2. Executive Summary
“Why did we buy a SAM tool?”
Because everyone else did. Because Gartner said to.
Because buzzwords like ‘risk mitigation’ and ‘optimisation’ got the attention of decision makers.
Because SAM vendors said it would deliver big savings.
Except it didn’t.
The truth is, conventional SAM doesn’t save money; it costs money. Which is fine, as long as it
lowers your risk and improves your clients’ experience by a commensurate amount.
Another myth is that software is an asset: Software Asset Management. Software is not an asset – it
is an expense to be minimised and controlled.
This paper sets out to challenge these accepted ideals and offer an alternative to conventional SAM
choices. Specifically, it proposes the concept of SAM sprints. Instead of paying for SAM tools and
resources in perpetuity (and realising little value from them), your organisation should be engaging
in short, targeted periods of SAM focus. Within these brief sprints, technologies and resourcing are
explicitly tasked with achieving defined outcomes and informing key decisions for the year to follow.
This approach is expected to save up to 75% of your SAM budget.
You’ll get more. For less.
Gartner: “Software Asset Management Is Now a C-Level Imperative” (March 2016)
The Problems
Software Asset Management (SAM) is a universally accepted notion. Its principles of saving money
and lowering risk are well documented and welcomed everywhere.
But there are two problems with it.
First, SAM doesn’t save money; it costs money.
To be precise, conventional SAM costs money.
Buy a SAM tool, pay SAM maintenance, run a SAM
project, employ a SAM resource. Is it a time-tested
strategy with proven results or is it a classic attempt
that merely conciliates risk assessment? “We’ve paid all
this money on SAM, we must be more compliant...”
Second, the terminology: Software Asset Management. Assets, by definition, are grown and
accumulated and protected; they are pursued with an unrivaled intensity and at the end of a
few years you hope you’re left with something of value. The more assets, the better.
3. Expenses, on the other hand, are typically suppressed and regulated and controlled. From utility bills
to the weekly grocery list, downward pressure is applied in an effort to minimize expenditure.
But what about software? All the parsimonious ideals go out the door. Incredibly, software is
promoted and viewed as an asset without a thought, leading to a proliferation of vendors and a glut
of wasted licensing. Although stakeholders claim to review software expenditure and even cite
examples of rationalisation, the overwhelming and upward trend proves an insatiable thirst for the
latest and greatest software “assets” remains. Mindsets change from “let’s share expenses and
lower costs” to “I bought it, it’s mine, hands off” or “it’s okay, I’m buying an asset”.
Asset: “an item of economic value owned by an individual or corporation, especially that which
could be converted to cash.”
Expense: “money spent or cost incurred to accomplish a purpose or facilitate business operations.”
Do we “own” software? No, we license it. Is it “an item of economic value” that can be “converted to
cash”? No. Actually, software licensing sounds rather like “money spent or cost incurred to
accomplish a purpose or facilitate business operations”.
So should Software Asset Management be changed to the more accurate
Software Expense Management? Should it be ‘SEM’? No. This article presents
neither an argument in semantics nor a proposal for the adoption of a new
acronym – ‘SAM’ has entered the vernacular and is here to stay. Rather, we
suggest that a change in outlook (expenses instead of assets) should lead to a
change in approach amongst SAM advocates and IT leaders.
The Facts
By way of example, a popular SAM tool cost one Australian university $140,000* for its fleet of
13000 computers. In addition, an annual support and maintenance fee averaging over $20,000 was
paid for more than 10 years.
*Note: figures cited are approximate
4. The fair and logical question to follow is: “How many benefits has the university realised over the
last decade from its $350,000 SAM investment?” This cumulative figure is displayed in the chart
below.
Whilst the eye focuses on the grey and growing cumulative costs, the mind is drawn to the small and
steady orange ‘maintenance’ bars. Instinctively we reason that the ongoing costs are comparatively
low, so why would we contemplate discontinuing the maintenance? “We may need it down the
track… we’re too heavily invested to back out… we’ll eventually yield the cost savings… we don’t
want to jeopardise the discount we’re getting…” The mentality has become similar to holding on to
poorly performing shares - the psychological justification makes a good business decision less likely.
