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Software Asset Management (SAM): The Complete Guide

Software assets management

Software Asset Management, or SAM, is all the rage right now, but it’s much more of a business imperative than a buzzword. If your organisation owns software licences – especially from one of the major global vendors (Microsoft, Oracle, SAP or IBM) – then SAM is applicable to you.

SAM is an umbrella term for software-related processes including, but not limited to:

SAM has taken on many meanings, and we are being bombarded with conflicting messages about what SAM is, why it’s necessary, and how to go about it. As a result, it’s not well understood, its importance is underestimated, and clear information about it is in high demand (hence this blog).

Before we get into it, we should warn you that this expert guide is over 3,000 words! We’ve made a PDF version available so you can keep it on-hand as a reference. Just pop your email in below and it’s yours.

What is IT Software Asset Management?

The official definition of SAM coined by ITIL (Information Technology Infrastructure Library) is: “All of the infrastructure and processes necessary for the effective management, control, and protection of the software assets within an organisation throughout all stages of their lifecycle.” Less officially, SAM is the business practice of reviewing software usage on a regular basis to ensure compliance with licence agreements and entitlements.

Software is easier to deploy and harder to track than its hardware counterpart, making SAM a challenge for most businesses, especially large enterprises. More divisions, more teams, more projects mean more software, and a lack of visibility into usage can expose an organisation to serious financial and legal risks.

Effective SAM results in the ability to know – on a consistent and repeatable basis – the software asset entitlements that are owned, the software assets that are deployed, and where and how the assets are being used. 

Differentiating between ITSM, ITOM, ITAM, Software Asset Management and Hardware Asset Management

IT Service Management (ITSM), IT Operational Management (ITOM) and IT Asset Management (ITAM) are the three essential strategies for running the IT function in a business. Whereas ITSM focuses on the operational phase of an asset’s lifecycle in order to deliver services, ITAM spans the entire asset lifecycle, managing an asset’s financial, contractual and operational risks and implications.

SAM and HAM (Hardware Asset Management) are a subset of ITAM, where SAM addresses the management of software assets, and HAM addresses the hardware assets. Naturally, due to the inherent dependencies between software and hardware, there is a lot of overlap between these functions. That’s why SAM should never be considered a separate discipline. The best way to manage IT assets is to have an overarching ITAM strategy that considers both hardware and software matters.

 

Software asset lifecycle management

An effective SAM program requires a good understanding of which lifecycle stage any given software is on.

The software asset lifecycle stages are:

  1. Plan: That’s when you make strategic plans and decisions on what software your company needs and which exact software solution fits your company’s needs the best.
  2. Acquire: That’s the procurement stage, in which you buy the licences for the software.
  3. Commission: At this stage, you introduce the new software (software deployment) into your business processes and give users access to it.
  4. Maintain: Here, you keep the software updated and work with the software support team if you have any issues. This way, you maximise the value of the software solution.
  5. Retire: At some point, you might want to switch to a different software solution if the current one is not useful or your company has different needs.

With a SAM program in place, you can quickly identify each stage, make better software choices, and understand when a software solution doesn’t work for your company anymore.

3 things a SAM strategy is not

1) SAM is not vendor-specific

SAM is not vendor specific, so if it’s being led by a software vendor, a vendor’s partner or representative, it’s neither holistic nor objective.

This isn’t always obvious. For example, Microsoft enterprise licences and subscriptions are sold via authorised Licensing Solution Providers (LSPs), who also offer customers a “SAM” service. Many organisations sign up for this, believing it to be an efficient and cost-effective bundling option. The problem is, as Microsoft partners, LSPs have a vested interest in reselling Microsoft. They earn commission for selling ongoing solutions, on-time renewals and annual true-ups.

Plus, LSPs are incentivised to drive business customers towards the cloud and online services, rather than just sell licence agreements. Organisations can end up paying tens of thousands of dollars on top of the money they’re already spending on Microsoft, without much added benefit. 

