The Strategic Importance of Software Asset Management

In September 2020 Anglepoint VP, Selina Baranowski, joined Todd Alcock, VP at Converge, for a joint webinar – The Strategic Importance of Software Asset Management. Together, they covered topics such as: what SAM is (and what it isn’t), why it’s important, and the four major strategic benefits of SAM.

Below, you’ll find the notes we took from the webinar.

What software asset management is (and what it isn’t)

The formal definition of software asset management is as follows:

“All of the infrastructure and processes necessary for the effective management, control and protection of the software assets within an organization, throughout all stages of their lifecycle.” – ITIL v3 Best Practice Guide – Software Asset Management

That definition is a bit general, so to let’s drill down even more. SAM has the following characteristics:

– SAM is a business practice. It involves people, processes, and technology.
– SAM includes a set of managed processes and functional capabilities.
– SAM tools can help facilitate, and sometimes automate, these processes and capabilities; but deploying a tool by itself does not ensure the effective practice of managing software assets.
– SAM is not just about software on desktops. In fact, SAM is most importantly about software on servers – that is where the cost and operational impact of software assets is most concentrated.
– SAM is a multi-disciplinary practice. It requires collaboration among several departments – IT, Finance, Procurement, Legal, and HR being some of the typical major players.

To understand SAM even better, it’s valuable to know what SAM isn’t. These points are commonly misunderstood in many organizations today:

– SAM is NOT a one-time exercise.
– SAM is NOT a one-person job. Many organizations start with one person doing SAM (frequently in addition to other responsibilities), but quickly realize that effective SAM cannot be performed by a single individual.
– SAM is NOT just about IT.
– SAM is NOT just about compliance or audits.
– SAM is NOT just about a tool.

Simply put, SAM cannot be successful without the right people, processes, and technology.

Why software asset management is important

The importance of software asset management extends across an entire organization. Two of the main and most important aspects of SAM are cost savings and risk mitigation – from both a compliance and IT security standpoint.

We’re going to look to Gartner to discuss why SAM is important and how it is increasingly affecting organizations.

“SAM has evolved into a discipline that supports strategic business development, requiring IT leaders to engage C-level commitment to CSAM investment.” 1

– SAM is becoming more important to C-level executives; the recent release of Gartner’s first-ever Magic Quadrant for SAM Managed Services is evidence of this.

“[Organizations that] successfully execute ITAM as a discipline typically achieve 30% cost savings in the first year of their initiatives, and at least 5% cost savings in each of the subsequent five years. Given that software and hardware spending often accounts for 20% of IT budgets, this is a crucial discipline to master. ITAM can also significantly reduce the compliance risks associated with recent increases in the number and intensity of software audits.”2

– Every organization needs to reduce costs, especially in today’s economic landscape. Year one cost savings of 30% and 5% in years after is very common for our clients (oftentimes it’s even higher). This equates to millions of dollars in cost savings.

“[Gartner] survey reveals that 65% of respondents reported at least one software vendor audit in the previous 12 months, up from 61% the year before.”3

– We’ve found that as market and licensing models are changing, so are the publishers’ revenues. This means that they’re thinking of new and creative ways to generate revenue from their existing customers and auditing is certainly one of those ways. This year especially, we’re seeing more and more audits – many of our clients are facing audits from multiple software publishers.

4 strategic benefits of software asset management

As noted by Gartner, SAM is a discipline that supports strategic business development. Here are the 4 main strategic benefits of SAM:

Reduce Risk:

– Data collected from SAM allows organizations to identify IT security risks, finding faulty and/or unsupported software. You’ll know which/how many software assets need patches/security updates.
– SAM reduces compliance exposure. When auditors come knocking, they’ll find that you are paying for what’s being used; eliminating the need for potential hefty, business-changing fines.
– The reduced risk from practicing good SAM will save your organization from any and all potential legal, financial, and reputational damages/liabilities.

Reduce Spend:

– This is a major benefit! Many of our clients see actionable savings of 20% or more in year one.
– Good SAM monitors usage on an ongoing basis, allowing you to identify re-harvesting/re-use opportunities. It’s (obviously) important that you don’t spend more money that needed.
– Ongoing usage monitoring also empowers organizations to purchase software assets based on their true usage and future needs.
– Additionally, SAM helps limit rogue purchases and potential chargebacks.

Maximize Investments:

– Through configuration management & standardization and change control & business continuity, organizations get the most out of what they have.
– Take advantage of IT optimization opportunities, i.e., virtualization, server consolidation, etc.
– Having the right people and processes in place allows you to realize the full benefits of your SAM tool(s). Many organizations fail to take full advantage of this.

Negotiate Strategically:

– If you know exactly what you have and exactly what you need, you can negotiate from a position of power. This gives you confidence and makes life much easier.
– SAM data allows for dialed-in and precise decision making.
– Having a SAM managed service provider in your corner gives you the publisher-specific expertise needed to negotiate. This detailed publisher knowledge allows for focus on key contract asks and advantageous terms.

Other ways which software asset management helps organizations

Here are a few other ways that SAM benefits companies:

– SAM streamlines IT processes through standardization driven by SAM policies.
– SAM greatly reduces man hours and limits business disruption caused by audits.
– The visibility and validation that come with SAM contribute to better IT governance policies and practices.
– Data of past usage and trends helps improve forecasting of future software needs.
– SAM helps prioritize which software publishers to manage based on spend, audit considerations, strategic importance, etc. To read more about publisher prioritization check out THIS ARTICLE.

The benefits of proper software asset management are immense and of great strategic importance to organizations today. If you have more questions regarding SAM, please reach out to us and we’ll be happy to answer them.

1. Gartner Publication G00298384, 03 Mar 2016
2. Gartner Publication G00251385, 18 Jun 2013
3. Gartner Publication G00228206, 27 Jan 2012

Case Studies

Below, you’ll find case studies from some of Anglepoint’s clients that demonstrate the strategic importance of SAM.