Software Efficiency Report United Kingdom

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1 Software Efficiency Report 2011 United Kingdom

2 A licence to print money In the UK alone, there is over 1.7 billion worth of preventable and ongoing cost associated with unused software and shelfware 1 Waste is a very significant problem in all aspects of IT. 1E wanted to look specifically at software waste and what we found astounded us. Our research shows that when managing software licences and assets, most organisations here in the UK focus on compliance, rather than on controlling costs. Organisations are simply buying more software than they use. Driven by the very real anxiety that a sudden software vendor audit could result in heavy fines or lengthy litigation, many organisations simply over licence, buying more and more software just in case. This tendency to err on the side of caution is only part of the story. Over 80% of the CIOs and IT Managers we talked to felt that software asset management is overly complex. This is perhaps not surprising, given the complicated nature of software licence agreements, bundled licence and maintenance deals and the general vagaries of product names, versions and editions. You would think that CIOs and IT managers would want to do something about this waste, but our research reveals that just 8% are actively trying to manage the problem by regularly identifying and reclaiming unused software across their organisations. Unfortunately, merely detecting unused software and shelfware across a myriad of systems, locations, PCs and servers presents a very real challenge for most, never mind reclaiming and reusing those licences. Our findings reveal that the problem of waste is likely to get worse if organisations don t focus on managing their software assets more efficiently. There is a clear financial imperative in every organisation to do so. Over 80% of respondents agreed that there was more than 100 worth of waste per PC. Sumir Karayi CEO, 1E 2

3 Software waste Over two thirds of organisations in the UK have software waste When asked directly, most senior managers accept that there is software waste within their own organisations. Two thirds admitted they had software waste and more worryingly, more than one third admitted that they have no way to quantify the problem. Businesses are increasingly subject to vendor audits. At a recent Gartner conference, 61% said they had been audited by at least one software vendor in the past 12 months 2. These audits are the cause of much anxiety. Software waste adds significant and ongoing additional costs to most organisations across the UK. It is created when any organisation purchases software which adds no value and is typically made up of: Unused software - software that is installed on a user s PC which is not needed or used Shelfware - software that is purchased but never deployed 3

4 I advocate what I call licence optimisation, which answers three key questions: what do we own, what are we using, and what do we really need? 3 Forrester Research Inc. Principal Analyst quoted in Computing magazine, March

5 Unused software Four out of five licence managers we spoke to estimated that the cost of unused software was more than 100 per PC There are many scenarios that can lead to software licences being installed but not used. Estimate of the value of software installed - but unused - on a typical PC Licences may be allocated to users based on their department as opposed to their need, they may be bundled together by the vendor, or users may be given software for a specific need or role when they first join the company which is never reclaimed when that need changes. 15% 29% Whatever the reason, unused software is a significant drain on IT budgets - on average costing organisations 432 per PC. 19% 30% The user s perspective Many users are well aware of the problem of unused software on their desktops. Nearly three quarters of users believe that they have some unused software on their PCs. A third believe they have five or more applications installed on their machine that they never use. 1% 6% I don t know Estimate of how many unused items of software users think are on their machine 4 40% 35% 30% 25% 20% 15% 10% 5% 0% None Fewer than 5 Between 5 and 10 More than 10 Don t know 5

6 Shelfware 92% of managers admit to having shelfware, with an average of 22% of products destined never to be deployed Shelfware is, as its name suggests, software that is left to sit, undeployed on the proverbial shelf in a forgotten corner of the IT department. But even though it remains undeployed, shelfware still incurs maintenance and support charges. Shelfware costs every organisation in the UK 89 per user per year 5 The challenge with shelfware is that, though widespread, it can be hard to find in most organisations. Traditional systems management tools can only detect software that has been installed, so many organisations are aware of the problem of shelfware but unable to do much about it. It s unreasonable to expect customers to continue paying maintenance on unused products and undeployed capacity. 6 Forrester Research Inc., April 2011 The manager s perspective Shelfware has many different manifestations, but they all cumulatively drain the IT budget every year. IT management teams need to learn how to hunt down and eliminate shelfware, in order to free up budget for more important activities. Estimate of the percentage of software purchased but undeployed in UK organisations 12.0% % 4.8% 40-49% 8.8% 30-39% 17.5% 19.5% 20-29% 10-19% 29.9% 1-9% 7.6% None