The LSP version of SAM – usually delivered via a third party tool – is running a monthly report that does the bare minimum to keep you compliant. This type of SAM is not fit-for-purpose for vendors other than Microsoft, and also means the software options are limited to one vendor. True SAM requires objectivity, and you can’t get that from a Microsoft LSP.

2) SAM is not just a tool

SAM is often portrayed as a turnkey solution with a high level of automation. While that is certainly the aim of an effective SAM strategy, the reality is that managing software and licence entitlements is a complex operation that requires a careful mix of people, processes and tools.

There are many fantastic SAM tools on the market, but none that can replace the people and process elements. A SAM tool can do a lot of heavy lifting for you by discovering software and recording licence usage, but no single tool can discover all software and the data necessary to measure all licence models. Each vendor has its own unique licensing structure, and these are constantly being updated, making it difficult for SAM tools to keep up.

3) SAM is not a set-and-forget solution

SAM is not an endpoint, nor is it static. It is an ongoing operational journey that, if implemented well, increases in efficiency and decreases in cost as time progresses. 

An organisation shouldn’t expect to have perfectly optimised SAM from the get-go. It takes time and some adjusting to achieve SAM maturity. It is critical to measure and review your usage on a regular basis and ensure this is aligned to your entitlements and definitions of use.

Benefits of software asset management

The good news is that SAM is not just something you have to do; it can drive real business value.

The common benefits of a SAM program are cost savings, licence compliance, risk reduction, and enhanced visibility.

Benefits of software asset management diagram
1) Cost savings

SAM has many financial benefits as the process of licence optimisation is geared towards removing costs and redundancies. When a business only pays for what they need (and use), costs decrease dramatically. Since you know what products are being used and in what quantity, only those where the new features will be of use will need to be upgraded. In addition, support need not be paid on the software licences that are not in use. This alone can have a significant impact towards reducing software-related costs.

2) Licence compliance

Another critical driver is compliance. As software vendors ramp up compliance audits to supplement diminishing on-premise revenues, organisations are at ever-increasing risk of incurring unbudgeted costs through being audited and found non-compliant. A SAM program means you can identify and address any compliance risk before the vendors come knocking. It also makes you less likely to get audited. Being prepared keeps things safer, cheaper, and easier when auditors show up at your door. 

3) Risk reduction

The continual risk of vendor audits and compliance issues is making SAM an essential practice within a well-run business. The material risk of being audited by software publishers and the disruption it causes has never been greater. There are also risks associated with having too many tools, inaccurate data, and delayed or incomplete communications with stakeholders. End users are often left frustrated by the tools they use and the manual processes they create.

4) Enhanced visibility

SAM provides you with a licence baseline and ongoing visibility into usage versus entitlements, ensuring licence compliance and correct allocation of licence type along with identifying any shelfware. This puts you in a strong position in licence discussions and negotiations with your software vendors.

Overlooked software asset management benefits

A high functioning and mature SAM capability can highlight where efficiencies can be achieved, and unnecessary risks can be mitigated. But there is a plethora of other benefits that run much deeper than financial, so let’s look at a some of the most overlooked benefits of SAM:

1) Seamless renewals

Understanding your actual usage versus entitlements plays a key role in the renewal process. Most organisations don’t have the time or resources to undertake a thorough due diligence prior to annual support and maintenance renewals.  Most renewals are only attended to at the last minute and then procurement teams rush through approvals without consideration whether the renewal is correct as is or if any updates are required to the quantities, terms, pricing, licence types, etc. 

Preparing for licence renewals can take months, so it’s critical to have the right tools and guidance to mitigate the risks and/or identify the opportunities. With the right insights and baseline data, renewals can be approached with more accuracy and confidence and provide ongoing savings or reduction in compliance risks.

2) Improved security

As the management of software grows more complex and becomes further ingrained into our daily lives, the security risks become greater and failures more damaging. Organisations need a complete and ongoing picture of their infrastructure – what software has been deployed, how it’s being used, who’s using it, and if it’s up to date. 

