This year has already proved to be a year of M&A activity, and those companies that don’t have a grip on software asset management (SAM) in a merger face exposure to financial and compliance risks.
A mature SAM programme is crucial for optimised IT spend management and on-going licence compliance, and needs to be assessed during the M&A process.
Businesses should be aware of potential software licence liabilities they may be taking on, and understand the value of software as an asset. Software publishers are known to target companies undergoing mergers and acquisitions for audits because they know that these businesses are at high risk of being out of compliance.
Mergers provide vendors with opportunities for increased revenue. Businesses must scrutinise the licence position of the acquisition target and understand the licence implications for the merged entity.
Key considerations for assessing software financial and compliance risks in a potential merger or acquisition include:
Software purchased – centrally, by business unit, division, or department When all software is purchased centrally for the entire enterprise, licences are more likely to be tracked accurately.
The further down the organisational hierarchy that software purchases are allowed, the more difficult it is to track and reconcile licence entitlement with installations and usage. De-centralised procurement also means it‘s more likely that the enterprise is over or under-licenced and is not maximising volume discount opportunities.
Processes to track software installations and usage How is an inventory of installed software performed – manually by random sampling, enterprise-wide by automated inventory gathering, or somewhere in between? Is it centrally managed or left to individual business units, divisions or departments?
Is inventory checking a once-a-year chore, is it updated quarterly, or is it continuously collected and updated? Is sufficient data collected to confirm compliance with all of the different licence types purchased, such as per-device licences, named-user licences or concurrent use licences?
The ideal situation is a centrally administered, automated, continuous, enterprise-wide software inventory collection and asset recognition process. The benefits of an automated approach include increased operational efficiency and a reduction in manual labour for IT asset management.
The further from that ideal in any of the dimensions of frequency, breadth or automation, the less likely it is that the company has an accurate record of installed software.