- Jan 26, 2017
- Olaf Diehl
SAM Round Table, Part 2: A Surprising Story of “Value”
Recently in Berlin, Aspera GmbH was once again the sponsor of we.CONECT, an international SAM conference that combines speaker sessions with attendee round tables. It’s a great place of knowledge for companies, service owners and practitioners with mature Software Asset Management practices, and the topics are all relevant for strategic day-to-day SAM, especially in mid-size organizations.
The following is Part 2 in a series of insights from a round-table discussion(Read Part 1)with SAM professionals and experts. Aspera hosted the topic “Cost Savings in the Data Center” and I was the group moderator.
The unexpected story of “business value”
A big challenge for a SAM team is being able to describe what we are doing and what its impact really is. How does managing and optimizing your software assets really affect the company’s bottom line? As the 45 round table participants talked about “real” cost savings vs “theoretical” cost avoidance, our discussion turned to how a mature SAM program reaches beyond license management and compliance.
And then an unexpected story came up. What is “business value”? We defined this as the value that frees up a company’s budget and lets you do something more valuable with it.
For instance, if you reduce consumption of software from a particular vendor like Oracle, then you won’t spend the $100k earmarked in your budget. Now you can use that $100k for a different investment like a more efficient CRM system. That $100k saved might pay out and save $500k more over the next two years. Previously you spent the money because your license consumption seemed to dictate that need, but by optimizing SAM, you have now freed budget to spend more cleverly.
SAP is another example of huge potential for savings. Your SAM processes may identify a minimum 10% of savings within your SAP budget, equaling $2 million. This money is shifted into licenses for a new business application that provides $5 million revenue over the next 12 months. So what’s the actual value that SAM added for the company? It’s a relevant idea that is worthwhile to develop further as part of ROI metrics.
The expected case of “added value”
A topic that is always popular is how to describe the value of SAM optimization. It was no surprise that our round table discussed this! When you look at your real savings and actual saved money, you will find the theoretical savings in the budget that is freed up. There is additional value in activities that are important for running your business but can’t be measured in dollars.
That is “added value.” The participants defined this as all activities that do not have a monetary impact, but support other services directly or indirectly. This support could be seeing your trends in service, having a better understanding of your IT organization, or knowing that your employees are working more efficiently. It could also be automation of IT requests, setting alerts that software components are missing, or alerts that software is breaking an IT security rule.
For instance, what is the impact of greatly improved data quality? You can’t exactly say that it’s worth $500k of savings per year, but it’s provable that other business processes depend on reliable data. If the quality of your data is bad, then teams have a lot of project iterations and extra manual work, the processes are poorly implemented, and fixing them will consume more resources. This turns into wasted time and productivity, which is lost Opex, and possibly real missed revenue.
Another example: A request system is working smoothly because your SAM process allows more automated decisions, and you avoid 500 service interruptions and 500 tickets that don’t have to be processed manually. Maybe this is equivalent to saving the cost of a FTE employee at the end of the year. This is hard to show. But it’s easy to demonstrate that all SAM activities help the IT team and the processes in an organization.
Metrics for calculating the effect of added value can vary. We recommend that you start with one KPI per report and an agreed-upon value. Popular ones are “man day of work reduced per year,” “assets not managed per month,” “purchases outside contracts per quarter,” “new software not covered by IT standards,” and “obsolete products in portfolio.”
Increase the value with automated SAM
Our license management platform, Aspera SmartTrack, supports a strategic approach to get all of the SAM savings. We do this by improving the automated processes that manage your SAM workload.
For example, an average company might have 1,000 software requests per year. Each request needs to be evaluated for licenses needed and for vendor compliance, and that request is accepted or rejected. Let’s say your employee spends roughly 15 minutes per request by doing this work manually. You can calculate 1,000 requests x 15 minutes / 60 minutes / 8 hours to know the number of working days invested in this process.
If you automate these activities with SmartTrack, you might reduce the employee workload by 90%. Now your SAM team can realize the exact saved dollars as the metric.
Best practices in optimization
The most impactful SAM savings are often found in the data center. The round-table participants and I concluded that it‘s important to look at these savings as both hard results and soft results.
You can see the dollars you’re saving, literally, on SAM spend. That’s the hard results of cost savings and cost avoidance, which I discussed in detail in my first article. You can look at the details of your SAM processes to find more savings that may not be quantifiable in exact dollars. That’s the soft results of business value and added value.
Now that we’ve examined the extended benefits of SAM, it’s time to take a closer look at how to get there. My next article gives best practices “from the field.” The group created a powerful list of how to optimize your SAM estate — usage, licenses, contracts, and everything else — by sharing what they are doing already, what are they plan to do, and what they feel is often overlooked or undervalued.
If you’re not already subscribed, join our blog and don’t miss the next article in this series!