Research has shown that between 20-40% of applications installed by companies are not used. In the United States alone, they believe that this accounts for $12.3bn in preventable and ongoing costs.
This easily happens when licences are allocated to users based on their department (as opposed to their need), or if they are bundled by the software vendor, or if software is bought for a specific role when an employee first joins the company but the licences are never reclaimed or redeployed when their role changes.
This carries enormous implications for businesses as there are hidden costs in software that aren’t yielding any business value.
In subsequent years, this attracts maintenance costs which are completely unwarranted – between 15-20% of the original licence fee on an annual basis.
Understanding what is out there and whether it is being used is critically important.
We recently analysed a large company with over R16m tied into licences that aren’t being used – a significant ongoing and unnecessary spend. Organisations are simply buying more software than they are using.
When Opinion Matters conducted a software efficiency survey among companies in the United States and United Kingdom, they found some insight as to why this is happening:
• 71% of companies surveyed felt that software asset management is overly complex;
• 52% of companies still use spreadsheets to record software licences, with 12% still using a paper-based filing system – and 12% using nothing whatsoever to keep track; and
• 77% of organisations never reclaimed any unused software licences.
From a compliance perspective it is also critically important to monitor what is being installed. When a software vendor audits a company, it does not care whether you as the business owner are getting value from the software, it cares whether it is installed or not.
If it is installed, the business has to pay – no questions asked. A financial services company we’ve recently come across had a desktop productivity application installed for 1 000 staff members’ machines, which only 55% of them were using.
By managing these licences effectively, you are minimising both cost and reputational risk around a “bad audit”.
Of course, not all software is being installed with the consent of the IT department. “Rogue” software, such as games and user productivity software, also represents a reputational and security risk to companies if they are not managed and controlled correctly.
It’s important that companies determine what they own, what they are actually using, and what they really need.
Historically, companies have managed abuse through a “desktop lockdown” approach. This meant that administrative rights were not given to the end user and hence they could not abuse the corporate asset, ie the PC.
At face value this seems fine but with the commoditisation of IT and user self-service, this approach has become archaic.
We’re seeing tools, like AppClarity from 1E, that allow companies to rapidly get a view of all applications within an organisation, financially quantifying the waste that is present, and providing the ability to uninstall the unused software.
At the same time, user empowerment tools allow users to get software rapidly redeployed when the need arises or even “rented” for the time required. The reality is that it’s time to start expecting more from your IT department.
In short, savings accrue through averted future maintenance as well as the potential to renegotiate enterprise licence agreements based on usage/business value.
Companies need to optimise their use of applications to cut costs and control the software that could be causing exposures in their operations.
Source: Fin24.com 23 July 2012