Samanage Software Asset Management Roi White Paper
1 Quantifying the Value of Software Asset Management
Quantifying the Value of Software Asset Management
Over the past few decades, employees have come to rely more and more heavily on
software solutions to automate and enhance a variety of core business activities – from
sales order entry and inventory tracking to payroll processing and financial reporting. As
a result, companies of all sizes and across all industries now find themselves struggling
to control the growing number of software applications installed on their servers and
desktops. Studies show that the average employee PC has close to 150 software titles
installed, including fixes, drivers, and service packs.
Software Asset Management (“SAM”) systems combine processes and technologies to
improve the way software applications are utilized, tracked, and managed throughout
all phases of their lifecycle. There are many advantages that can be achieved through
the use of SAM. Improved application performance and increased productivity of both
IT staff and end users are chief among them.
SAM offers significant financial benefits, lowering the total cost of software ownership
and accelerating the return on software investment. According to Christopher
Germann, senior research analyst at Gartner Group, “organizations can realize cost
savings of between 5 percent and 35 percent by implementing focused software asset
This paper provides an overview of software asset management and its key benefits.
Additionally, it highlights the areas where an SAM solution can deliver the most
tangible, quantifiable cost savings to an organization. Readers will also learn how to
calculate the potential return on investment (ROI) on SAM in order to present senior
management with a compelling business case for the solution.
What is Software Asset Management?
Software applications have become a vital asset for today’s businesses, providing the
foundation for employee productivity and output, and supporting mission-critical
processes that drive operational efficiency and profitability. Companies spend more
today on software than ever before. In fact, while tough economic times are impacting
most other industries, software vendors are actually seeing their markets increase.
Forrester Research predicts that global spending on software will reach $341 billion in
2008, a 9 percent increase over 2007.
As more and more software is purchased, companies must find better ways to justify
and optimize their investments. Additionally, software is unique from other technology
2 Quantifying the Value of Software Asset Management
solutions, like hardware, because it is intangible, making it much harder to monitor,
control, and manage.
Software asset management is a crucial business practice that combines policies,
processes, and supporting technologies to improve software budgeting, purchasing,
utilization, management, control, and security across an entire enterprise. Software
asset management is not a one-time project. Because technology environments change
so rapidly, SAM must be viewed as an ongoing process in order to ensure continuous
compliance, performance, and value.
SAM empowers businesses to improve all facets of software acquisition, use, and
administration. As a result, the value and impact of software solutions is dramatically
improved throughout all phases of their lifecycle.
Today’s most popular SAM applications include fully integrated auditing and tracking
tools, a centralized information repository, advanced monitoring and analysis, and other
robust features to enhance the following software-related functions:
Budgeting and acquisition
Installation and deployment
Logging and tracking of settings and configurations
Monitoring of security solutions, such as anti-virus software
Why You Need an SAM Solution
The need for SAM is driven by many factors, including the rising cost of enterprise
software and the growing portions of IT budgets allocated towards software purchases
and subscriptions. Also adding to the urgency is the growing reliance of end-users on
software applications in order to execute their day-to-day activities, and the challenges
faced by IT departments in supporting these increasingly complex systems.
With SAM, businesses are able to:
Establish and enforce formal procedures for budgeting, purchasing, deploying,
and using software
Enhance strategic technology planning and make more informed software
purchasing decisions by obtaining complete visibility into existing inventories
Increase employee efficiency by accelerating the deployment of mission-critical
Ensure adherence to standards and security policies
Reduce IT support costs by minimizing the number and length of helpdesk calls
Streamline administration of software assets, including upgrades and routine
maintenance. Administration currently accounts for close to 33 percent of
software budget consumption, according to Forrester Research. And the
3 Quantifying the Value of Software Asset Management
Information Technology Research Institute states that the cost of maintaining
software throughout its lifetime can total as much as 90 percent of the initial
Leading industry analyst firm Gartner also cites reduced software total cost of
ownership (TCO), greater economies of scale, improved efficiency and cost-
effectiveness of support and help desk operations, and the ability to create knowledge
bases and best practices around software management as some of the major benefits
SAM can offer.
Not less important than the benefits that companies can achieve through the
implementation and use of SAM, tough, are the serious commercial, legal, operational,
and financial risks they face if they don’t put in place the procedures and tools needed
to effectively manage their software applications.
A poll conducted recently by IDC shows that less than half of companies have formal
SAM practices and procedures in place. , In a similar Gartner study, 38 percent of
organizations admitted that they had little more than a basic understanding of their
This leaves these companies in a highly vulnerable state. For example, without SAM in
place, these businesses are subject to:
“Shelfware”, or software solutions that are purchased but never installed or
utilized. Gartner estimates that approximately 20 percent of software owned by
companies is never used. And, a report issued by Morgan Stanley and AMR
Research indicates that almost half of all CRM licenses purchased are never
Fines and penalties imposed due to non-compliance with licensing agreements.