An even more important question in this example would be: “How much value should be expected
by paying $30,000 a year from now on?” Realistically, nothing can be done about decisions made in
the past. But what about the next decade?
In general, what resourcing costs are associated with implementing and configuring SAM tools,
managing their upgrades, troubleshooting and extracting relevant data? Vendors acknowledge that
administrators are required to leverage the benefits of their tools, so it could easily be argued that
an extra $100k per year in SAM resourcing needs to be added to the SAM cost.
5. Listed below are some common features of software maintenance that vendors often promote. As
you read them, try to determine if they’re worth whatever costs your organization are charged.
The Benefit The Pitch The Reality
Access to
the latest
version
Stay up to date and
connected. Benefit
from the latest
features that will
drive even better
decisions and save
even more money.
Significant IT resources can be required to evaluate and
update point releases, many of which offer no real
advantages. ‘Bleeding edge’ versions may contain bugs,
with early adopters acting as unpaid troubleshooters for
developers. New modules can be introduced but still
more internal resourcing is required to gain the benefits.
The tool and its documentation typically become more
complicated, not simpler.
Latest
product
information
Relax as we define
products that are
seamlessly delivered
to your SAM tool via
an automatic
update overnight.
Many applications used within organisations are not
mainstream and are not included in product discoveries
by vendors. Manual definitions created by clients can be
used by vendors as the basis for their ‘automatic’
definitions. One could argue that SAM vendors get more
value from this process than clients do.
Training
and
support
Troubleshooting is
only an email away.
Any training tends to be online. Manuals are text heavy.
Check your SLAs because email responses may not be
immediate. Even if the response is within 24hrs, the
resolution may not be. Does the vendor have a best
practice published or a user community to turn to? The
vendor’s technicians may not be SAM-savvy.
The fact is that even the best data and reports from a SAM tool do not equate to savings. Without a
holistic approach to SAM and without internal policies to shape procedures and influence decisions,
any potential benefits are very difficult to leverage within an organization.
Another growing concern for SAM vendors is the move to cloud
technologies. Whilst they do not advertise this anxiety, many tools
do not successfully track installation and usage of cloud technologies.
And those that do are of questionable value – a browser based cloud
service could easily register a full day’s use, simply because it was
‘open’ all day. Either way, conventional SAM becomes less relevant
in the age of the cloud.
In the end, one must return to the basic objectives of SAM and ask the questions:
Has the SAM tool helped us to lower risk and improved our ability to respond to audits?
Has it lowered costs and enabled better alignment with business strategies?
Has it lowered the time it takes to procure or deploy software, thus improving IT processes
and the client experience?
6. The Possibilities
Here presented are various strategies for consideration. While each has its own merit and
advantages, the recommended proposal to follow is deemed to be the superior option.
Change Nothing – this course of action is very often chosen because it allows organisations
to stay in their comfort zone with stable budget projections and service expectations. The
so-called savings they’ve achieved to date are enough to warrant no action. Adjectives such
as ‘agile’ and ‘innovative’ remain safely as conference room buzzwords; ‘risk averse’ and
‘status quo’ are still in charge under this scenario. As costs continue to rise, however,
changing nothing should not be seen as a viable option. If you don’t change your SAM
approach, you give yourself no chance to change your SAM maturity.
Outsource SAM – an emerging trend with a convincing sales pitch: “SAM is a challenging and
complex process which most organisations do not have as core functionality. Outsource it to
us and we’ll reduce your IT spend and risk.” Okay, you can outsource low-level procurement
work and even obtain some useful data from the service. But that’s not SAM. SAM is
balancing risk and drawing conclusions and shaping governance and making decisions. It is
inextricably linked to service management and hardware fleet and deployment and end-of-
life policies. Just as you can’t effectively outsource risk or governance, you can’t effectively
outsource SAM. If you’re in discussions to go down this track, one suggestion would be to
inform your potential SAM vendor that their fees will be subtracted directly from any hard
savings they make for your organisation – that ought to clear the room.
