RESEARCH SUMMARY NOVEMBER 2013 Reducing Cost and Risk Through Software Asset Management A survey conducted by CA Technologies among delegate attendees at the 2013 Gartner IT Financial, Procurement & Asset Management Summit in London, U.K., during September 2013.
2 RESEARCH SUMMARY ca.com 1.0 Survey Highlights A threat is looming: 91 percent expect to be audited for licence compliance once or more than once in the next twelve months. This compares with 88 percent recorded in a similar survey last year 1. Almost three quarters of European organisations find it either difficult or very difficult to identify unused software and redistribute it making it highly likely they would fail a software audit. Poll reveals that 93 percent of European organisations are dependent on overlapping, manual tasks to assemble an accurate software inventory for license management. Majority have no appropriate tool for licence compliance management, and their information is distributed across various systems, spreadsheets and archived agreements. As a result, 80 percent are either unable or partially able to achieve financial transparency for IT. Some 33 percent of IT assets are also managed using integrated discovery and asset management systems. And eight percent admit that the majority of IT assets are not managed at all. This is a major cause for concern, given that 90 percent of respondents expect either one or more initiatives/ projects around IT financial management/transparency/cost allocation to be executed in the next 12 months. The maturity levels for financial management processes in general are weak: 26 percent perform a high level allocation of costs, without linking it to work and consumption of assets and services. A further 51 percent allocate costs to lines of businesses, according to projects and consumption of assets and services. A comprehensive asset lifecycle management solution allows them to determine what assets are available and in use, improve organisational distribution of those assets and increase productivity around license reporting and audit responses. 2.0 Research Methodology The survey was conducted by CA Technologies at the 2013 Gartner IT Financial, Procurement & Asset Management Summit in London, U.K., during September 2013. Some 125 senior IT professionals participated in the survey.
3 RESEARCH SUMMARY ca.com 3.0 Preface Why is software asset management so difficult? After all, the expectations are seemingly straightforward. You simply need to identify the installed software products, match the installed software products to existing software licenses and report on the compliance status. The root of the problem is a lack of standards outlining how products are to be internally or externally documented or manufactured for sale and installation. This is not an issue that you can ignore. First, you need to proactively manage the investments you have already made in software assets to ensure that the organisations gets the most from them. Second, compliance with software license issues is an integral part of managing those assets. Vendors increasingly exercise the right to audit customers to ensure the licensee is not exceeding the authorised use for purchased software. The net result of inadequate IT asset management is that your organisation is exposed to risks of compliance fines and is subjected to the costs associated with conducting these audits. Moreover, your company can be severely impacted by the business disruption to normal business operations that the response entails. IT asset management practices as they exist today are inadequate and they leave you potentially exposed to these highly undesirable consequences. Most companies rely on manual efforts, spreadsheets, or home-grown databases to track software licenses and physical assets. This results in a poor understanding of where these assets are leveraged, which ones are no longer used and whether software utilisation is in compliance with existing agreements. Instead of optimising their assets, companies syphon costs from innovative investments by overspending on physical and software assets they may not need. An IT asset management solution such as CA Asset Manager empowers your organisation to manage assets differently. For example, you can quickly determine what licenses are utilised and which should be reallocated. You can pool software licenses and distribute them where they can be more optimally used rather than purchasing new software. And it gives you the flexibility to proactively manage vendor relationships, software compliance and mitigate risk from license audits. An effective software asset management process can reduce costs too. Improvements in software identification, product use rights, and pooling and distribution of available assets helps reduce the costs allocated to software acquisition. According to the CA ROI & Business Value Analysis Team, for example, companies are typically able to reduce the amount of software over-purchasing costs between 50 percent and 70 percent 2. You can also reduce the resources associated with conducting software compliance audits, to mitigate the risk associated with receiving a compliance fine, and to reduce software compliance fines themselves. Again, according to the CA ROI and Business Value Analysis research, companies who implement a CA Software Asset Management process and solution are typically able to reduce the cost of software compliance fines by up to 55 percent.
4 RESEARCH SUMMARY ca.com 4.0 Survey Findings in Detail Finding #1: Nine out of 10 firms will be audited at least once in the next 12 months The auditors are on your doorstep. The poll reveals that 91 percent or European organisations expect to be audited for licence compliance once or more than once in the next 12 months (see Figure 1). This is three percent higher than the equivalent survey finding from last year. Put another way, this suggests you only have a nine percent chance of going a whole 12 months without receiving at least one audit request from a software vendor. One of the main causes for the increase in audits is a failure in organisations to enable effective communications between the procurement, software asset management and IT operations stakeholders who all have a part to play in the deployment and management of software across the network. In light of this, you need to consider an IT asset management solution in order to improve the financial, contractual and operational management of your IT hardware and software assets throughout their lifecycle. Whether you are a service provider or a large enterprise, a solution like this enables the end-to-end management of assets supporting IT services from requisition to retirement, and provides the financial visibility and control over those investments. Figure 1. How many times do you expect to be audited for licence compliance in the next twelve months? 7 More than once Once We will not be audited
5 RESEARCH SUMMARY ca.com Finding #2: Who s watching over your software investments? The poll reveals that almost three quarters of European organisations (72 percent) find it either difficult or extremely difficult to identify unused software and redistribute it making it highly likely they would fail a software audit (see Figure 2). Most companies do not do an effective job at watching over their software investments. They rely on spreadsheets or home grown databases to track software licenses and utilisation. The organisation has difficulty understanding which software licenses are being utilised and which are available. The company over-purchases software and fails to maintain control over license compliance. This results in costly overhead for software and exposure to significant risk for compliance audit and violation. Figure 2. How difficult is it for your company to identify unused software and redistribute it? 7 Extremely difficult Difficult Not at all difficult Finding #3: Four-fifths of organisations lack financial transparency for IT According to the study, 93 percent of European organisations are dependent on overlapping, manual tasks to assemble an accurate software inventory for license management (see Figure 3). The majority have no appropriate tool for licence compliance management, and their information is distributed across various systems, spreadseets and archived agreements (see Figure 4). As a result, 80 percent are either unable or partially able to achieve financial transparency for IT. Software audits are increasingly becoming a way of life for both organisations and vendors. As this occurs, organisations need to take control of their software estate, in order to minimise the time and resources dedicated to audits and any subsequent penalties for non-compliance. A lack of financial transparency can have serious repercussions in terms of fiscal penalties, loss of revenue and diminished brand reputation. There is also the question of lost productivity. When software asset information is scattered across various systems, spreadsheets and archived agreements, precious resources can be wasted feverishly searching out the compliance information ahead of an audit inspection. An IT asset management solution integrates with your existing discovery tools and procurement systems to sift through massive amounts of information. For example, a master software catalogue can automate the time consuming and error prone task of manually recognising licensable software, gathering purchased software licenses and compiling product use rights.