7 47% of enterprises still use spreadsheets to record software licences, with 6% still using a paper-based filing system and a staggering 16% using nothing whatsoever. 7

8 Managing complexity 84% of those surveyed believe that software asset management is overly complex The root of the problem in identifying all this waste lies in the massive complexity caused by bundled licence and maintenance deals. This is compounded by unfathomable software licence and entitlement options, the general vagaries of product names, versions, editions and increasingly, virtualisation. Organisations across the UK face a daily challenge to reconcile the software they have deployed with the software they have licensed. Answering this seemingly simple question is a real issue for many - which is why projects aimed at understanding and managing software compliance and licensing frequently run on for many years and struggle to demonstrate any return on investment (ROI). What does your organisation use to manage licences? 16% 47% Few organisations are totally aware of how much money and waste can be tied up in software and how much they could save with efficient management of their software licences. 4% 6% 6% 39% Software sourcing managers faced tough challenges in Under continued pressure to control costs in an uncertain economic environment, they also faced ever-more complex licensing rules, increased licence audit activity and proliferating commercial models. 6 Forrester Research Inc., April % We don t use anything We use spreadsheet(s) We use an internally developed solution We have an off the shelf solution Filing cabinet / paper based system Document management system Other - please state Multi select 8

9 Each year, greater numbers fall foul of compliance audits, face unexpected costs, or suffer unreasonable restrictions on their use of the software they ve purchased or thought they d purchased. 8 Forrester Research Inc., December

10 Audit anxiety Over two thirds of organisations in the UK find preparing for a software vendor audit challenging The number of audits from ever more vigilant software vendors is on the rise. It is perhaps not surprising then that many organisations in the UK have come to believe that their number one priority when it comes to managing software is to ensure compliance, not to cut waste or reduce costs. This is particularly true given the potentially damaging results of failing a vendor audit - heavy fines, substantial back-charges and the threat of legal action. When coupled with the time and complexity involved in comparing the amount of software being used with the amount being paid for, it becomes easier for many organisations to over provision licences just in case. By focusing solely on preparing for an audit, organisations are buying ever increasing amounts of software, ignoring the very real danger that much of it will never be deployed, never be used and never add value. Perhaps unsurprisingly, the number of organisations that find a software vendor audit challenging rises to nearly 90% as the number of software products in the environment increases. Forrester sees many software licence agreements that are seriously flawed. [...]These flaws result in problems, unexpected software costs, and, sometimes, legal disputes. 8 Forrester Research Inc., December

11 The majority of organisations (77%) have never reclaimed any unused software licences. 11

12 A missed opportunity? Only 8% of organisations in the UK are regularly reclaiming software licences to save money Uninstalling unused software and redeploying those wasted licences will drive down costs and deliver a better return on investment from existing assets. Despite the obvious benefits of software licence reclaim and the staggering cost associated with unused software and waste, three quarters of UK organisations have never done it. Their biggest obstacle is usually fear. Have you ever considered reclaiming unused software licences to reduce costs? 15% 8% 26% No Yes & we ve done it occasionally 25% 52% 18% Yes & we do this regularly Yes, would like to but can t - Risk Yes, would like to but can t - User Objection 8% Yes, would like to but can t - Lack Tools Over half of respondents said that they had considered actively uninstalling and redeploying licences, but that they are unable or unwilling to take the next step. Reclaiming unused software would mean that many organisations would be able to avoid buying new licences until they actually need them, which could have very real financial impact on the value they get from their software. Despite only 19% of managers responsible for software licences in the UK stating that their primary goal is cost control, we believe there is a clear financial imperative for every organisation to identify and reduce software licence waste. 12

