With proper software asset management, you can avoid “paying it again”

Guest post by Rafael Brugnini,  President and General Manager for HP Software in EMEA


SAM.jpgAt this time of year, as we approach the end of the year, annual budget plans start to get solidified alongside annual audit cycles. For IT departments, these two processes are usually inherently linked. As IT and finance teams drive this joint review, when it comes to software they essentially look to answer four simple questions:

  • “How much are our software licenses costing us?”
  •  “Where and how is it all being used?”
  • “Can our usage be optimized?”
  • “What else will we need next year?”


Unfortunately, with the sprawl of virtual machines, the growing adoption of flexible, cloud-based delivery models and the wide adoption of multi-sourced services have made these seemingly straightforward questions increasingly difficult to answer—particularly for software.  Welcome to the challenge of Software Asset Management (SAM).


We see a growing focus on compliance and “trueing up” from our customers and the vendor community. One of our customers has had to reshape their entire 2014 planning as a result of an unexpected multi-million dollar invoice from a software vendor. Another EMEA customer is currently struggling with the impact of software that was licensed for unlimited use—for a period of time—only to discover that adoption of that software has permeated far more extensively across their enterprise than they had originally anticipated. They now face the prospect of a large bill at the end of the license term. Probably the most extreme example occurred this time in the Americas.  A team was recently presented with a seven figure invoice for licenses that were sitting on a server in the Data Centre for an abandoned IT project.  


As I talk to customers and understand their issues, I’m rapidly coming to recognize that when it comes to software assets—and in particular software licenses—answering even simple questions is more challenging than ever.


According to industry figures from analyst firm, Gartner, the enterprise software market is growing faster than other key IT segments. It is up 13 percent from $285Bn in 2012 to $324Bn next year. The issue is not just how much software spending is rising, with the rise of Bring Your Own Application (BYOA) the question is also which department is paying for it. By 2015, 35 percent of enterprise IT expenditure will be managed outside the IT department.


So we are faced with increasing software spending and de-centralizing accountability—a classic recipe for failure and loss of control. As more buyers consume more licenses in different ways—from enterprise licenses, to directly purchased cloud computing services and bundled outsourced services—it can become virtually impossible to understand if an organization is compliant with its contracted licensing agreements or not.  


There are two situations to characterize most organizations:


1.       Organization is not compliant

This type of organization uses more software than purchased licenses. When a vendor audits such companies the consequences can be severe: penalties, additional unbudgeted costs and reputational damage.


2.       Organization is over-compliant

Purchased more licenses than needed (or used). Poor understanding of vendor’s licensing rules and maintenance/renewal contracts makes planning impossible and creates a high risk of overestimating growth.  Software and maintenance payments make mergers, acquisitions and divestitures problematic.


Software Asset Management is not the sort of IT discipline that gets many of us excited, but compliance issues and the serious fines that go with them are grabbing headlines around the world. HP is trying its best to simplify license management and compliance for our customers. The payoffs from this can be spectacular, as proactive management reveals unused ‘shelfware‘ and allows customers to target unexpected or excessive consumption.


Before that, if you’re looking for robust enabling technology and comprehensive services that provide Software Asset Management best practice, it is worth getting in touch. Delivery options range from fast track audit snapshots, to a dedicated in-house Software Asset Management program, to an outsourced License Optimization service. So with the year-end around the corner, identifying and redirecting any uncommitted budget into getting started with Software Asset Management could just be one of the smartest ways to ensure that next year’s budget goes that bit further!

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