6 RESEARCH SUMMARY ca.com Figure 3. Which of the following best describes the current state of your organization s IT management operations? Figure 4. 8 Majority of IT assets are not managed IT assets are managed in several systems, spread sheets and other local repositories IT assets are managed in integrated discovery and asset management systems IT assets are automatically discovered and all information (e.g. utilization, compliance, financial) is managed in integrated systems To achieve financial transparency for IT, are you able to provide the information easily? 7 No, information does not exist Partially - information is distributed across various systems, spread sheets and agreements Yes, information is aggregated and consolidated in the appropriate tool(s)
7 RESEARCH SUMMARY ca.com Finding #4: Few organisations charge for consumption of software assets, to agreed SLAs The maturity levels for financial management processes in general are weak: 26 percent perform a high level allocation of costs, without linking it to work and consumption of assets and services. A further 51 percent allocate costs to lines of businesses, according to projects and consumption of assets and services (see Figure 5). Figure 5. How would you best describe your company s maturity level for IT financial management processes in general? IT asset management solutions possess advanced reporting capabilities to report on and maintain your software asset utilisation. A personalised dashboard displays results that are critical for better decision support, for example, and provides key indicators for the highest audit risks, the most expensive licenses, the most important publishers and the largest contracts. In cases where your company is audited, it can significantly reduce the effort necessary to report and negotiate with the license vendor. In addition, your company is far less likely to owe a compliance fine. High level allocation of costs without linking it to work and consumption of assets and services Allocation of costs to lines of businesses according to projects and consumption of assets and services Lines of business are charged for consumption of hardware and software assets and services, according to general SLAs
8 RESEARCH SUMMARY ca.com Finding #5: Cavalier approach to allocating costs for IT While the poll finds financial management processes to be immature, the same applies to current IT asset management practises (see Figure 6). Some 91 percent of organisations allocate hardware and software assets on an ad hoc basis, following requests from lines of businesses; while 50 percent optimise their hardware and software asset usage according to changes in line of business needs. It comes as no surprise therefore to find that 68 percent of firms find it difficult or extremely difficult to allocate costs for IT (see Figure 7). Understanding the financial impact of your license base enables you to decide what costs are relevant to your business and to allocate these costs accordingly. An IT asset management solution tracks specified software-related expenses, including historical, current and projected costs, to help you analyse their financial impact. Costs can be allocated on a pro-rata basis to their respective projects and business units. This in turn provides transparency and cost allocation based on the actual use. Figure 6. How would you describe your company s maturity level for IT asset management in general? Ad-hoc allocation of hardware and software assets based on requests from lines of businesses Optimizing the hardward and software asset usage according to changes in line of business needs Fully integrated as part of service portfolio and IT financial management strategy and processes
9 RESEARCH SUMMARY Figure 7. How difficult is it for your company to allocate costs for IT? Extremely difficult Difficult Not at all difficult About CA Asset Manager CA IT Asset Manager delivers the foundation for a robust software license management discipline. With accurate compliance views, you can plan your software licensing needs and take action to avoid fines and penalties that could be incurred during a software audit. And you can improve service delivery with CA IT Asset Manager by supporting the automated review, approval, and fulfillment processes for hardware and software requests. For more information, visit www.ca.com/itam Connect with CA Technologies at ca.com Agility Made Possible: The CA Technologies Advantage CA Technologies (NASDAQ: CA) provides IT management solutions that help customers manage and secure complex IT environments to support agile business services. Organizations leverage CA Technologies software and SaaS solutions to accelerate innovation, transform infrastructure and secure data and identities, from the data center to the cloud. CA Technologies is committed to ensuring our customers achieve their desired outcomes and expected business value through the use of our technology. To learn more about our customer success programs, visit ca.com/customer-success. For more information about CA Technologies go to ca.com. 1 European Organisations Struggle with IT Asset Audits, Facing Costly Penalties for Non-Compliance, CA Technologies Poll Reveals. Press release January 9, 2013. 2 The impact ranges shown are provided to show a range of potential process improvements and ROI metrics that can be achieved through the appropriate, effective implementation and use of CA IT Asset Manager. Copyright 2013 CA. All Rights Reserved. One CA Plaza, Islandia, N.Y. 11749. All other trademarks, trade names, service marks, and logos referenced herein belong to their respective companies. CS200-40320_1113