Managing software licenses can be a demanding task, even for small local governments, and penalties for violating licensing laws are stiff. To comply with licensing laws, however, local governments typically over-purchase software licenses, wasting precious fiscal resources. To better manage licenses, local governments can use tools that help strategically track assets.

A 2005 Global Software Piracy Study by Framingham, Mass.-based IDC reported that 21 percent of software in the United States is unlicensed. The same study also found that last year alone, software manufacturers lost $6.6 billion as a result of piracy. In years past, many manufacturers have increased efforts to recover lost revenue through unannounced audits of organizations' licenses, which can result in a host of steep fines and penalties if unlicensed software is discovered.

The previously audit-happy software manufacturers now are changing their methods and encouraging their customers to use information technology and software asset management (IT/SAM) programs. The programs combine a software tracking tool with an internal process to provide detailed information about an organization's IT assets and how they are used. Armed with that information, managers will only buy the new hardware and software that is needed.

To ensure license compliance, cities and counties historically have purchased one license for every user. However, different users have different software needs and may not need a license for all applications. A strategic IT/SAM program identifies who needs licenses for which software.

To implement an IT/SAM program, cities and counties select a software tool that will track all the software installed and used in their operation. Then, they regularly compare the collected information to the actual user's needs, ensuring license compliance by comparing the number of software copies installed to the number of licenses owned. Many software publishers now provide customers detailed information about their owned licenses that can be automatically imported into their tracking tool, making the comparison much easier. Strategic IT/SAM programs go one step further by ensuring the software installed is actually being used by an employee.

When cities and counties can identify unused applications during an inventory, they can determine whether they can be reallocated or discarded. If, for example, a city has paid for 300 licenses for an application but only half of those licenses are in use, the IT department might decide to renegotiate its contract with its software supplier and stop paying for the unused licenses.

According to Stamford, Conn.-based Gartner, IT assets and their support systems can account for as much as 40 to 60 percent of an organization's total operational budget. Gartner also has found that organizations that systematically manage the lifecycle of their IT assets may reduce costs by as much as 30 percent the first year, and up to 10 percent annually during the next five years. Simply put, strategically managing assets has significant budgetary impact and assures that dollars are being spent wisely, both of which spell good news for taxpayers and local governments alike.

The author is CEO for Seattle-based Express Metrix.