Software Asset Management From Scratch: Definition and Best Practices
⏱ Reading Time: 10 minutes
Today, businesses rely on software applications to perform daily activities, maintain security, and manage their relationships both in and outside the company.
In its daily operations, any business will probably need accounting software to keep its books in order.
Some businesses will need software to help them track orders or manage their stock.
Most of them will use it for other essential programs like word processing, billing, and managing a database.
Businesses will also need to keep their computers along with the data on them safe from any malicious third parties. This doesn’t only protect the business and its interests, but also the customers and their privacy.
Companies also invest plenty of money into software like CRM and social media management programs. Finally, let’s not forget about all the recent applications that have popped up to help employees and teams to work together better, like Slack and Asana.
For all these reasons, businesses tend to spend a little over eight percent of their revenue on IT, a quarter of which goes to software.
Picture 1. IT spending by industry
Furthermore, almost one out of every two companies expects their IT spending to increase over the next year, with one out of every ten believing it to be significant.
As a result of all of this, businesses need to consider investing in Software Asset Management, SAM for short, to maximize the return on investment reaped from the software applications used.
More importantly, with SAM, businesses will never have to pay extra fees due to noncompliance.
What Is Software Asset Management?
Software Asset Management enables businesses to better control and automate how they procure, use, and deploy software licenses. As a result, they reclaim their budget and maximize their savings.
In simpler terms, every software that is used for commercial reasons needs to be licensed. For instance, a company cannot use Microsoft’s word processor without paying licensing fees.
Otherwise, the company runs the risk of being fined for noncompliance.
Now, very small companies probably use a small number of software applications. So it might be easy to keep track of all of the licenses, knowing which ones are about to expire and which ones are underutilized or even entirely useless to the company.
Picture 2. Software applications
However, as the company grows and the number of required software applications increases, it gets harder and harder to keep track of all of these different cogs.
This is why it becomes necessary to have a Software Asset Management system in place.
What Are the Benefits of SAM?
There are numerous benefits to having a good Software Asset Management system.
Here are some of them.
Saving Costs and Optimizing Usage
SAM lets companies determine their technological needs and usage requirements, so they can optimize their operations and cut costs where possible.
Some companies might find that certain applications have more utility than others for them. Others, on the other hand, might conclude that they haven’t really been using all of their software.
In fact, to avoid non-compliance fees, some companies choose to go overboard and pay for as many licensing fees as possible. This ends up costing them more than if they had just paid the fee.
A report by Deloitte found that more than one-fifth of a company’s IT budget is spent on software licensing as well as maintenance activities. According to Gartner, the right SAM program in place could reduce a company’s IT expenses by up to 30 percent.
The most cost-effective route is middle of the road, the one that identifies the needs of the company and then procures the licensing agreements accordingly.
This equips the company with the exact software licenses it needs, making sure it neither lacks necessary ones, nor underuses them.
Making Budgeting Easier
A good SAM solution can make software costs more predictable and easier to forecast.
However, if a company has no idea what licenses it has or which ones need to be renewed, it becomes all the more difficult to predict how much money it will need for software licensing.
Given that software licensing and maintenance comprise a significant portion of a company’s expenditure, it is necessary to include them in the budget.
Reducing Security Risks
Another benefit of SAM programs is that they help reduce the security risks that come with software.
For one thing, Software Asset Management tools enable the control of what does and doesn’t get deployed onto a company’s network, hence reducing the possibility of a vulnerability.
Also, they make it possible to configure different applications so as to ensure compatibility, prevent conflicts, mitigate breaches, and protect against viruses and malware.
As a result of all of this, the entire IT infrastructure of a company becomes better protected.
Best Practices of Software Asset Management
If you want to implement a SAM program at your company, you might be wondering what to look out for and what you should avoid.
Starting with the best practices, there are four main elements you want to focus on:
- The team
- The tools
- The data
- Managing the efforts
Let’s look at each one separately.
You need to start by building the right SAM team. Technology doesn’t solve problems on its own. Instead, it is a powerful tool that enables people to tackle problems.
Therefore, if you’re going to invest money in a SAM solution, you need good people to steer the program. Otherwise, you’d be wasting your money.
This team’s objective should be to minimize IT costs and mitigate risks.
So, it needs to be skilled as well as experienced, particularly in the fields of software entitlements and verifying licensing models because these processes cannot be automated.
Picture 3. The right team for SAM
You will need to fill various positions, some on a part-time basis and others full-time.
These are some of the positions you might need:
- Software Asset Administrator
- SAM analyst
- SAM consultant
- Software Asset Manager
- Director of SAM
- SAM specialist
Since procuring software requires the collaboration of different teams, among which are IT, finance, legal, and procurement, the success of a SAM program hinges to a large degree on the support of senior management.
