Failing to invest in Software Asset Management is a risky business

One of the big mysteries of IT is the comparatively low level of investment in software asset management (SAM), especially given that IT software spending is currently outpacing hardware spending. As it does, the costs and risks associated with software use are increasing.
In an effort to examine why the adoption of SAM is so low and highlight the risks effective SAM can mitigate, 1E commissioned Forrester Consulting to conduct a custom Technology Adoption Profile entitled “Prevent Hidden Risks with Enhanced Software Asset Management.”
The findings of the report reveal that SAM processes have failed miserably to keep pace with changing technology and licensing models. According to Forrester’s report, “Not only are businesses failing to protect some of their most expensive assets, but by failing to ensure visibility across all stages of the software asset life cycle, they are putting themselves at risk.”
Here are some key takeaways from the Forrester study:

Only 33% of organizations have any Software Asset Management (SAM) processes in place

Despite global businesses and governments spending $579 billion on software and $361 billion on hardware, the study showed that more than 30% of respondents reported that they have an inconsistent or decentralized repository, and only 17% of organizations have tooling in place that accurately tracks and understands the complexity of the software deployed across their desktop estate.

Shadow IT is a significant risk to business

Business and employee purchases represent a staggering 40% of a firm’s technology spending. As individuals bypass centralized controls to purchase software, they expose the business to multiple risks:

• Information & data security weakness – Shadow IT enables the installation of applications that are not maintained or patched, leading to security vulnerabilities. Employees and business leaders can install software that is inappropriately used or unlicensed to perform the tasks they need. This exposes the business to security threats via malware that may be included in unlicensed or unsupported software.
• Costly & time consuming audits – Nearly 60% of businesses have to contend with four or more audits per year; 37% of firms experience one to three audits per year; 47% of firms said they deal with at least four to 10 audits per year; and at least 12% deal with 10 or more audits per year. As every CIO knows, audits are an expensive and resource intensive business. If individuals and departments are allowed to purchase software unchecked, there will inevitably duplicated, unlicensed or inadequately licensed technologies throughout the business.
• Inefficiencies & lack of agility – 1E’s recent benchmark study into the Real Cost of Unused Software revealed that an incredible 37% of software goes unused, at a cost of $30bn to businesses in the US alone. Even if money were no object, this software sprawl leads to a drain on the IT department’s resources, which eventually slows down the whole business.

A clear shift towards cloud-based services

Forrester research shows that, today, 29% of an IT organization’s application portfolio is being deployed in the cloud. Organizations expect this to increase, with 42% of all applications deployed in the cloud over the next two years. In order to move to the cloud, IT decision-makers must understand what, where, and how much software has been deployed and is in use.

Out of the Shadows

Forrester concludes that the failure of IT departments to centralize their software repositories stems from a diverse range of problems including insufficient business buy-in, data quality issues, licensing complexity and a lack of skills from IT staff. However, it’s clear that one of the biggest challenges is how to tackle the problem of Shadow IT.
Shadow IT is no new phenomenon and it’s no surprise that it’s on the rise. Digital technologies are being developed at an incredible pace and technologically savvy employees want the latest tools to perform their jobs effectively. As lines of business and the empowered user fail to get want they need from IT quickly enough, they will acquire solutions elsewhere, bypassing IT altogether.
But how does an IT Department clamp down on Shadow IT without stifling digital advancement? Technologically empowered individuals and collaborative technologies are at the heart of digital progress. If companies are to stay ahead of the game, or simply keep up in the face of digital disruption, they need to harness this potential, not stamp it out.
One only needs to look at how companies who have become the digital disruptors have tackled this issue – by using highly automated centralized technologies that empower individuals or departments to help themselves, quickly and easily, end users effectively bypass IT anyway and still get what they want.

Investing in Success

Tackling the issue of Shadow IT is clearly important, but it’s only part of the puzzle. If SAM is, by Forrester’s definition “accounting for and effectively managing all business technology assets throughout their lifecycle, from procurement to disposal”, then we need to look at how software is managed throughout the lifecycle.
Of course, the ultimate solution is to implement automation from start to finish, giving IT the breathing space to focus on innovation rather than just keeping the lights on. But life is rarely that simple and it’s always expensive. Automation needs a certain amount of planning and housekeeping to get it on track, and more importantly, executive sponsorship to fund it.
Indeed, the lack of executive sponsorship, and alignment on clear goals, is the number one reason SAM programs fail. In which case, IT professionals must focus on how best to demonstrate not just the IT or financial value, but also the business and commercial value of investing in SAM and software automation. Once investment has been secured, sticking to these goals, measuring and reporting on success is crucial.
Technologies such as 1E’s Software Lifecycle Intelligence tool provides a great start, demonstrating the immediate savings that could be made by addressing software sprawl. However, as we have seen, enhanced SAM can deliver so much more than a purely cost saving exercise. Besides allowing for better decision making, SAM is the only way to understand and take control of your software estate. AppClarity, 1E’s Software Asset Management tool, provides a precise and straightforward view of the installed and active software across the enterprise. Automated processes measure application usage and unused or prohibited software, and allow licenses to be redeployed as needed. The time-saving solution transforms Software Asset Management into a business as usual, instead of an ad-hoc project.
The Forrester TAP report determines that enhancing SAM’s capabilities improves IT leaders’ ability to defend against software audits, security risks and Shadow IT by understanding the software that is within their ecosystem. This understanding in turn empowers IT leaders to make better decisions, to increase their negotiating ability when it comes to audits, and to drive cost efficiency, opening up time and resources to invest in innovative technologies.
Amy DeMartine, Senior Analyst at Forrester Consulting will share her tips on the best way to kick-start a Software Asset Management program in a live webinar at 11.00 AM ET / 4.00 PM GMT on Wednesday, December 16, 2015. Learn more and register for the online event here to demonstrate not just the IT or financial value, but also the business and commercial value of investing in SAM and software automation. Once investment has been secured, sticking to these goals, measuring and reporting on success is crucial.