Set your software asset management methodology

By running a proper software asset management program, some corporate clients have saved cost and discovered that their balance sheet looks better than they thought.
Written by Taur-Jiun Wong, Contributor
Everywhere you look, software coupled with the hardware technology has transformed every aspect of life. It affects the way we communicate, the way we work and the way we run our lives. In a business environment, software tools have allowed a most cost effective way of delivering services. Many day to day operations that we take for granted today is previously unheard of. Business has become more efficient. Communication and the speed of doing business has quantum leaped. Job function has evolved.

Without doubt, software is critical to many of the businesses today. Take out the software element, and many corporations grind to a halt. Yet, most companies surprisingly do not manage or have no idea about managing their software. Software policies are virtually non existent at the CXO level. Software assets are usually not recorded. There is no software license strategy in place.

By running a proper software asset management program, some corporate clients have saved cost and discovered that their balance sheet looks better than they thought.

This series of articles seek to provide a basic roadmap about software management. In this article, we will touch on the background and the reasons for software asset management. In the next few articles, we hope to provide a basic tool to help IT managers and senior management put in place a software management methodology.

Ensure compliance with the law.
The most obvious reason for having proper software management is compliance with the law.

Computer software is protected under the copyright law. Under the law, it cannot be used, reproduced or distributed without express authorization from the software owners. Note that keeping a copy in the computer or even running the program is considered reproduction.

It is a general misconception that as long as they have bought the software, they own the software. This is not true in the case of software. Copies of computer software are typically licensed and not sold outright. It means that the software owner has given you the permission to use, subject to the terms and conditions that come with the license. Ownership of the software does not pass when you purchase the software. You do not own the software as you would a computer but you merely have a limited right to use it. The use is subject to the terms and conditions of the software publisher. It is thus not for the companies to make copies for internal distributions or to lend it or distribute it as if they own it.

Conditions and manner of use are controlled by the license agreement. It is a valid legal contract between licensees and software publishers. Typically, the law and the license give the software owner a claim for damages. In some countries, it also gives rise to criminal sanctions.

Although the terms and conditions in a license vary from software publisher to software publisher and from software to software, generally, the license stipulates that the software can be installed and used on only one computer. Most licenses however, also allow you to maintain a back up copy of software for archival purposes.

In today's digital era, copyright law also prohibits users from sending unauthorized copies of software via the internet or other electronic media. With the proliferation and popularity of file sharing programs, this poses a unique problem for some corporate and IT managers. Software belonging to the company may be made available for sharing because some employee installed one of these sharing programs. Alternatively, in desperation to get a certain job done, employees may install illegal software from the web. With proper software management and license planning, this situation should never arise.

Effective planning and cost control
The second major reason is to control cost and provide better corporate governance.

A fair number of senior managements that we worked with do not have proper software records in place. Their software purchase is usually ad hoc. In many cases, senior management reacted in horror when they are challenged or shown evidence of inadequate licensing. An equal number of companies turned out to be over licensed.

Proper software asset management allows the management to understand the status of their software assets at any moment of time. With this information and anticipated business expansion, the management will be in a better position to plan and negotiate licensing acquisition; purchasing only what is necessary while doing so in conformance to clearly defined procurement procedures

Often, the software costs more than the hardware. As a result of poor planning, many corporate found that they did not put aside enough budget for software purchases. They either resort to last minute budgetary adjustment, in adequate software purchases, or allow the employees to download illegal software. Since they never have a proper software policy, after a while, they have absolutely no idea of their software use, resulting in a vicious cycle of poor software planning and acquisition and embarrassment when the law comes knocking.

Budgeting is key. You must identify the planned software expenditures in a separate line item for your IT budget and track your actual versus planned expenditures. By doing so, you can more accurately evaluate your needs ensure that the software acquired is legitimate and plan for future acquisition. Large organization often devote 25 percent of their IT budgets to software purchase.

Set your software asset management methodology
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Avoid unnecessary hardware costs
Unnecessary software and poor software integration strategy often result in frequent and unwarranted hardware upgrade and acquisition.

A proper software management strategy helps in identifying and communicating with its employees the software it currently supports, expected upgrades, substitutions, disposals as well as data and program retention policies. By collecting and sharing this information, software data, and program files can be managed on a systematic basis with minimum disruption. In addition, non-disruptive removal of software no longer supported frees space on existing hardware, thereby helping organizations avoid costs of unnecessary upgrading and replacing hardware.

Limit software support costs and resources
By identifying current and future software needs and specifying when software will cease to be supported you can control the costs of supporting software and avoid the cost of renewing licenses unnecessarily or in overly expansive terms.

Control can be effected by a management process that regularly reviews the organizations' software needs updates the list of supported software periodically and clearly communicates in advance when certain software and applications will no longer be supported and hence removed for the organizations computers.

Improve performance
A proper software implementation and integration avoids downtime and jeopardizing mission critical functions. In our experience, many corporations, as a result of the ad hoc manner in which they add software or upgrade the same, spent a lot of time trying to get the different functions to talk to each other. Valuable time and resources are wasted trying to resolve these issues.

In a real example, a large printing house in the US found that their job processes slowed down after investing several million dollars in hardware and software. After two weeks of trouble shooting, they tracked the problem down to an illegal beta software that an employee previously installed. The same software was causing the proprietary system to perform incorrectly.

Anticipate and take advantage of change
An effective software management process will make it easier to anticipate and take advantage of changes in technology and the organizational structure while minimizing its potential adverse consequences.

The set of tools in the next few articles will help you in identifying and communicating the current and future software needs of your organization. Based on the feedback within the organization, it will help the management or the IT manager have a clearer understanding of future needs. The feedback and planning will also provide additional insights into the advantages and disadvantages of deploying anticipated technology sooner rather than later. The process will help you avoid acquiring software on the verge of becoming obsolete as well as software that are yet untested and unreliable.
Taur-Jiun Wong is COO and co-founder of Intelleigen. Intelleigen empowers businesses and ideas with global IP (intellectual property) solutions. Intelleigen consults with businesses to help them protect and exploit the value of their ideas. Intelleigen is a multi-disciplinary consulting organization and is represented in the major cities of the Asia Pacific, including Auckland, Beijing, Delhi, Singapore and Washington DC, giving clients full region-wide coverage.

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