Ensuring return on investment from a Software Asset Management (SAM) programme continues to be a challenge for IT leaders. How can businesses ensure their SAM spend is providing value, leading to cost savings, better decision making and software licence compliance? More difficult still, when should a business decide to outsource SAM and licensing tasks and what should be maintained by an in-house team or automated using SAM technology?
SAM is the practice of managing and optimising the purchase, deployment, maintenance, utilisation, and disposal of software applications within an organisation. In recent years, the investment made by large and fast-growing organisations into SAM programmes has grown significantly.
An effective SAM programme will protect an organisation from the risk of large and unplanned expenditure in the event of software licensing noncompliance identified during an audit by a software vendor. In short, this is where an organisation is found to be using more software than they have legally paid for, although the complexities run far beyond this. Multi-million-dollar settlement figures in cases of licensing noncompliance are commonplace, and organisations have learned through painful experience that they require a robust SAM programme to insure against this.
A truly effective SAM programme should also be self-financing, both by preventing audit expenditure and by identifying areas for software cost savings. Software licence optimisation is a key aspect of SAM and continues to grow in importance as organisations invest heavily in complex software infrastructure and cloud computing.
Organisations often invest hundreds of thousands of dollars into a SAM tool platform to automate SAM processes. On top of this expenditure, many organisations also supplement this tool investment with either an in-house SAM team, an outsourced SAM managed service or specialist external licensing consultants. Often, the most elaborate SAM programmes will combine elements of all the above to manage the workload and expertise required to operate effectively.
Considering this wide range of options, what are the important factors that should guide decision making for investing in SAM? Organisations who understand where to invest in SAM and how to apply the best resource to each SAM programme requirement will ensure a significant return on their investment.
The first step an organisation should take when planning their SAM investment is to evaluate and understand the complexity, volume and business value of the various SAM activities that will be required. The concept of business value refers to measurable improvement to business outcomes, for example reduction of renewal spend for a software contract. It is important to recognise that many high business value activities are dependent on low business value activities (such as software discovery and recognition).
There are numerous elements that make up a fully-fledged SAM programme. These range from relatively straightforward tasks such as recording software purchases and managing internal software requests through to complex, specialised activities like audit defence or cloud migration licence cost planning. Once an organisation lists each of the separate activities contained within their SAM programme they can begin to be categorised as follows:
- Volume – how frequently the task is performed, or the number of working hours required to complete the task
- Complexity – the required domain knowledge to complete the task
- Business Value – measurable improvement to business outcomes
When each SAM activity is plotted against these three metrics it quickly becomes apparent that there is an unequal spread of requirements and outcomes for each task. Therefore, it makes little sense to approach each task the same way or with the same resource – here is where effective resource and investment planning will supercharge the effectiveness of a SAM programme.
Businesses who have taken the proactive decision to allocate budget to a SAM programme have several options for how to utilise their investment. These include an in-house SAM team, SAM tool platform automation, outsourced service providers, temporary staff, resource from elsewhere in the business (such as Service Desk) or specialist consultancy partners. Each organisation is different, and the availability of resources will change depending on the circumstances of the business.
Understanding how to allocate these various resource options is key. This will certainly vary between different organisations, but some assumptions can be made. A task which is categorised as complex and offering high business value will often be best performed by the organisation’s core team or a specialist consultancy partner, depending on the volume or frequency of the work. It is important to build and maintain key skills within a SAM team to be able to deliver business value and work on some of the more complex areas of the environment. No SAM team can ever cover all the bases in terms of licensing knowledge, so a specialist consultancy partner is recommended here to fill any gaps that the in-house team cannot cover or do not have the bandwidth for.
A task that is relatively complex yet offers lower overall value (this does not mean it is unimportant) should be conducted either by an outsourced general service provider or a specialist temporary resource. Lower value tasks shouldn’t occupy the time of key in-house SAM resources or more expensive consultancy partners. It will likely be more efficient to allocate this task to an outsourcer who has the economies of scale to deliver the work more cost-effectively if the volume is reasonably high.
A task with low complexity and low value (again, it may still be important) will see the best return on investment through tool automation (if high volume) or allocating a temporary/junior resource to complete the requirement. Such a task could also be allocated to a different department. i.e., Service Desk.
As stated previously, each organisation is different and complexity and volume remain relative to each business. A task that is categorised as low complexity in one team may be seen as much high complexity in another depending on the domain knowledge available. Following this methodology will allow any organisation to understand how to allocate their SAM investment more effectively. The flexibility of this model allows the method to be relevant for both large and small organisations as well as different types of organisations with vastly different IT environments.
Eric is the Managing Director of FisherITS and shares his expertise in software licensing with clients to help protect their investments and operations in IT. A veteran of software licence compliance, Eric is experienced in the design and management of software licence compliance programmes for many top 10 software publishers and has led hundreds of enterprise-level licence audits. In recent years, Eric’s focus has been on giving strategic and tactical advice in establishing Software Asset Management to a diverse range of clients, from SMEs to large enterprises.