Benchmarking the Software Budget

Antony Attfield looks at how organisations are reaping the benefits of a strategic approach to software

So often organisations go about Software Asset Management backwards.

While no company would think about virtualising their servers without a business case, or embark on a major information security overhaul without knowledge of the return on investment, strangely software often isn’t treated in the same way. Instead businesses fall into the trap of picking up software as they need it.

Maybe a specific problem needs solving, or perhaps you’ve already got half a product suite so it’s an easy step to add in the rest. This approach might work if your business was static, if the software you first put in place was used by the same people, doing the same jobs, in the same office for its entire life span. But that’s just not realistic.

A Software Supermarket
It’s like the old adage “don’t go shopping without a shopping list”. It happens once in a while. A last minute dash to the supermarket on the way home from work turns into a weekly shop. The problem is you tend to grab products off the shelf as you remember you need them, and you plan your meals on the fly. By the time you reach the tills I can guarantee that you’ve picked up several unplanned extras, a couple of duplicates and possibly forgotten the very thing you came in for.

Yes, you won’t go hungry, but it’s no way to manage your food budget.

So why does this happen with software? Perhaps it’s the sheer range of options provided by different software products and the accompanying vendor agreements. However, going straight from the need to buy just one program, to locking a chunk of your software budget into one vendor is a big step. In effect you’re walking into a software supermarket without a list just to get that one licence. Already you’ve bypassed the budget, strategy, the software you already own and the wider needs of your business. As a purchasing method this works and usually keeps a company’s software spend under control, but it tends to create a rolling series of stop gap measures, and likely makes for an expensive long term approach. Once it comes to future planning, or even creating a business case for software usage, this method just isn’t up to scratch.

Having said that, resellers and vendors can be guilty of furthering this short term approach. Typically two classic motivations for Software Asset Management (SAM) are usually given to encourage an organisation’s investment. One revolves around the better use of resources: know what you’ve got, and use it as best you can. The other is centred on the threat of a vendor audit, built on the wisdom that a few corners cut in software licensing can come back to bite you by the way of a fine.

Both of these are excellent reasons to make sure your software estate is in order, and are often the two issues a SAM review is designed to tackle. However they both lack real foresight into the problem. They look at the here and now, and present an organisation with a guide to how best use their software budget. What they both lack is a strategy for procurement.

The Principal of Benchmarking
So if a SAM review isn’t cutting it, what else do we need do?

To think strategically about less tangible assets such as software licences, it helps to go through a benchmarking process. The idea is to stretch a software licence review beyond an audit of current software assets and uses. Benchmarking, therefore, measures different products, vendor agreements and future technology implementations against each other, aiming to find the most efficient routes to achieve a business strategy. By matching up products, costs and goals, an organisation can make informed decisions about their software spend. When done well it should provide a solid business case for whichever option is taken and give an organisation a much clearer view of how their IT estate is contributing to the business as a whole. To borrow from the earlier shopping analogy, benchmarking isn’t just writing a list, it’s also deciding what you want for dinner in the first place.

To finish here’s a quick outline of the steps commercial benchmarking for SAM would normally follow:

1. Review your historical software use, your current company state, and its current needs.
2. It then compares this information to your organisation’s aims and long term technology strategy moving forward.
3. Armed with this knowledge, only then can you begin to investigate vendors, products and agreements and see where savings could be made.
4. From this position you can draw up a comprehensive cost model for numerous alternatives, ensuring you can assess all of your options before you continue.
5. The three or four best options are then closely compared and a software strategy chosen.

Of course, none of this replaces traditional SAM practice. Rather it compliments it, and gives a tangible figure to the cost savings open to a company (in Trustmarque’s experience around 22.5 percent on renewals and new agreements). To make the most of this process many companies turn to consultants or resellers who understand both market trends and how to best negotiate with software vendors to maximise the value gained from signing a software agreement.

Antony Attfield is a solutions manager at Trustmarque Solutions working specifically to help companies gain value from their software licensing. For more information on Trustmarque’s Commercial Benchmarking service email or call 0845 2101 500.