Aug 05, 2016

Go Big or Go Home: The US Government’s approach to Software Asset Management

On June 29th, the US Federal Government voted The MEGABYTE Act (aka Making Electronic Government Accountable by Yielding Tangible Efficiencies Act of 2016) into law.

The MEGABYTE Act was originally introduced to the US Senate in 2015 on the tail of findings by a non-partisan agency which revealed that implementing a combined approach of oversights and federal software license management policies saved a single agency $181 million tax dollars per year. Theoretically, this means that the MEGABYTE Act could yield billions in savings across the federal government.

The mega details

The MEGABYTE Act aims to increase tax dollar savings and prevent unnecessary spending by mandating an organized software asset management program throughout government agencies. The legislation outlines a framework to manage the use, procurement, deployment and compliance of software licenses.

  • Clear roles, responsibilities, and a central oversight authority within agencies must be established to manage enterprise software license agreements and commercial software licenses.
  • A comprehensive inventory, including 80 percent of software license spending and enterprise licenses in the agency must occur.
  • Regularly track and maintain software licenses throughout the software license management life cycle.
  • Analyze software usage and other data to make cost-effective decisions.
  • Provide training relevant to software license management.
  • Establish software license management program goals and objectives.
  • Examine the big picture of software license management life cycle to implement effective decision making and incorporate existing standards, processes, and metrics.

What’s the mega impact?

I am all for organizing one’s enterprise, and agree with the fundamental backbone of this groundbreaking legislation. However, remember that the US Federal Government spends $6 billion in software expenses with 42,000 transactions identified for the US Government workforce to locate. Talk about a whale of a task – and an enormous savings potential!

Even if the estimated savings gained by managing the Federal software budget is only 1% (far below the 30% that is often promoted by Analysts), this bill could garner $60M in potential budget gains. A 30% savings (more commonly considered the SAM industry standard expectation) could recover $1.8B – a pretty substantial impact. If the moons align (keep in mind we only have 1 moon) this might be possible. However, I find myself questioning the feasibility of realistically implementing such an endeavor in its current state, not to mention tangled complications with national security and confidentiality.

Still, no one can argue that the MEGABYTE Act serves as a powerful reminder of the savings possibilities that SAM offers large for organizations. Just this past month, another large government agency was in the news, reporting penalty fees due to an IBM audit which cost it $2.3M. Although Fresno County in California reduced its initial $4.5M settlement with IBM after it was discovered that too many employees were using unlicensed software, one can’t help but wonder how a properly implemented SAM program could have saved taxpayers from carrying these costs.

A mega-sized future

A memorandum signed by the Office of Management and Budget Agency was published on June 2nd that includes the following directive:

No later than September 30, 2016, covered agencies shall, to the extent practicable, compile a baseline inventory of their commercial and COTS software licenses purchased, deployed, and in use. Agencies should leverage commercially available IT to support processes for compiling and maintaining software license inventories. Commonly used IT that enables industry best practices and standards for software license management includes: Software Asset Management (SAM) tools, Software License Optimization (SLO) tools, Continuous Diagnostics and Mitigation (CDM) tools, Continuous Monitoring as a Service (CMaaS), network management tools, and finance and accounting systems to report on software inventory, prices, and usage.

This technology should automate: IT hardware and software asset discovery; IT asset inventory tracking; software inventory normalization; contract, purchase, and product use rights reconciliation; software license optimization; and SAM data sharing capabilities.


I appreciate enthusiasm for change, but the established timeline is aggressive. With no financial guidance covering the budget allocation needed to implement SAM protocols, (keep in mind that these are the tax dollars of the US Citizens being spent), a Q3 closing deadline appears unlikely to achieve.

Knowing the size and complexities of the US Government, what are your thoughts about its Agencies being able to comply with the memorandum (focus, deadline, accuracy)? Or, is this another government ploy to manage their enterprise software using goals and dates that are more politically motivated than achievable?

Topics: SAM Insights