The £18 billion annual public sector IT budget is one of those areas earmarked for cuts as the government plans to cut 20-40 per cent from departmental budgets. The austerity plans are forcing every government department to look at alternative ways of delivering services and new technologies that can provide cost savings.
Budget reductions in the public sector are nothing new. Socitm, the Society of IT Management in the public sector, recently published a report revealing the real-term reduction in the amount local government has spent on IT since 2006, equating to 19.3 per cent. The difference this time is that budget reductions will affect every level of government and they will be very real and arguably the hardest to manage in our recent history.
Slashing services is not the only method of curbing costs: kinder cuts can also be made by achieving efficiencies in government processes, procurement and management; a fact highlighted in successive reviews by Sir Peter Gershon and Sir Philip Green.
One of the simplest, quickest and most effective methods for achieving efficiency savings: the proper management of software assets.
Software alone accounts for around 35 per cent of all public sector IT spend, so it’s vital that software is effectively acquired, deployed, used, managed and retired. If organisations do this, they can achieve immediate efficiencies, as well as realising significant cost savings over the software lifecycle. By the same token, those that fail to manage their software effectively will inevitably incur significant and unnecessary overspend which, in the current belt-tightening climate, is simply unacceptable.
Any one government department may be using thousands of computers, based across the country in a mixture of centralised and remote locations, running numerous versions of operating systems and applications residing in datacenters and distributed environments alike. Given the highly dispersed nature of many government departments there is an additional reason to manage software – control and compliance.
Software Asset Management
Software Asset Management (SAM) should not be viewed as an optional administrative process but a key mechanism for transforming software from a cost centre to a strategic asset. For the public sector struggling with budget cuts it can deliver a number of benefits including controlling costs associated with software assets, improving the performance of those assets as well as the organisation and its employees and compliance with the law.
Software can represent anywhere between 30-35 per cent of an organisation’s total IT budget so it makes good sense to keep a detailed view on how, where and which licenses you buy. That, in a nutshell, is Software Asset Management (SAM).
Over the last ten years, the main drivers for Software Asset Management have been compliance. Yet as more and more organisations recognise their legal obligation, or are reminded of it by the software industry enforcement groups or publishers, many have been driven simply to complete a license compliance review. While ensuring compliance saves organisations from fines, it has little return and in most cases has been seen as a costly exercise.
It’s important that public sector organisations remain don’t breach their licence terms, and SAM is a vital tool for ensuring compliance. But there are other, much more positive reasons to ensure that software is managed effectively.
Why manage software?
What is driving the challenge for those in the public sector now more than ever, is the need not only to contain costs, but reduce them while keeping control
of the organisation’s processes. Managing software estates is essential to deliver three core outcomes: cost reduction and control, performance optimisation and compliance management.
A critical benefit of software asset management is cost control and in this era of tightened government budgets, nowhere will this be more important.
Broadly speaking there are four core areas where cost savings can be found: control of software acquisition costs; control of hardware costs; control of software support costs; and risk mitigation of legal costs.
Procurement practices need to be clearly defined so that effective management processes are in place to minimise software acquisition costs. This can be achieved by identifying and communicating existing and future software needs, budgeting for acquisition and buying only what is needed and not for storing as “shelf-ware”.
A Software Asset Management programme will identify redundant software assets where project-based demand has expired. This software that can be redeployed to meet new demands, thus reducing both ad-hoc purchase requirements and mis-licensing whilst supporting accurate project budgeting.
Within the IT budget planned software spend needs to be a separate line item and an effective tracking mechanism is needed to monitor planned versus actual purchasing.
What’s more, the removal, or retirement, of software programs that are no longer in use, or supported, frees space and system demands on hardware platforms which means organisations can avoid the cost of expensive hardware upgrades caused by memory being taken up unnecessarily.
Software support and maintenance costs
By identifying what software you have, what you intend to have and when you will cease to support legacy programs, you can control your software support and maintenance costs. As a key output of Software Asset Management information any organisation with effective processes can identify the degree to which any support and maintenance requirement should be renewed for.
In some organisations where new project requirements are limited and the environment is largely static support and maintenance software, costs may represent almost the entire software budget and can only be effectively reduced with accurate usage and demand detail.
Managing your estate through a software asset management process will reduce your exposure to the risk of legal challenges, fines and reputational damage. The process will create a record of all the documentation you will need to avoid this risk, including:
- a written statement of your organisation’s software policy
- evidence of communication with employees
- a total inventory of your estate
- all documentation of actions undertaken in support of management processes
Cost control is not the only benefit associated with software asset management. Performance improvements across an organisation can also be delivered through efficiencies or soft benefits. For example, the process an organisation goes through in adopting a software asset management programme will ensure the quality and reliability of the software estate itself due to constant review of software relative to the business requirements.
Illegal software will be flushed out and with it the inherent threat of viruses. Licensed software on the other hand offers the assurance of product authentication and quality as well as the warranty of the software publisher, all documentation, manuals, tutorials, product support and upgrades.
Rationalisation and compatibility
Given the sheer number of software applications on the market today, one of the biggest issues confronting IT departments is that of compatibility. By managing the lifecycle of all your software assets an organisation can generate the information it needs to address this issue effectively ensuring that employees in one arm of an organisation can access and use documentation from another.
Integral to the software asset management process is the stated objective of anticipating the organisation’s future software needs. By undertaking a comprehensive review you will be in a far stronger position to anticipate your future software requirements enabling cost efficiency of projects and accurate decisions on risk within the current environment and compelling reasons for change.
In addition this process will also help you avoid the acquisition of software on the verge of becoming discontinued or unsupported by the vendor or publisher.
Software is not sold to a user – it is licensed. That therefore limits your right to use, reproduce and even distribute that program to the terms of the software licence agreement.
This, it must be remembered, is a valid legal contract between the licensee and the software publisher.
Furthermore, copyright law protects the publisher from infringements such as the unauthorised distribution and copying of the program itself. UK law is clear – violations are punishable with a maximum jail sentence of ten years and the potential for substantial financial penalties, let alone the damage to reputation from being found to infringe copyright law.
It’s clear that SAM is much more than a tool to ensure compliance. Rather than being seen as a “nice to have”, it’s actually a key mechanism for transforming software from a cost centre to a strategic asset. Of course, an effective SAM programme requires that staff understand and adhere to all processes, policies and procedures; yet the small investment needed to educate employees is repaid many times over by increased efficiencies, lowered costs and avoided risks.
Far from being a drain on resources, a software asset management programme has the potential to reduce IT costs by up to 30 more than 20 per cent, while a typical return on investment can be reaped back within the first year. For once, cutting costs actually goes hand-in-hand with better operational performance: a rare piece of good news for increasingly embattled public sector organisations, and one they cannot afford to turn down.
The Software Industry Research Board (SIRB) is a separate arm which sits under the FAST IiS umbrella. It’s comprised of leaders from across the software vendor, software
management tools and licensing consultancy communities. SIRB has the single aim of promoting Software Asset Management (SAM) excellence across all organisations.
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