Software Asset Management is the collection of policies, procedures, and
technology necessary to ensure that a company’s deployment and use of 3rd party
licensed software remains consistent with the underlying license grants.
Sounds like an IT discipline, right?
Wrong. This article presents 10
compelling reasons why ownership of a (global) software asset management program
is best rooted within the (global) Procurement organization. If not, it is
a tremendous lost opportunity.
Procurement groups manage demand. They synthesize and aggregate
requirements. Software licenses are a company asset. You don’t want
too many and you don’t want too few. Software licensing also represents a
recurring investment either in the form of annual subscriptions or in the form
of annual maintenance on perpetual licenses. Like any other commodity, it
is Procurement’s obligation to manage, throttle, and question software license
purchase requests from both IT and from business units.
Procurement groups optimize supplier relationships in a variety of ways
– through competition, by introducing new suppliers, by renegotiating prices, by
maintaining solid business relationships. These activities are critical to
a successful software asset management program. Case in point: Our company
has a significant investment in terminal emulation software required by one of
our own proprietary systems. Unless highly specialized terminal emulation
features are leveraged, which is generally not the case, there are many
competing products in this space – including at least one robust, free, open
source offering. It is Procurement’s role to question the norm and to
rally the organization to consider non-status quo alternatives if the same
business requirement can be met by less costly and equally sufficient
3) Compliance management
is a Procurement competency. Typical Procurement examples include
the leveraging of preferred suppliers or ensuring adherence to previously
negotiated prices. In context of software asset management, there are two
ways in which Procurement can leverage it’s compliance management competency.
First, there is the opportunity to enforce technology standards through the use
of on-line catalogs. For non-catalog purchase events, Procurement’s Buyer
function should be used to ensure the use of preferred suppliers and adherence
to contract terms and conditions. Second, choosing to buy, or not buy, 3rd
party licenses requires knowledge of how the software has been, or will be,
deployed and used. To properly influence a license spend event,
Procurement must be well informed about the company’s software deployment
practices. Procurement must be adept at understanding if deployment
practices are compliant with the underlying software license agreements.
4) Any respectable Procurement
organization must be staffed with experienced, technologically savvy IT
Procurement professionals. If an IT Sourcing/Procurement
professional ever utters the phrase “I’m not technical,” he or she should be
fired. The anatomy of a Software Asset Management professional requires
competencies in both Procurement and IT. So, the notion of rooting a
global SAM Program within a Global Procurement organization is perfectly
logical. This being said, I do not advocate that the SAM program be
rooted within the technology sourcing function. Global SAM programs
require independent visibility and sponsorship. At my company, the program
is sponsored by our Chief Procurement Officer and our Chief Information Officer.
5) A detailed understanding of
technology contracts and the ability to analyze purchase order history are
necessary to understand a company’s global license position. This
is essential input to a technology sourcing strategy which must consider ongoing
and new software requirements. This is another example of how Procurement
experience with contract and purchase order terms and conditions meshes with
software asset management responsibility.
6) The ability to analyze discovery
tool data to get a clear picture of how licensable software is being deployed
and used is necessary to ensure compliance with the license grants. This
work is not typically an IT priority given their focus upon the rapid delivery
of technology solutions which foster differentiation in the market place, or
which can result in the introduction of a new product to market faster than the
competition. Interpreting discovered software artifacts is a combination
of art and science. Few IT professionals have reason to develop this
competency. This skill is part of the anatomy of a SAM professional and
should be embraced by the Procurement organization.
Procurement organizations have budget to develop sourcing strategies which lead
to optimized supplier performance, risk reduction, and cost optimization.
Software Asset Management is a discipline which contributes
directly to the technology sourcing strategy. On the other hand, IT
organizations generally have a fixed KTLO (Keep The Lights On) budget.
While this is a critical operational responsibility, the budget for this is
perennially squeezed in favor of new initiatives which support competitive
8) There are both
subtle and not-so-subtle reasons for keeping a global SAM Program
organizationally separate from the IT organization. This is an
issue of empowered independence. It can be argued that asking IT to
monitor and maintain license compliance for their own implementations is a bit
like asking the fox to look after the hen house. In my experience, IT
colleagues are generally quite happy to have some other group manage software
license compliance. While this is a sentiment for Procurement groups to
leverage, it must not be confused with the fact that all company employees must
take some responsibility for license compliance on the machines they use.
9) Cost reduction and cost avoidance
opportunities are associated with any effective SAM Program. This
is the domain of Procurement. Software asset management program examples
include reuse of unallocated licenses; leveraging licenses across business
units, cost centers, and geographical regions; enforcing standards which take
advantage of negotiated pricing; and heavily scrutinizing the status quo of
annual maintenance renewal events.
10) Third party audit
events require focused management which insulates IT professionals from the
conflict that can result from compliance negotiations. IT
professionals will need to continue working with the licensed software and will
need to continue working with the software provider for technical support.
While IT may be asked to provision additional deployment and use data during an
audit, discussions around the degree to which licenses are being properly used
should occur between the SAM Program and the supplier.
Will your own
company’s software asset management program be effective if rooted within the IT
organization? Maybe. But for the reasons listed above, some of the
odds may be stacked against you. From a purely selfish Procurement
perspective, software asset management represents an opportunity to further
elevate and recognize the Procurement function. SAM is global and
cross-functional. It requires engagement with people at all levels of the
organization. Furthermore, the financial, legal, and reputational risk
mitigation obligation of any SAM program is a significant organizational
responsibility. It has C-Suite visibility. SAM Program
responsibility is a Procurement Organization opportunity not to be missed.