Why Software Asset Management is indispensable for large companies
And three factors to prove that
Software Asset Management (SAM) provides advantages to any organization. More insight into costs, software usage and a clear overview of all available licenses is something every IT department will benefit from. For larger organizations SAM is a must. The financial impact is high, in terms of possible cost savings and in the avoidance of potential risks.
This article is based on a research that revealed how deficient Software Asset Management affects larger companies. The financial consequences impact organizations with more than 250 employees the most. Besides the fact that they have the largest software budgets, according to the research, there are a number of other factors that contribute thereto.
The larger the organization, the less insight
The survey shows that the larger the organization, the less knowledge there is about cost and use of software. Among the organizations with less than 250 employees, 63 percent of decision makers surveyed know how much is spent on software annually. In organizations with 250+ employees, this percentage drops to 33 percent while in those with 1000+ only 21 percent know the costs.
The same applies to software usage. While 60 percent of small companies use all software, only 45 percent of large companies do.
This low understanding is usually caused by a lack of overview which is likely to be confirmed by anyone working in a large organization. In general, these companies have an incredibly complex software infrastructure and there are often hundreds to thousands software products in use, from multiple software publishers. If these software products and licenses are not managed, overview is easily lost. The result of the combination of little knowledge and many products is obvious: a significant probability that contractual agreements are violated in large organizations.
Audits generally target large organizations
Software publishers such as SAP, Oracle, IBM and Microsoft know this as well. That’s why software audits form a substantial share of their revenue model. If they do not perform these checks, they miss a big revenue opportunity.
As an audit is time consuming, it is performed only when there is a reasonable doubt about the compliance position. In short, audits take place when some contractual violations are expected. And, as previously mentioned, results of this study show this most often occurs in organizations with more than 250 employees.
The study confirms that large companies face audits most often. 78 percent of organizations with more than 250 employees are audited at least once per year. For companies with 1000+ employees, this percentage is 83 percent. For small organizations, the percentage of 62 percent is still relatively high, but, nevertheless, the highest frequency can be found in the largest companies. Seventeen percent of the companies with 1000+ employees are, on average, audited four times, or even more often, annually. This can be explained because an audit by Microsoft, for example, is often reason for Oracle or SAP to also perform an audit. Where there's smoke, after all, there is also fire.
Software publishers target larger organizations. After all, the highest revenues can be collected there. As the software budgets are much higher (running into millions), the same contract breach in a larger organization has more impact than in a smaller company. The additional payment or penalty will therefore be higher.
Who looks at these numbers would expect that the need for SAM is obvious to every company. Many large organizations still underestimate the added value of SAM though. This results in many companies still throwing away millions each year due to unused software or compliance issues. This is purely an observation of the current situation. And it's a pity. Software should provide savings or make a positive contribution to earnings, rather than unexpected spending make it cost more than it generates.
This article is also published in Dutch on Computable.nl.