May 24, 2017

SAM’s Secret Weapon: Financial Management

There are two main reasons that we need Software Asset Management or SAM.

  1. Compliance. Copyright laws are the basis of external requirements for SAM.
  2. Cost Savings. Money you spend on software needs to be financially managed. Costs need to be planned, controlled and optimized. These are all internal requirements for SAM.

Over the last decade, I’ve seen most companies consider compliance first. One of the most common SAM facts is that a professional software asset management platform can save you up to 30% on your software spend.

While more and more software offerings are being provided as cloud solutions, it may seem that compliance is no longer a leading factor for software asset management. Some may even say software asset management will become unnecessary. However, this is fundamentally misleading.

What we’re experiencing is a fundamental shift in SAM’s role: a turn from software asset management as a tool for compliance management towards SAM as vehicle for financial management.

Cloud management is financial management

The more cloud and consumption-based models you implement, the more important it is to stay on top of your daily, weekly, monthly and quarterly data.

  • What was your forecast? Which level of adoption did you anticipate and with which financial calculation?
  • What is your current state? Are you at risk to reach and exceed forecasted consumption, with the risk of exceeding your budget?
  • How can you optimize your consumption and your contracts in order to stay within budget?

License pooling is financial management

We aren’t only talking about cloud. Purchasing licenses on a local level, without taking the global perspective into account limits SAM’s financial impact. SAM professionals understand that maximum benefits are gained when you’re able to manage and control software contracts on a global level.

This practice is widely described as license pooling. However, license pooling requires strong SAM financial management since local organizations may be concerned about “paying for others”, and central SAM Managers may worry about being left with unpaid license pools.

Strategic SAM is financial management

Compliance isn’t the only reason that you need a solid understanding of your license and software inventory. At the end of the day, you need to know your licensing position to get the most financial impact and value from your SAM program across your entire organization.

Forecasting, controlling, and budget optimization have always been classic functions of your financial organization and ERP systems. When it comes to software asset management, forecasting, controlling, and budget optimization are also needed – in combination and in addition to existing fundamental SAM functions such as:

  • Global user aggregation
  • License consolidation
  • Consideration of parallel use rights
  • Secondary copies
  • Cross-deployment rights (i.e. consolidation of cloud & local instances)
  • Organizational and geographical scopes

By merging fundamental compliance benefits with a financial management perspective, software asset management delivers unmatched value through a comprehensive and impactful approach. This is strategic SAM. As software asset management data is shared across the company, your SAM program will begin to influence business decisions.

SAM stakeholders drive value

Given this fundamental transformation, some people may wonder who is ultimately responsible for SAM in the company: Procurement? IT? Or even Finance? The answer is none of them alone.

All stakeholders play a valuable role in SAM. We need to involve Procurement in order to keep an eye on strategic contract negotiation. We need IT since many solutions are hybrid cloud solutions or may partially involve actual software rollouts. And SAM also needs Finance since budgeting and cross-charging of consumption based models is increasingly relevant.

And, of course you need a dedicated SAM solution since this is the only way to merge the still heterogeneous data from various departments. Most importantly, you need a dedicated Software Asset Management solution to plan, control and optimize your software consumption globally and independently.

As the software industry continues to shift to the cloud, SAM goals will ultimately transition from compliance to financial management. Enterprise wide strategic collaboration will be even more necessary to address future challenges. The best way to maintain control over your consumption and costs is by implementing an independent, comprehensive approach to your software asset management.

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Topics: SAM Insights