By Dean Devlin & Chris Moore
Procurement of software generally takes place in both the public and private sectors on a very “local” basis, office by office, program by program, division by division. In addition, oftentimes complex license agreements, metrics, and entitlements are not well understood or communicated effectively throughout an organization to avoid over-purchasing software and license compliance issues.
As a result, government organizations and companies not only fail to realize the benefits of economies of scale, but also risk spending too much on unneeded software, as unused licenses might sit idle in other parts of an organization. While some might argue this approach provides accountability – buyers know what they need and procure it - in fact the opposite is true. Individuals, once they buy, tend to fail to monitor usage and tend to overbuy to be “safe.”
In addition, the ease with which users across an organization can download and deploy new software applications without understanding the licensing and compliance implications means that IT managers must be vigilant in their ongoing monitoring of software inventory and usage in order to avoid exorbitant and unforeseen costs. All of this results in little accountability for the actual usage of software licenses, as no one has any understanding of the complex issues around license entitlements nor incentive to manage it.
This leads to tremendous waste. Some experts in the industry believe that as much as 35% of software spending could be eliminated through better software asset management and optimization. Automated license optimization systems have saved private sector companies millions of dollars. It is time that government agencies adopt this commonsense approach as well.
Government leaders should implement policies that private sector organizations are beginning to utilize in order to save money and purchase software more effectively. Procurement officials should require departments and agencies to take an “enterprise wide” view of software purchased. By doing this, departments and agencies can realize economies of scale by putting their true purchasing power behind software procurement.
Additionally, departments and agencies should consolidate software management so that there is a central control and oversight of license usage. This step would enable government entities to optimize their software usage and purchasing, preventing costly overbuying and reducing software liabilities during audit “true-ups” – license fees and penalties paid to software vendors due to non-compliance with software licenses.
In order to incentivize smarter procurement of software by government buyers, Congress should require departmental Chief Information Officers (CIOs) to conduct an assessment of departmental systems and to determine that all existing licenses of the required software are being used and new licenses are necessary before obligating any resources to procure additional software. Additionally, Congress should require that departmental CIOs be the single buyers of software for government agencies in order to realize the greatest possible economies of scale, as well as implement next generation software asset management technologies.