Too Many Software Licenses? Renegotiate!
Too Many Software Licenses?
Renegotiate!
By instituting a strategic plan for identifying and managing software resources, public entities can save time and taxpayer dollars
By Kris Barker
For government offices across the nation, a universal truth surrounds the implementation of information technology and software asset management (IT/SAM). This truth is based on the premise that failing a software audit is not an option.
Quite simply, for government entities affiliated with creating and enforcing laws, failure to comply with license requirements would result in a public relations nightmare. The very thought of software representatives appearing at the public agency’s door, and pos-sibly finding that not all of the entity’s software is fully licensed, is enough to make even the most stoic government IT director blanch.
In response to this potential threat, government managers have typically over-purchased software licenses to ensure compliance. The result is a feeling of being forced to comply and wasting precious fiscal resources, or of facing the embarrassment and any political fall-out involved with audits that don’t end smoothly. This fear-based model has caused gridlock and confusion, not to mention an unnecessary strain on the IT department’s budget and time.
The inefficiencies and confusion inherent in a fear-based compliance model raise a fundamental question: Why has this approach been favored for so long?
At first, there was little choice. Consider the findings of a “Global Software Piracy Study,” conducted in 2005 by IDC, a worldwide provider of market research and consulting services. The study reported that 21 percent of software in the United States is unlicensed. This same study also concluded that last year alone, the United States lost $6.6 billion as a result of software piracy. Consider, too, that for software manufacturers, targeting unlicensed software in businesses represents revenue opportunities.
To address the licensing dilemma, government IT directors knew that they had one of two options. First, IT departments could submit to unannounced, time-
intensive audits and “prove their case” on compliance to vendors or third parties. If following the second choice, the entity could fail the compliance test and garner a host of steep fines and penalties in the process.
In short, the traditional model of fear-based compliance has clearly represented more of a “lose-lose” situation for software companies and their government customers alike.
The good news is that this fear-based model is finally changing. Software publishers are learning from these experiences and, together with their government customers, are shifting toward a more productive, organized, and customer-friendly model. This revamped model concentrates on longer-term, strategic IT/SAM.
Providing a Pivotal, Proactive Process
The beauty of this new model is that strategic IT/SAM actively engages organizations in multiple facets of the important planning and decision-making processes regarding their IT resources. More and more government IT personnel are learning to capitalize on the advantages of this approach. By implementing the new model, cities and counties can now strategically use the information garnered in an IT/SAM program to save time, resources, and money.
According to Gartner, Inc., a global IT research and consulting firm, IT assets and associated support systems can account for as much as 40 to 60 percent of an organization’s total operational budget. Strategically managing these assets has significant impact on an entity’s budget, while assuring taxpayers and stakeholders that their dollars are being spent wisely.
By realizing the full value of an IT/SAM program, cities and counties can look beyond the process required to simply satisfy license compliance. Strategic IT/SAM includes correctly identifying unused applications during inventory and leveraging this information to significantly reduce associated support costs.
For instance, a city government office may have purchased 300 licenses for a software application, but perhaps only half of those licenses are being used. By implementing IT/SAM, this information may be viewed strategically, rather than just through a short-term lens. The public entity can then determine the best course to take, such as whether to reallocate those licenses or renegotiate its contract with a software supplier.
More and more, government officials are seeing that strategically managing their agency’s software assets is beneficial for business. A November 2005 international survey, conducted by the International Business Software Managers Association (IBSMA) and ECPWeb.com, supports this mindset. The survey found that SAM generated an average 131 percent return on investment and an average savings of $717,000–no meager sum on the savings spectrum.
Monitoring software usage and the ability to proactively respond to this information represent an entire, new way of managing business operations. As a result, government personnel can gain increased knowledge about their resources and aim for a longer-term, strategic, and ultimately money-saving model.
Gartner studies also found that organizations which systematically manage the life cycle of their IT assets may reduce costs by as much as 30 percent the first year, followed by an annual savings of up to 10 percent during the next five years.
Because stakeholders demand wise spending across the board, including IT budgets, the market shift to a genuinely strategic approach can help entities meet this challenge. Strategic IT/SAM enables organizations to save money in this area of their business, the same way they would want to save money in any other area.
As more organizations become aware of the growing number of efficient and money-saving opportunities that exist, this market shift will only become more pronounced. Strategic IT/SAM can benefit players on both sides of the fence–public-sector IT buyers, as well as private-sector software suppliers.
Editor’s Note: Kris Barker is Chief Executive Officer of Seattle-based Express Metrix, a provider of PC inventory and IT/SAM solutions. Barker, who has more than 25 years of experience in key software development and high-tech leadership positions, also serves as an educator with the University of Washington Extension Service. He is active in several Pacific Northwest community and charity organizations.
For more information about Express Metrix and IT/SAM resources, visit: www.govinfo.bz/5963-101.