Software Asset Management can help reduce your security vulnerability by making sure that the software you have installed in your estate is up to date. Having a more organised software estate will also mean that patch management can be conducted quickly and efficiently.

SAM can provide the IT security teams with key usage data for them to analyse and shape decisions around security governance, details on software installations, versions and editions such that potential risks for malware exploitation can be identified down to ownership, location, entitlement and assets.

3) Increased leverage

Enterprise software vendors and their ever-changing licensing models create confusion and uncertainty in customers and give the vendors a power which they exploit when it comes time for renewal or new contract negotiations.

Multiply these changes across all your software vendors and it’s virtually impossible for the organisation to keep abreast of all these changes and the commercial implications to their situation. 

With the right SAM guidance, you can get a clear understanding of your software estate and your available options, which you can leverage when the time comes to negotiate.

4) Flexibility and agility

Licence optimisation means aligning your software and technology with business needs while ensuring your infrastructure is future-ready. Whilst most people focus on cost, ensuring flexibility in these contracts is equally important, enabling agility in the business should your needs rapidly shift. 

A good example of how this flexibility can support an organisation and why it’s important was seen during the Covid-19 outbreak. Organisations needed to respond quickly to ensure their teams could work from home through to the inception of, or acceleration in, Digital Transformation programs.

Those with a strong SAM capability could get a rapid understanding of the licence and contractual impacts these changes would have on the business, and exactly where new or amended licensing models were required and what options they had available to them.

5) Cloud enablement

An often-overlooked advantage of an effective SAM program is its ability to help form the organisation’s strategies for the future. Detailed knowledge of an organisation’s hardware, software, and infrastructure can provide a powerful foundation for making well-informed, critical decisions related to growth, acquisition, and other important strategic decisions.

6) Vendor relationship management

A vendor relationship can last for years if it’s managed well. It is crucial to keep an open and consistent dialogue with vendors to ensure that vendors have an understanding of needs and software asset management goals. SAM helps you rebalance your relationship with the vendor and establish a more powerful position.

Software asset management tools

Tools can be helpful for effective SAM, but they are not a solution within themselves. There is no single tool that provides end-to-end insight into licensing and compliance. They are designed to automate processes, but some aspects of SAM can’t be automated.

With that being said, tools can be a very valuable addition to an organisation’s SAM program if configured properly and managed well. Several technologies are available to support key SAM processes, such as ServiceNow, Snow Software, VOQUZ and Flexera.

Ultimately, the success of a SAM tool comes down to the quality of the data and how it is managed. Time and money invested in a SAM tool is wasted if the contract and entitlement data attributes aren’t correctly inputted and continuously updated. It’s also necessary to analyse and adjust the data to ensure it represents an accurate, continuous and complete view of all software installed, used and accessed.

Choosing a SAM tool

Many enterprises begin their SAM journey by looking at tools, but it’s difficult to determine your requirements without first fully understanding the goals of the SAM initiative. 

If cost reduction is the primary goal, a tool’s optimisation capabilities will take on more significance than if the focus is exclusively on risk and compliance. Alternatively, if risk reduction is the sole reason for deploying SAM, look for a tool that’s sold modularly so you’re not paying for functionality you won’t use.

Other considerations include ensuring a prospective SAM tool supports all software vendors, and all products from the vendors they do support. Similarly, if cloud services are part of your application portfolio, look for a tool with sufficient functionality to support this.

Software asset management systems: Features and functionality

Some key features of SAM tools include:

  • Software inventory – Discover and collect information about software installed on the network.
  • Licence management – Act as a repository for licence entitlements which can then be reconciled against software inventory data to provide the organisation with an Effective Licence Position (a view of where the organisation is under-licensed or over-licensed).
  • Software metering – Monitor the usage of software applications on a network and enforce compliance for applications licensed based on usage.
  • Application control – Restrict what and by whom particular software can be run on a computer as a means of avoiding security and other risks.
  • Software deployment – Automate and regulate the deployment of new software.
  • Patch management – Automate the deployment of software patches to ensure that computers are up-to-date and meet applicable security and efficiency standards.
  • Request management – Centralise software requests to capture and assess specific licence requirements and track the procurement and deployment process.
  • Product cataloguing – Capture product-specific information and licence agreement types to ensure consistent naming conventions for mapping across other tools.