13 There s a software licence time bomb armed, ticking and buried deep in the foundations of many a Global 200 firm s elegant IT architecture. 10 Forrester Research Inc., July

14 Financial imperative Unused software and shelfware in the UK accounts for 1.7 billion in preventable and on-going costs 1 Organisations are frequently concerned about software vendor audits and compliance, so they often overlook the huge waste involved in shelfware and unused software. This anxiety, coupled with the complexity of software licensing, is generating significant inefficiency and waste in many businesses. These costs are largely preventable. As this report highlights, few organisations are truly aware of how much money can be tied up in software waste and how much money they could be saving. The software sitting unused on PCs in the UK could have historically cost those organisations 7.3 billion. 11 Software waste per PC per year 16 Software waste Unused software Shelfware Purchase cost Maintenance cost Total per PC per year When considering this over a typical three year replacement cycle, a UK organisation with 1,000 users has 432,000 worth of unused software sitting on its PCs. It wastes a further 104,000 yearly on ongoing maintenance and support charges for software that has either been installed but not used or literally left on the shelf. 14

15 About the research This survey was conducted online within the United States and United Kingdom by Opinion Matters, an independent research company, in March It was commissioned by 1E and analyses the results from over 500 IT professionals who are responsible for managing software licences in companies with more than 500 employees. This report focuses on the United Kingdom results. A majority of workers in the US and UK regularly use a PC to do their jobs Source: Harris Interactive U.S. 108 million employees U.K. 17 million employees What is your job title? What size company do you work for? CIO Head of IT IT Manager More than 10, SA Manager IT Operations , Pocurement Other U.S U.K U.S. U.K. About Opinion Matters Opinion Matters is an Independent International Market Research Agency. Consultancy and client service are placed firmly at the top of its agenda, and creative thinking at its core. Opinion Matters reaches and engages audiences, ranging from the general public through to the leaders of industry, delivering robust results with advocacy. Opinion Matters complies with the Market Research Society (MRS) Code of Conduct in the UK and the ICC/ESOMAR Code and ESOMAR World Research Guidelines. For more information, please visit: 15

16 About 1E 1E believes every one of our customers should expect more from their IT. Founded in 1997, 1E is recognized as a leader in software and services that improve IT efficiency by identifying and reducing costs and waste in hardware, software, energy and time. 1E pioneered advanced PC power management with the release of ground-breaking solutions like NightWatchman and WakeUp. That innovative approach has continued with the development of revolutionary concepts like Useful Work, Drowsy Server, Computer Health and Shopping as part of a unique range of industry-leading solutions. Headquartered in London and New York and with 16 million licences deployed world-wide, over 1,400 organizations in 42 countries have trusted us to help them to work effectively, productively and sustainably. To date, we have helped our customers save in excess of 350 million in energy costs alone, reducing their electricity consumption by 5.8 million megawatts and cutting CO2 emissions by 4 million metric tonnes. For more information, please visit About AppClarity AppClarity, from 1E, offers an immediate reduction in software costs by intelligently helping organisations to manage their software assets more effectively. AppClarity enables you to financially quantify software waste on all applications by identifying and controlling unused software across the whole enterprise. 16

