CEO Roundtable debate - every penny counts

FASTtalk July 2009

Vendor audits are on the increase meaning compliance and software asset management (SAM) have become watchwords for savvy companies needing to keep their costs in check.

In difficult times, what companies need from their IT estate is predictability and reassurance, not unexpected, unbudgeted costs. So in times of recession, SAM and compliance become even more pertinent as organisations attempt to get their costs in check. In fact, there is evidence to suggest that the compliance landscape is set to change and that vendor audits from software publishers are set to increase.

Independent UK research conducted by IDC in October 2008 cited that 52% of all companies have been subject to a vendor audit or review in the past 12 months, whilst 23% have been subject to 3 or more audits or review during this timeframe.

This means that companies need to ensure that they have their software licensing and compliance requirements under control. But this doesn’t necessarily mean more costs. In a recession many organisations will be undertaking business rationalization programmes that could reduce staff levels and subsequent software requirements - but what is happening to the associated licences?

To discuss these issues, FAST invited a number of specialists to give their views on Software Asset Management. Participants around the table included Federation Members Andrew Highland from Staff&Line, Kevin Trinkwon from Trustmarque Solutions, Mark Cresswell from Scalable Software and Ian Moyse from Webroot Software. Also participating were Sam Bramwell from Microsoft and Ian Preskett from Bytes software services, industry analyst David Norfolk from Bloor Research, and Andy Pearce and Phil Heap from FAST.

Taking SAM seriously

Setting the scene, David Norfolk from Bloor Research said it was surprising that organisations and their people fail to take Software Asset Management (SAM) seriously.

“If you don’t know what software you’re running, you’re in trouble. I don’t see SAM as just being management of licences. I see SAM as part of configuration management and of being in control. It’s also about governance and risk management. All publishers have done very well out of selling companies more licences than they need. Now, in a time when money is tight, it is going to be exceedingly difficult to pay for a software package that no-one uses.”

Sam Bramwell, licensing and anti-piracy manager for Microsoft said many management of their software estate and agreed that it is important to bring greater clarity to the SAM process to empower organisations to make quick positive strides towards achieving software compliance.

“80% of companies have got some SAM practices in place, but the maturity is very basic. SAM as a job role isn’t there in many organisations - and there is a lack of authority and executive sponsorship. And though we’re starting to see changes to that, it doesn’t happen overnight. Microsoft’s SAM optimisation model can help companies assess their maturity level and give them a starting point. With effective SAM, comes compliance. Often we find people are scared to make a start in fear of the consequences, so at Microsoft we are beginning to change our licensing programmes as well as provide more assistance for SAM to make it easier for our customers”.

Getting greater buy-in from Boards - and vendors

Webroot’s Ian Moyse shared some key points that came out of a recent SAM event he attended. “It’s clear that companies are struggling to get buy-in from their Board. That means vendors must help them do a better job. It’s clear that modules don’t all report in the same way. It’s not just about buying an asset tool. There is no standard for the way that asset tool works.”

Microsoft’s Sam Bramwell added, “The fast adoption of technology to drive business is one reason we are where we are today. No single organisation, be they customer or vendor is to blame. However, we must all take equal responsibility to fix it and ensure that customers derive the most value from their software investments.”

FAST' managing director Andy Pearce says getting executive support for SAM is very important. “I don’t think the industry has done a good job in communicating the benefits of SAM. All organisations need C-suite level support, and the challenge to the industry is for us to partner and to collectively get those benefits across to businesses. For example, SAM could be run by Finance. If Finance had greater understanding of the uses of software, we might find a lot of interest.”

Webroot’s Ian Moyse suggests that economic reality means IT departments are having to play a greater role. “We’re seeing IT become very interested negotiators. Resellers I’ve spoken to say they haven’t seen IT act like this before, far more attuned to the costs and better negotiators of value for their business. One of the issues is that most companies don’t have clear financial management around software assets and see it as an expense, not a capital item needing management.”

Mark Cresswell told the roundtable that it isn’t easy to get buy-in for SAM in terms of cost reduction. “It is often difficult to get IT to embrace cost reduction because it can be interpreted as meaning that they haven’t been diligent in the past. However the opportunities are significant. Volkswagen Credit, in the US, did a SAM project a few years ago and skipped spending on existing software for 2 years, simply by reconciling licences. If all organisations approached SAM as a cost saving measure, revenue for the main publishers would be severely impacted in the short-term.

FAST’s Andy Pearce believes getting the message over to Finance is very important. “If organisations are not compliant, they are breaking the law. And the review is just the start of the process. SAM is about determining where you are today, and then getting it right and managing those assets on a regular basis. 60% of companies are unlicensed and 40% are overlicensed.”

A climate of fear

A key issue for organisations is the idea of the value of their software. Determining how much software costs is relatively easy, but determining the value is much more difficult.

Mark Cresswell from Scalable Software says getting value out of software never goes out of fashion. “This recession seems to be creating a climate of fear within IT that prevents certain groups acknowledging they may have overspent. Instead the message is sent that everything is ‘under control’ and opportunities for cost saving are missed.

There needs to be a far greater spirit of co-operation between finance and IT for organisations to have a hope of capturing the real saving available.”

Kevin Trinkwon of Trustmarque Solutions says dealing with the problem. “Companies have usually passed it down to IT because the CFO still sees SAM as an IT issue. But for the CFO, procurement is their baby. At the point of sale is where everything can be done, because otherwise, someone has to admit a mistake.”

David Norfolk of Bloor Research says measurement can be a problem. “Measurement is tricky. If you look at reputation risk, there’s a low chance of being caught.”

Mastering the black arts with effective process and governance

Kevin Trinkwon from Trustmarque Solutions says software licensing has often been seen as a black art. “It is a complex and invisible asset that people don’t see on their radar.”