By Lisa Erickson-Harris
Software expenditures for most large corporations are sizable, if not dominant, expenses in the IT budget. New models for software licensing are evolving and arriving on the scene with cloud computing, software-as-a-service (SaaS) and other utility-based computing models offering lower points of entry and more flexibility for software acquisition. Yet, the total amount being spent on software is not expected to decline; in fact software spend is growing at about a 7% compound annual growth rate according to industry analysts. Software will remain a costly expense.
When it comes time to ask for budget dollars for a product that enables IT to manage its software assets, a strong case is needed, none the less. Corporate executives may be reticent to spend money on software whose main purpose is to manage license compliance for its applications and tighten control of these expenses. Yet, perhaps these two points are exactly the justification that will sell executives on the investment in software asset management (SAM) and license optimization.
Technologies such as network management, performance management and DevOps can be viewed as esoteric to those without direct need, making it difficult to build the case for products that are strictly behind the scenes. SAM, on the other hand, has the ability to show direct return on investment. Cost savings are easily achieved through the implementation of an effective software asset management and license optimization program supported by software and analytics. CxOs will always be open to improving financial results through reduced expense. The skeptical nature of corporate leaders will demand evidence.
Dollars and cents are at the heart of any strategy to secure budget for SAM and license optimization. Within the scope of that objective, a number of steps can be taken to establish credibility and gain executive support.
- Establish credibility-Gather and provide data points even prior to purchasing and implementing a SAM and license optimization solution. In some cases, this will mean manually taking an inventory and comparing results to purchase orders and contracts. Convincing the management team that IT understands the volume of software licenses and the mechanics behind managing them will help to build the case that IT will also be able to take advantage of a tool that provides automation and analytics.
- Educate executives about market norms and trends– Locate and share typical statistics on software investments such as how much overspending is typically done to avoid license compliance issues, which software suppliers typically pursue compliance audits (see this blog post), return on investment (ROI) for successful Software License Optimization programs (see this blog post on Building the Business Case for Software License Optimization), etc. This information can be mapped to your own software investments to show the risk and return in relationship to your organization.
- Provide case studies to demonstrate potential savings-Ask solution providers for case studies, published or not, and then talk to users to gain additional insight into which products and priorities delivered the quickest results. Use this information in pitching your request for budget dollars. In some cases, you will need only charts and/or spreadsheets that show savings achieved in similar vertical markets.
- Show examples of analytics-This information can be provided by your short-list of SAM and Software License Optimization vendors in support of your business case. Detailed examples provided by these vendors can show how analytical information will fuel contract negotiations and also reduce expenses for some specific categories of software applications used by your organization. Advanced license optimization tools have built-in Business Intelligence (BI) engines, such as Cognos, to deliver complex analysis and reporting capabilities that can now be applied to software asset management. Another category of “advanced analytics” is What If analysis that is used to see the impact of hardware and software changes on your license position, before the changes are actually made.
Software License Optimization plays directly into the requirement for IT Financial Management (ITFM) by adding business discipline to the function of technology management. Through license compliance measures that ensure contract requirements are being met and which mitigate unbudgeted audit true-up expenses, IT leaders are demonstrating a perspective that moves beyond technology for the sake of itself. Similarly, cost savings and due diligence are shown when IT professionals scrutinize software investments with the aid of sophisticated tools. The business case for purchase of Software License Optimization tools will become self-evident as IT Directors and CIOs communicate the business value.
Learn more by reading our white paper: Moving Up the Software License Optimization Maturity Curve to Drive Business Value.