Stop SAM – Some decision makers pursue this outcome because they correctly deduce that
the promised reductions in cost and risk have not eventuated. Of course, such a decision will
never be marketed as stopping SAM; it will be more like ‘reskilling’ or ‘launching a new
project’ or ‘heading in a new direction’. Savings made through basic contract management
are sufficient in this scenario. As long as a bucket of money is put aside for a rainy day (for
when an audit reveals you’re under licensed) and ‘all-you-can-eat’ licensing is not selected
every time, stopping SAM can be an acceptable business decision. Truthfully, if you’ve done
your risk vs reward analysis, it’s not a bad idea. But not as good as the proposal to follow.
The Solutions
The realization that licences are expenses (not assets) should at the very least provide a
platform for SAM champions to take a fresh look at the policies they’re administering. QUT’s
Licence Recovery Policy is an excellent example of real world policy change.
Educate stakeholders of the need for transparency in software
inventories. If a known licence is an expense, an unknown licence is
a money pit – a financial black hole that will continuously drain
resources until it’s discovered. Worse, unknown licensing is like a
dangerous hidden rock lurking quietly beneath the surface, waiting
to inflict damage through a surprise audit.
7. Therefore, brainstorm incentives for federated areas to submit licensing and procurement details.
Such a change can encourage renewed emphasis on creating policies and education to stop millions
of dollars’ worth of unknown, unapproved, untracked, and unmanaged software expenses.
How do we change the SAM reality from costing money to saving it? There is no doubt that
many benefits can be leveraged from SAM, so we need discovery and reporting capabilities.
But do we need to pay exorbitant amounts of money upfront and annually to have this information
about our own landscape?
No. The answer is to develop SAM sprints. Ascertain what the best time in the year would be to
engage in a short, sharp burst of concentrated SAM effort. Perhaps this will be when software usage
is high but procurement activity is low.
For example, imagine a two month sprint in Feb/Mar.
You’ve quantified and documented what your organization wants from SAM. (Don’t be too
broad or vague like “lower costs and risks” or “improve client service” – be specific like
“lower site licences from 70 contracts to 65” or “collate all cloud contracts”.)
You devise the plan, map the goals, and diarise what you want from your sprint. You
communicate with key stakeholders exactly what you are doing throughout Feb/Mar.
Setting tangible outcomes and expectations will encourage not just the primary SAM
resource but all stakeholders to get on board and obtain the deliverables the organisation
requires to better align with its business strategies.
Engage the relevant team (or a 3rd
party if needed) to take a snapshot of the installations
and licensing position in your environment.* Importantly, the technology you choose to
provide this data is not a separate SAM tool which you’re paying for all year. Rather, it is an
annual snapshot of your licensing position.
Collate, analyse, and report on the data you’ve acquired.
Present this annual report to stakeholders and make clear and actionable decisions.
This kind of intense effort will actually yield more benefits than an ongoing position would during a
full 12 month period. It will provide the impetus required to underpin effective SAM in the longer
term. In other words, you’ve gotten in and obtained the data you needed, gotten out, published the
reports, and made decisions that will empower your organisation to get the most from its licensing
in the year ahead.
In fact, you will find that this dedicated approach allows you to make clearer decisions. Your SAM
becomes far more potent, powerful enough to shape and inform your policies for the year ahead
because your overall licensing position and trends will not change drastically in that time frame.
Effectively, you’ve raised your organisation’s SAM maturity through the sprint, until the following
Feb/Mar when your approach will be even more robust. Expected savings would be 75% of your
SAM budget (the costs of resourcing, the costs of the tool) as well as better outcomes. The resource
who engaged in the SAM sprint returns to their typical IT/licensing/procurement duties for the
remainder of the year.
You’ll get more. For less.
8. The References
* Gartner quote 3/3/16: https://www.gartner.com/doc/3237218/software-asset-management-
clevel-imperative
* Example: System Center Configuration Manager (SCCM)
