The payoff from software asset management makes it worth serious investment.

Software asset management (SAM) automation and optimisation are goals of many advanced IT organisations.

The reasons for this are reduced costs associated with software license purchases, renewals, and IT asset management labour.

Effective SAM processes also reduce the cost and risk of software vendor audits. Automation is the key due to the incredible complexity involved. SAM requires the collection and analysis of a multitude of pieces of data, including hardware and software inventory, application usage data, purchase orders, license agreements, and maintenance contracts.

License rules, including product use rights, are not only complex, but also constantly changing. Virtualisation and other IT technologies further complicate the license management process. A manual SAM approach has become intractable and will miss significant cost savings opportunities.

But how big is the payoff? Is it really worth the effort to implement an automated SAM solution? And where do these cost savings come from?

Analysts estimate that 30% or more of IT budgets are consumed by software license and maintenance costs. By automating and optimising the SAM process, organisations can maximise software utilisation, reduce the risk of non-compliance (audits, fees, penalties), and reduce software license and maintenance costs by as much as 15 to 30% per year. For a medium to large enterprise, the savings can be in the millions of dollars per year.

SAM complexity—let’s count the ways

The first order of business from a SAM perspective is taking inventory—what’s installed in your IT environment. Many inventory and configuration management tools exist and they collect a lot of data.

The difficulty comes about when trying to make sense of all that data— on the hardware side of the ledger there are, among other things, processor type, speed, and number of cores, all of which can impact your software license position, depending on the license model involved.

On the software side there are add/remove program data, file evidence, registry and installer evidence. There are literally millions of pieces of raw data. What’s needed is an “application recognition library” that can translate the raw inventory data into an actionable list of software titles, with publisher and version information.

With installed hardware and software lists in hand, the next step is to collect purchase order data. This will begin to establish your entitlement to the software. What did you buy? How much did you buy? The purchase order typically contains a stock keeping unit (SKU) number for each line item.

The SKU identifies exactly what you bought. In the case of software, the SKU defines the application title, version, edition, and even the type of license and maintenance agreements that cover this software. Without looking at the SKU’s, it’s very difficult to know what you bought and match it to what’s installed in your IT estate. A SAM tool that utilises the SKU information can automatically match purchases to installed software.

PO data is only the beginning of the entitlement side of the license compliance equation because license counts do not tell the whole story or even most of the story of how you are allowed to use the software.

The license agreement and associated product use rights (PUR) define where you can install the software (laptop, desktop, home computer, virtual machines, etc.), how it can be used, and whether you can freely upgrade or downgrade between versions; they define how licenses can be consumed.

Common product use rights include: upgrade, downgrade, second use, virtual machine use, and multiple versions rights. You cannot determine an accurate or optimised vendor license position, without taking PURs into account.

Furthermore, PURs give the organisation benefits that are frequently untapped. If properly applied, product use rights can significantly increase IT savings. In order to automate the process, the SAM tool needs a “product use rights library” (PURL) that contains the set of usage rules for each type of license agreement and license model.

There’s more to the complexity problem—virtual environments add significant software license management complications. Datacenter server virtualisation has been one of the hottest trends in IT due to the hardware and energy cost savings involved.

But it’s very difficult to manually track virtual machines (VM’s) and the software running on them. Not only do you have to know what applications are installed on each VM, you also need to know about the underlying hardware in the host server, depending on the license type in effect—for example, a processor based license requires detailed knowledge of the server processors and cores. In addition, virtual environments are dynamic—tools like VMotion allow VM’s to be moved from one host server to another.

Furthermore, different versions and editions of software have different virtual use rights, making the license management job even harder. An automated SAM solution must be able to collect VM software and server hardware inventory, correlate VM’s to host servers, and apply virtual license terms and conditions.

SAM automation leads to optimisation and cost reduction

Very few SAM tools on the market today provide the extensive set of built-in libraries and license optimisation functionality necessary to automate such a complex set of tasks and reap the maximum IT cost savings.

Look for tools that provide a comprehensive ARL, a stock keeping unit (SKU) library that ties purchase data to software installations, and a product use rights library (PURL) that automates the process of applying use rights and determining an accurate vendor license position.

An automated SAM solution enables an optimised process that can reduce overall IT costs by 5 to 10% per year or more.

John Emmitt is director of business development at ManageSoft.