17 About FAST IiS The Federation Against Software Theft (FAST) and Investors in Software (IiS), two of the most respected independent names in the UK software industry, have joined forces to strengthen and clarify the advice given to the end user community relating to best practice for Software Asset Management (SAM) and achieving cost efficient licence compliance. In bringing the two organisations together the market will benefit from a single organization able to balance the often-polar positions of reducing licensing costs and mitigating compliance risks within the context of Software Licence Management (SLM). FAST and IiS share common goals and complement each other s strengths and capabilities. The collaboration enables a holistic approach to SAM & SLM best practice and the protection of software publishers rights. The entity, under the auspices and management of The Federation, will keep both the well-known brands of FAST and IiS to respectively maintain focus on their core propositions. The FAST brand will continue to strenuously lobby government for a robust, effective and efficient IP regime in the UK and protect the IP rights of its members as appropriate. The IiS brand will remain focused on driving best practice and consistent standards to advance the professionalism in SAM. For more information, please visit: About IAITAM The International Association of Information Technology Asset Managers Inc. ( IAITAM ) is the professional association for individuals, organizations and providers involved in any aspect of IT Asset Management ( ITAM ), Software Asset Management ( SAM ), Hardware Asset Management, and the lifecycle processes for IT Asset Management in organizations of every size and industry across the globe. IAITAM s mission is to provide real-world based skills development, and to support IT Asset Managers already setting the standards for successful ITAM business practices such as, saving money, gaining control, reducing risk, increasing accountability and improving performance. Over the past 9 years, IAITAM has strived to support the IT Asset Management industry through expert training and advice as well as lead the profession down a path of best practice to enhance the business drivers of ROI, Efficiency, Risk Avoidance and Professional Development for themselves and their organizations. For more information, please visit: 17

18 References is the average amount of unused software on a user s PC Typically support and maintenance costs 20% of initial software licence cost x 20% = on-going software maintenance costs on unused software is the cost of new licences that become shelfware / user / year x 20% = on-going software maintenance costs on shelfware = total maintenance cost on wasted software licences / year 17m regular business PC users in the UK 15 17m x = 1,773,631,818 spent on maintaining unused software and shelfware licences in the UK each year 2. In a survey of attendees at Gartner s IT Asset Management, Procurement and IT Financial Management Conference conducted in November 2010, 61% of the 144 respondents said they had been audited by at least one software vendor in the past 12 months. Gartner Survey Analysis: Survey Shows Another Increase in Software Vendor Audits? IT Asset Managers Should Prepare Now. Jane B. Disbrow, Alexa Bona, Stewart Buchanan, Frank DeSalvo, Frances O Brien, Jo Ann Rosenberger, March 2, Duncan Jones, Principal Analyst at Forrester Research Inc., as quoted in Computing magazine, March 8, Helpdesk Efficiency Report 2010, Vanson Bourne 5. IT budget = $12,350 / user / year 12 1 GBP = 1.63 USD 13 IT budget in GBP ($12,350 / 1.63) = 7, % IT budget spent on software 12 21% of 7, = spent on software per user per year 26% of software spend is on new software 14 26% of = spent on new software per user per year 21.6% of new software becomes shelfware (this report) 21.6% of = This figure does not include on-going maintenance 6. Duncan Jones with Chris Andrews, Rory Stanton, Forrester Research Inc., as quoted in Software Pricing And Licensing Trends 2011: Software Sourcing Leaders Should Create Sourcing Strategies That Take Advantage Of Profound Changes In The Software Market, April 5, Reserved 8. Duncan Jones with Christine Ferrusi Ross and Rory Stanton, Forrester Research Inc., as quoted in Updated Q4 2010: Check your Software License Agreement for These Common Flaws Update Familiar Contract Clauses to Accommodate Technology Changes, December 23,

19 9. Reserved 10. George Lawrie, Forrester Research Inc., as quoted in Defuse Software License Time Bombs With Software Asset Management, July 9, is the average amount of unused software on a user s PC 17m regular business PC users in the UK x 17m = 7,349,100,000 historical total of unused software on PCs in the UK This figure does not include on-going maintenance 12. IT Key Metrics Data 2011, Gartner, G Bloomberg Currency Conversion, April 7, Forrsights Software Survey, Forrester Research Inc., Q Harris Interactive Survey for 1E, September Software waste per PC per year calculates as: Unused software = = is the average amount of unused software on a user s PC / 3 years typical refresh cycle = cost per year x 20% = on-going software maintenance cost per year Shelfware = = new shelfware acquired each year 5 Typical software maintenance fee = 20% x 20% =

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