The c-suite helps navigate the corporate politics and to ensure that all the teams work in harmony towards the company’s overarching goals.
Various solutions in the market help companies manage their software assets, and each company needs to find the one that suits it best.
Obviously, several factors need to be taken into consideration.
For one thing, you need to take into consideration how flexible the solution is and how well it would integrate with other applications within your IT infrastructure.
You also want to look at the scalability of the solution. The tool should be able to grow as your company does, and keep up with your company’s evolving needs.
A third consideration is how advanced are the license management features in the SAM solution you’re considering. For instance:
- Does the solution help with license optimization?
- What about reminding you of contract expiry dates?
- Will it help you recycle licenses?
- Can you use it to manage vendor audit requests?
Over and above, you want a tool that measures your SAM program’s metrics, both financial and operational, and report them accurately back to you.
Otherwise, how can you develop insights about the program’s efficacy and make informed decisions?
Nevertheless, a single SAM solution will rarely solve all your problems.
In fact, your organization won’t become automatically compliant the moment you deploy a Software Asset Management solution.
Instead, compliance comes when the SAM team successfully uses those tools. It is the integration of the two that can make a SAM program successful.
SAM programs work through the collection of data, and the more accurate the data is, the more successful the program will be.
You see, when organizations use software applications, they generate data.
SAM solutions collect this data, along with that gathered from departments such as procurement, to give you an idea of how over or underutilized a software application.
It also lets you know when the license needs to be renewed and which licenses can be tossed to the wayside.
However, most organizations generate data both on-premises as well as in the cloud. To avoid confusion or clashes, the data from these different sources should be aggregated.
In other words, licenses, entitlements, and usage metrics all need to be cross-referenced across these different sources and normalized so that management has a single source of information.
In addition to aggregating data, it is also important to talk about centralizing this data to make it accessible and avoid confusions in the future.
For example, if the data is aggregated in more than one locale, a member of the SAM team may end up quoting inaccurate or outdated information or, worse yet, may make a decision based on this bad data.
Managing the Efforts
One of the main objectives of a SAM program is to always be audit-ready and avoid non-compliance fines with the ill-repute that comes with them.
So, your company must always be prepared for an audit by one of your vendors and should be able to hold up to the scrutiny.
One way to achieve this is to consistently carry out an internal analysis, such as Gap analysis or compliance analysis.
A gap analysis looks at the current software assets used by the company and tries to identify those without a license.
Alternatively, a compliance analysis lists the over-licensed software and the under-licensed software as well.
Another option is for the company to conduct regular audits on itself.
After all, since the cost of non-compliance can be high, both financially and legally, companies should be willing to go the extra mile to avoid such a fate.
How to prepare?
For instance, the U.S. Army installed unlicensed software applications back in 2013, and this cost them $50 million.
So, companies ought to access login history, scrutinize licensing data, and in the event that a problem has been found, carry out a forensic investigation.
To that end, companies will have to implement proper IT asset management procedures, which represent a more comprehensive view of IT assets and circumscribe Software Asset Management procedures.
Once a company has a record of all of its software assets, it needs to start categorizing them into low priority, high priority and blacklisted.
There are many reasons for this.
To begin with, some software assets, such as open-source programs, do not require any licensing fees, making them a low priority on the company’s agenda.
Alternatively, other software assets might be expensive while having the greatest impact on a business’s bottom line. These assets will represent a high priority.
Finally, some programs might bring in malware or become prohibited for some reason, making them blacklisted.
Even though a SAM program can be beneficial for a company, there are some pitfalls that can affect the program’s overall efficacy.
For example, if a company begins its program with unrealistic expectations, perhaps due to inexperience with SAM, it can jump in too quickly.
As a result, it can get swarmed by all the other challenges it failed to prepare for.
Another problem is not vetting the SAM vendor properly.
In other words, when a company acquires a SAM tool, it needs to be fully aware of both of its capabilities as well as its limitations.
It also needs to know which capabilities come out-of-the-box and which ones need to be customized.
All told, a SAM program can be a godsend if carried out correctly.
If a company assembles the proper team, acquires the right tool, collects the needed data, and takes the proper managerial steps, it can avoid having to pay non-compliance fines.
As a result, it can also keep its reputation intact as an entity that gives everybody their fair due.
Heather Redding is a content manager for rent, hailing from Aurora. She loves to geek out writing about wearables, IoT and other hot tech trends. When she finds the time to detach from her keyboard, she enjoys her Kindle library and a hot coffee. Reach out to her on Twitter.
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