We buy too much software from software vendors because we don’t have processes and tools in place to ensure we only buy what we need.

What we need is what we use not what we install.

A fair software licensing agreement would allow us to pay for software that our employees need to do their jobs. Software companies have defined this in their agreements as Installed. After all, it wouldn’t be installed if we didn’t need it; right?

This assumption is deeply flawed to the benefit of the software vendor and to the financial detriment of our companies.

Coupled with ease of installation and the fact that we are responsible for policing ourselves, these pieces of software are the only IT asset that can self-replicate and create substantial unexpected financial liability for us.

Software companies know that if they are short on revenues, it’s time to step up audits as they will almost certainly find that we do not have enough licenses to cover the software it is deployed, and they also know that our Software Asset Management (SAM) tools will confirm this to their benefit.

Software Asset Management tools such as LANDesk and SMS measure what we have installed and not what our employees use. As we will see these are very different measures.

What we need is a tool that allows us to measure exactly what software applications our employees need to do their jobs. If we had this information our IT departments could make significant improvements in the utilization of the software our companies already have.

And it’s not just the cost of licenses; annual maintenance fees for installed software commonly range from 17% to 22% of the original price of the software and these fees increase annually. In just a few years, the cumulative maintenance fees can far exceed the original software cost.

IDC reports that in 2005, maintenance fees represented 41% of the revenue streams of software companies. this figure is expected to grow to 46% of software vendors’ revenue by 2010. Collectively, software buyers will pay $137 billion in annual maintenance fees by 2010.

Loose inventory controls result in the over-buying of software. Most companies don’t know what software licenses they already own, and they misjudge what they need. New software might be purchased for individual employees or entire departments without regard to whether or not the company already has the software, and often without verifying that the employees need the software.

In many cases, free or low-cost “viewer” or “report-only” software will meet an employee’s needs, but still a costly full package of software is requisitioned and purchased.

How vast is this over-spend? Most firms over-buy licenses for 60% of their software portfolios and are non-compliant on another 30% of their software assets. Even organizations with tight purchasing controls over-spend on license agreements. Studies have shown that, on average:

• 82% of the PCs that have Microsoft Office Professional edition installed don’t need all of the applications of this expensive high end suite.
• 84% of the PCs that have the full Microsoft Visio package installed use it in read-only mode or not at all and could suffice with a free document viewer.
• 90% of the PCs that have Microsoft Project installed don’t need it at all.
• 92% of the PCs that have the full package of Adobe Acrobat don’t need it at all and could suffice with just the reader.
• 8% to 10% of the workstations do not need Microsoft Office at all.
• Just for the software applications listed above, the average over-spend on a “per machine” basis is $369.

For an organization with 10,000 PCs, the over-spend can amount to more than $3.5 million over five years on maintenance alone. When you add in the cost of buying new copies of software that could easily have been recycled from unused copies already licensed, the over-spend grows exponentially. 

Last week, after being told about the solution by Nigel Watkins of IBM, I had a demonstration of Survey from Scalable Software. Scalable call Survey an IT Value Management application. It provides detailed, comprehensive usage information for our software, hardware and printers.

Using Survey, I was able to see how I could identify unused and under-utilized hardware and software assets, and reduce IT spending by eliminating unnecessary maintenance obligations, reallocating existing software licenses, reducing annual true-up costs, and cutting back on support needs. I could also use Survey in risk management, as it identifies areas of noncompliance with license agreements.

• Stop the over-buying of software licenses
• Remove the cost burden of maintaining and supporting under-utilized software and hardware
• Gain fair value from annual software license reviews and “true-up” negotiations
• Reallocate unused or under-utilized software instead of buying additional licenses
• Replace full versions of software titles with read-only versions for workers using the software in that capacity
• Achieve accurate compliance with vendor licensing and eliminate potential liability
• Accurately schedule the retirement of older, legacy applications
• Accurately plan your IT budget for the next year and forecast future budget needs
• Plan the strategic deployment of new applications and IT infrastructures, such as application virtualization

Survey is one of these really cool systems that I see every so often in that it works without a lot of fuss and it hits the spot where we are all weak – software asset management. It will pay for itself very quickly.