Managing software assets in the cloud

SAM becomes an even more critical competency for organisations moving to implement cloud architectures. While effective SAM is a cloud enabler, ineffective SAM can undermine many of the financial advantages and other benefits provided by cloud computing.

Organisations need to take added steps to ensure compliance in the cloud, adapting the SAM program to address the new and varied challenges presented by cloud architecture. While SAM principles remain unchanged, licensing risks and the application of effective SAM in the cloud differ fundamentally from those in traditional IT environments. SAM programs must be able to completely and accurately measure software in the new architecture with all its complexities and nuances.

Software asset management best practices

Best practices for SAM begin with laying a solid foundation of people and processes, then selecting a tool that provides the functionality required to meet your organisation’s goals. 

Software asset management best practice combine combines people, processes and tools

Getting the most out of your SAM program requires a disciplined approach to implementation that includes gathering inventory and usage information, reconciling the data with licences owned, and developing policies, procedures, and processes that support and optimise your ongoing SAM efforts.

The software asset management process 

Step 1: Assess SAM maturity

The first step is a pragmatic introspection of the internal state of the operation to determine where your organisation sits on the SAM Maturity Curve and where and how you can attain value out of your SAM platform.

There are five stages of SAM maturity:

  • Disorder – Uncontrolled spend, untracked inventory, manual or no processes.
  • Reactive – Sporadic gathering of raw inventory data (sometimes automated) potentially to support an audit or specific request.
  • Compliant – Implementation of a compliance (inventory) tool including automated reporting, regular reconciliation, looking to get and remain compliant for usage versus entitlement.
  • Proactive – Reviewing inventory tool reports and analysing trends, being ahead of vendors when renewals are due and have considered options, can attain transparency on usage by business units.
  • Strategic – Drive business decisions, influence and set infrastructure and architectural directions, measure and report savings across the IT estate, flexibility in contracts and operations to support business direction shifts, full transparency on SAM data.

The vast majority of organisations sit between reactive and compliant and will actually move between the two until SAM becomes a dedicated function within the business.

Step 2: Discover all software assets

Obtain, administer and maintain a complete overview of your entitlement position. This means discovering all software assets and shadow IT. These are vital to understand and document before you can move forward with a SAM program.

Step 3: Categorise licences and analyse usage

Gain a complete and accurate view of your installed and/or used software programs, and identify risks, gaps and possible remediation actions. This will help you organise licences based on department and find areas of underused software. Analysis of usage data will enable informed decision-making about renewals and future software investments.

Step 4: Monitor, optimise and recycle

Monitoring usage is key to ensure your organisation is getting value from its software investments and to be aware of potential exposures. This includes monitoring redundant licences to determine if and when to cancel the unused licences to reduce costs.

Key takeaways from this software asset management guide

Software licensing models are becoming more complicated yet the requirement for contract compliance remains. As such, a SAM program is a necessary investment for any organisation running application and infrastructure software, whether on premise and/or in the cloud, to ensure you get the most from your software assets while minimising the risks and costs associated with them

Effective SAM is first and foremost about establishing and maintaining people and processes. SAM tools can then be introduced to facilitate, and in some cases automate, these processes and capabilities, but organisations should be informed that deploying a tool by itself does not ensure the effective practice of managing software assets.

While SAM is the focus of this blog (and the industry right now), it should never be considered in isolation. A business’ technology assets – hardware, software and cloud – need to be managed holistically under a ITAM strategy to ensure the many financial, legal and operational benefits can be realised.