: see “IT Key Metrics Data 2016: Key Industry Measures: Cross Industry Analysis: Current Year”), an enterprise in this size range spends about $68,000,000 per year on IT. On average, software comprises 9.53% of the IT budget, or about $6,480,400. A 30% savings on software licensing would be about $1,944,120. That sum would contribute directly to operating profit. Assuming an industry average operating profit of 10.67%, savings of $1,944,120 would increase profit as much as a revenue increase of $18,212,008.”
This example provided by Gartner, in my opinion, further shows the importance of managing your software assets through software asset management and SAM technologies.
I encourage you to calculate what 30 percent of your current software spends per year is – the figure will certainly motivate you to adopt or mature your SAM function and SAM technologies!
If you are struggling to implement a Software Asset Management function within your organization, then read our ‘Two Minute Business Case for SAM’ to get you started.
1Gartner: Cut Software Spending Safely With SAM. Published: 16 March 2016. Analyst(s): Hank Marquis, Gary Spivak, Victoria Barber