Return on investment can be interpreted in many different ways and goes well beyond simple cost savings. Benoît Gruber at SAGE ERP X3 discusses this from an ERP perspective in a recent article. Although most of the standard measurement criteria are generic to IT investments, in terms of having the flexibility to absorb change and increase efficiency levels, equally relevant and tangible are the softer benefits.
These include high user engagement with software, getting the end user more involved with the procurement decision process and ensuring that user adoption is at expected levels. All of these benefits are also seen after adopting a software asset management (SAM) solution.
In addition, there are a number of different ways SAM can help to generate a clear ROI for strategic IT projects. These combine both hard and soft benefits as follows:
1. Quantify Wastage & Prevent Unnecessary Costs
To reduce expenditure on hardware and software, it is essential to start with a benchmark measure of what is actually being used and needed. This type of core business intelligence can be gathered using a SAM solution, which will accurately calculate and also potentially support cross charging of IT spend across the business.
Enterprise software (like an ERP solution) will contain software procurement records at a high level, for instance the total cost of the invoice or accrued numbers over the year for software vendor X. This information is useful to a point, but misses vital details, such as the specific type of product licenses purchased and what this entitles the purchaser to; or that the purchase was for a maintenance agreement due for renewal in 6 months; or, more significantly, that the £100,000 paid for software 8 months ago has only been deployed to 20% of the estate so far.
This level of granular information is essential for preventing wastage and ensuring cost avoidance. By harnessing the data held in a SAM tool, IT procurement processes could be quantifying wastage and preventing it in the future and as a direct result increasing their return on investment.
2. Generating Wider Buy In For Strategy & Spend
As outlined in the previous point, the benefits from implementing SAM are easily measurable and represent a good way for IT to demonstrate value and justify a particular IT strategy. Any IT project involves change and needs to be supported by communication to enable users to understand the reason for a new tool or a change to working processes.
SAM can clearly demonstrate this by proving the business value of software licenses, e.g. how frequently software assets are used by whom, how savings made from re-harvesting existing licenses were re-purposed. This effect was seen at Arup. They were able to develop high levels of user engagement for their SAM programme by actively sharing data which correlated an ability to ensure more effective IT expenditure with SAM activity, plus a reduction to wastage as well as cost savings.
In their case, this amounted to avoiding around £1m in software licensing true up costs within 13 months of introducing a SAM solution. In turn, employees became more supportive of the introduction of formalised software approval processes and less likely to devise workarounds. A solid communication and internal ’marketing’ plan is key.
3. Security Breaches & Reducing Shadow IT
The consumerisation of technology and increasing availability of cloud-based software has made shadow IT, whereby users bypass the IT department and install what are often authorised software products, a growing problem. Whether the issue is departments independently purchasing additional and unnecessary licenses of existing SaaS or traditional applications, or using their own preferred tools, the business risk should be eliminated.
Dropbox is a classic example of illicit use of applications in the enterprise and although a perfectly good way of storing information for a start up, many of these application do not offer the levels of security an enterprise needs to protect its corporate IP. A mature SAM solution can track the usage of cloud software, which in addition to highlighting any unauthorised applications, also provides other important metrics required for licensing and compliance purposes.
These include being able to monitor adoption rates of a new product, e.g. CRM tool, by end users, spot potential requirements for training, or identify whether the size of subscription purchased meets the organisation’s requirements. For e.g. if only 20% of an entitlement is ever being used, there is a chance to refine license costs during renewal.
SAM ROI can also be derived from the ability to respond quickly to a security threat at speed. Take the recent discovery of the Heartbleed vulnerability, as soon as the vulnerable products and versions are known, it is possible to run installation reports showing which computers are at risk and which users are using these product more than others – so patches can be more carefully prioritised.
4. Monitoring Project Success Rates
In addition to tracking compliance, SAM data is a valuable resource for the PMO (project management office) to track budget costs within IT projects and adoption of new applications. For instance, consider a scenario where an organisation embarks on the deployment of a large ERP tool.
When purchasing the tool, a 3-year ‘all you can eat’ licensing contract was negotiated with licensing levels set at the end of the 3-year period and minimum thresholds set for each year. Using SAM to keep track of deployment and adoption rates and then overlaying this against the project plan, it is possible to forecast whether an the correct license entitlement was purchased for the relevant project phase – just in time for re-negotiations.
5. Enabling IT To Focus On Greater Value Activities
One of the universal benefits of technology is the ability to automate administrative tasks and free up employees to focus on higher value tasks. This is as true of an ERP solution as it is for SAM. Adopting a SAM solution which can automatically track software installed with license entitlements has been shown to significantly reduce the amount of time IT staff spend on asset management activities and save around a week a month of in man hours. This additional resource can then be used to focus on greater value projects, for example, implementing video conferencing or a new telephone system.