Significant staff downtime caused by extensive use of unauthorized software,
such as IM-style programs or games. A 2007 study by independent market
research company NewDiligence claims that 85% of corporate employees use
IM, peer-to-peer collaboration or sharing, or anonymizers while at work.
Increased threat from damage caused by hackers, viruses, spyware, malware,
Achieving ROI with SAM
There are many ways in which companies can realize tangible, measurable return on
their investment in software asset management. Some of the main areas that will
provide the most significant hard-dollar savings include:
Increased Efficiency of IT Support Staff
Every day, corporate helpdesks receive numerous calls regarding software-related
problems. In order to properly troubleshoot and repair these issues, support staff must
collect data about the affected PCs configuration, so they can identify any settings that
4 Quantifying the Value of Software Asset Management
may be impacting software performance. Additionally, they must know what version of
software the user is running, and any patches or upgrades that have been installed.
Without SAM in place, this information must be gathered through lengthy, error-prone
“question and answer” sessions with the end-user. An SAM application puts this
information instantly at the helpdesk representative’s fingertips, shortening the length
of calls dramatically.
Additionally, because SAM applications make it easy to determine which software
packages are unlicensed or not “corporate-sanctioned”, support professionals can avoid
spending time on issues related to unauthorized software.
The potential annual savings achieved through increased IT support efficiency can be
calculated as follows:
Number of PCs X Average number of annual X Cost per ticket X % reduction in
support tickets per PC average call length
Many companies that utilize software asset management solutions cite average
reductions in helpdesk call length of as much as 20 percent. For a company with 500
PCs, averaging 4 helpdesk tickets per PC per year, and assuming a $40 cost per ticket,
this can amount to annual savings of $16,000.
Automated and Accelerated Software Audits
Manual software inventory audits are a cumbersome, time-consuming endeavor for IT
teams. Additionally, they are highly error-prone, and often require re-work when
human mistakes are uncovered. An SAM application fully automates all activities
related to software inventory tracking and auditing, reducing related expenses as
Number of PCs X Time required to X Hourly cost of X Number of audits
audit each PC IT staff member performed each year
According to Salary.com, a leading provider of compensation management solutions and
statistics, the average IT technicians makes approximately $33 an hour. Assume that
manual audits take 15 minutes, and the average company performs audits bi-annually.
Therefore, by automating and accelerating related tasks, SAM solutions can help a
company with 500 PCs to reduce software audit costs by $8,250 each year.
Improved Employee Productivity
Companies of all types and sizes experience significant productivity losses due to the use
of unauthorized software. In fact, polls conducted by leading US staffing firm Office
Team demonstrate just how big the problem is – employees spend as much as 156
5 Quantifying the Value of Software Asset Management
hours each year using IM and other chat programs, games, peer-to-peer file sharing
packages, and other productivity-draining applications.
SAM solutions identify illegal or unauthorized software packages on employee desktops,
so IT staff can immediately remove them. This can significantly increase employee
efficiency, resulting in dramatic cost savings:
Total number X Est. hours spent X % of employees who X Average
of employees using un-authorized experience downtime hourly salary
software each year
If we conservatively estimate that ten percent of any company’s employee base will
experience negative impact to productivity and output as a result of unauthorized
software, then an SAM solution can save a company with 500 staff members over
$140,000 annually (based on an average salary of $18 per hour, according to the US
Department of Labor).
Ensured Licensing Compliance
The Business Software Alliance (BSA) estimates that solution providers have lost more
than $30 billion in revenues due to licensing non-compliance. As a result, more and
more organizations are being subject to audits, and those found guilty of piracy or illegal
use of software face tremendous financial penalties.
Gartner estimates that as many as 70 percent of mid-sized businesses and larger
enterprises have already faced an external software audit by the end of 2007.
Additionally, studies show that non-compliant companies received average fines of
about $30,000 for each piracy instance.
By improving the speed and accuracy of the software auditing process, SAM solutions
make it easier for IT departments to track existing and allocated licenses. With greater
visibility into license compliance, issues can be identified and corrected before an audit
takes place. As a result, companies can minimize their exposure and realize the
following cost savings:
Probability X Number X % of PCs with X fine per
of audit of PCs unauthorized unlicensed app
The BSA believes that more than 30 percent of all software installed on corporate PCs is
unauthorized. And, many industry pundits put the probability of any given company to
face an annual vendor audit at around 15 percent. If we conservatively estimate that
only 5% of employee desktops have at least one unlicensed software package running,
then a software asset management system can save a 500-employee organization more
than $112,000 in potential fines.
