Software Asset Management

Software Asset Management Category Overview

• SAM is a practice that involves managing and optimizing purchase, deployment, maintenance, utilization, and disposal of software applications within an organization

• This helps an organization to reduce software costs, improve compliance, and develop processes for employee software requests

• Hardware Asset Management (HAM) and Software Asset Management (SAM) are disciplines of IT Asset Management (ITAM)

• Increasing demand for ITAM solutions has led to Gartner discontinuing its Magic Quadrant for SAM tools

Software Asset Management Market Size & Growth

• The global IT Asset Management (ITAM) software market is estimated to grow at a CAGR of approx. 11.4 percent in 2022 and 2027, amid the COVID-19 pandemic

• The market size for SAM, a sub-segment of ITAM, was assessed to be $3.1 billion in 2022. It is forecasted to grow at a CAGR of 9.69 percent between 2022 and 2028, and it is estimated to reach $5.4 billion by 2028

• This is due to the increasing demand for IoT & Cloud Computing, with the IoT market expected to grow exponentially and reach $700–750 billion by 2022.

Global Market Drivers for SAM

Increase in compliance audit and limit legal risk

License Compliance Audit

• 80 percent of the enterprises are expected to be audited by 2022. The audits are expected to increase by 400 percent by 2022

Limits the Risk

• Limits the legal and financial risk, which arises with the non-compliance of software licenses

Cost optimization

Cost of Over-Licensing and Increase in ROI

• Enables the buyer to save cost by minimizing over-licensing and maintenance costs for software licenses that is not being used

• Investment in SAM can generate up to 500 percent return on investment

Control on software assets and increase in organizational governance

Monitor Complex Software Licenses

• Helps in monitoring and tracking diverse and complex software licenses. It also reallocates software license, when hardware is decommissioned or moved

Organizational Governance and Reputation

• Enables better compliance with industry requirements and helps minimize legal risk of non-compliance

• BFSI enterprises require periodic enhancement of their IT systems and related operations for complying with new rules and regulations, which are aimed at improving risk management, governance procedures, and transparency of banking operations. SAM helps in keeping track of these software and hardware upgrades

Global Market Constraints for SAM

Lack of department interaction

Lack of Interaction

• Lack of interaction between legal, procurement, IT and the finance department may lead to a major failure in achieving SAM’s objective

Decentralized and separate functioning of procurement process and IT department

• Procurement department would be focused on cost saving levers, whereas the IT department’s focus would be limited to operational and functional hindrances

• This preferential focus results in lack of data sharing and connectivity between procurement and IT department which creates a hostile environment for SAM implementation

Low prioritization of software usage and complex Licensing rule

Under Utilization of Software

• For certain sectors, i.e. retail, hospitality etc. SAM is projected to be an insignificant compliance exercise when compared to its role in BFSI, high tech etc.

Complex Software License

• Complex software licensing and lack of visibility on SAM implementation and integration makes it difficult for buyers to comply with all requirements

Lack of historical Software licensing data

Lack of Previous Software Licensing Data

• Software licensing management faces further challenges in the form of data accumulation in older software licenses, merger, acquisitions and outsourcing agreements

• Enterprises are approximately overpaying 30 percent on maintenance for obsolete and under-utilized software solutions

Software Asset Management–Best Practice

Phase 1: Software Asset Request and Procurement

Structured SAM lifecycle

• Includes every aspect of acquiring IT asset, which starts from the initial request, selection, deployment, training and support services for the end-user

Enables control and accountability for spending and standards

• SAM enables control and accountability for spending and standards through user management and approval process which thereby results in best in class practice during the procurement phase

Phase 2: Software Asset Change Management

Register changes during IMAC

• Includes changes that occur during the lifetime of IT asset, referred to as IMAC (Install, Move, Add, Change)

Fetch benefits for enterprises on deployment of either of the following options.

• Creating a criterion for cascading, where the comparative benefits of non-cascading are also taken to consideration

• Delimiting the situations for cascading with mutual benefits for business process and costs associated with financial resources

Phase 3: Software Asset Replacement and Disposal

Control and accountability for the retirement of IT/software assets

• Enables control and accountability for the retirement of IT/software assets guided by financial and physical objectives

• It includes planning and management of the execution of replacement/disposal of assets

Third party contract for replacement/disposal of IT assets

• Best practice for asset replacement and disposal is to engage with a third party in case of scrap disposal to ensure professional data clean up or disk wiping occurs, and governance measures are maintained