6 Quantifying the Value of Software Asset Management
Another issue affecting many companies is underutilization of software licenses. A
March, 2007 article published in IT Week claims that every corporation has as much as
$390 in unused software on each PC. Additionally, software licenses are often
purchased, and never even installed. That means, a company with 500 PCs has over-
licensed their various software applications by at least $195,000.
SAM makes it easy to identify unused licenses and reallocated as needed, resulting is
the following savings:
Average # of unused X Average cost X Number of PCs
licenses per PC per license
The level of exposure to threats like viruses or spyware will vary greatly from one
company to the next. How much a company stands to lose from a security breach
depends upon the type data it maintains, and the type of intellectual properly it keeps in
digital format, among other factors. Therefore, it is hard to quantify exactly how much a
software asset management solution can save a company in this area. However, SAM
dramatically reduces related financial risks by helping companies to identify and correct
security gaps such as missing patches or PCs without antivirus software
Affordability and Return on Investment
The potential financial savings outlined above are even more impressive when you
consider the affordability of many software asset management packages. For example,
hosted SAM solutions can be acquired for just $20 per PC per month – with absolutely
no start-up costs, training fees, or other upfront expenses. For a company with 500 PCs,
that amounts to just $10,000 each year, compared to annual cost savings that amount
to hundreds of thousands of dollars.
The chart below logically depicts the anticipated savings highlighted in this paper, as
compared to the actual cost of a hosted SAM application. The previously mentioned
industry standard numbers have used in these formulas.
7 Quantifying the Value of Software Asset Management
Investment Formula Annual Costs
Hosted SAM Software $20 (Annual fee per PC) X 500 PCs $10,000
Total Investment $10,000
Return Formula Annual Savings
Increased Help Desk 500 PCs X 4 (Support tickets per PC each $16,000
Efficiency year) X $40 (Cost per ticket) X 20%
(Reduction in average call length)
Automation of 500 PCs X 0.25 (Hours it takes to audit $8,250
Software Audits each PC) X $33 (Hourly pay rate for IT
staff) X 2 (# of annual audits)
Reduced Employee 500 employees X 10% (Employees that $140,400
Downtime encounter productivity loss) X 156 (# of
hours per year spent using unauthorized
software) X $18 (Average hourly pay
Reduced Risk of 15% (Probability of audit) X 500 PCs X
Penalties due to Non- 5% (PCs with at least 1 unlicensed app) X $112,500
Compliance $30,000 (Fine per unlicensed app)
Elimination of License Average # of unused licenses per PC X $195,000
Underutilization Average cost per license x 500 PCs
Total Annual Savings $472,150
Total Annual ROI
Savings ($472,150) / Costs ($10,000) 4721%
As companies continue to rely on software applications to support vital operations, the
need to better manage these applications – from the time they are purchased, until they
are removed or replaced – is becoming increasingly critical. Companies that do not
implement SAM practices and tools are likely to face significant financial damages due
to productivity losses, underutilization of licenses, and compliance issues. At the same
time, the ROI that can be achieved with software asset management solutions is
significant, with the financial savings far outweighing the costs.
8 Quantifying the Value of Software Asset Management
SAManage: On-Demand IT Asset Management Services
SAManage is a leading provider of robust on-demand IT Asset
Management services. The SAManage cutting-edge solutions empower
companies to gain complete visibility into their IT environments, so they
can more effectively manage their assets, minimize related risks,
facilitate compliance, and optimize utilization.
With SAManage, companies can:
Easily deploy comprehensive IT Asset Management at multiple
locations across the enterprise
Achieve greater visibility into asset inventory and usage
Proactively detect and prevent IT-related risks such as illegal
software, security gaps, or missing patches
Ensure compliance with software licensing agreements and
Reduce technology costs and improve budget management
Minimize the time and effort required to address helpdesk issues
with instant access to asset configuration data
Capture and organize IT contracts and software licenses in a
Correlate assets to contracts and leases as well as their
department and business units, users, and technical owners
Powerful and Secure On-Demand Solutions
The SAManage on-demand service completely eliminates the time and
expense associated with implementing an IT Asset Management solution.
There are no servers to manage, and no software to install. Enterprise-
wide deployments can be completed in just minutes, and new features
and enhancements are available immediately. SAManage offers a free
trial period that allows you to “try before you buy”. To find out more and
start your free trial, visit our Web site at www.SAManage.com.
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