Discover Performance

HP Software's community for IT leaders // April 2014
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A license to cut costs and innovate

The bigger your enterprise, the harder you can fall if you overspend on software licenses or vendor penalties.

The bottom line

What: Improving control of your software licensing can free up budget and earn credibility with the business.
Why: Too many, or too few, software licenses can cost a large enterprise millions.
How: Find savings and avoid costly, embarrassing audit penalties by instituting a strong asset management program.
More: Check out HP’s Asset Manager.

IT leaders hear it every day: Run IT more like a business. Ops leaders in particular are feeling pressure to cut costs, improve ROI, and free up resources to innovate—which puts greater importance on a seemingly routine concern: software licensing.
 
A large enterprise puts a lot of money into licenses every year. And as IT organizations bring in more vendors, it’s more likely they’re paying for licenses they don’t need—or underpaying for licenses they use, risking heavy fines in an audit. Either way, hundreds of thousands, even millions, of dollars are on the line.
 
"One common obstacle we hear about from customers is freeing up capital to be more innovative," says Brian Brucken, vice president of HP Software Americas. "This is one area that companies can invest in and get a return on their money within four months. On average, enterprise customers find more than $500,000 in license and maintenance cost savings on software that is no longer in use."

Software asset management

The whole point of software asset management (SAM) is to control spending and ensure that you have the right amount and types of licenses. Done right, SAM can help to:

  • Prevent hefty fines from audits. In an HP survey of 16 customers in the Americas, all respondents had been audited in the previous year, with some audited by as many as 12 vendors.
  • Right-size your license purchases. Without effective auditing, you may be paying for licenses your users don’t need or use, on hundreds or thousands of computers. You may also be licensing duplicative programs: two pieces of software doing the same thing for the same users.
  • Lower software maintenance costs. Paying for software you don’t need means maintaining software you don’t need. IT staff wastes time upgrading and patching software for little reason.

Why the problem is getting worse

According to analyst firm Gartner, the enterprise software market is growing faster than other key IT segments, up 13 percent from $285 billion in 2012 to a projected $324 billion in 2014.* That means most companies are already paying more for software. But in today’s "bring your own application" (BYOA) environment, it’s hard to pinpoint which department is actually paying for it. And further complicating matters:

  • IT manages services from many internal and external sources, yet IT is still responsible for compliance with all software license agreements.
  • The cloud makes it easy for employees to download apps that IT may not even be aware of. Employees often use their personal devices for work, so IT has less control over what software they’re running.

What you can do about it

The costs of licensing too much or too little software are much bigger than many companies realize. So what can IT do to minimize the risk?

  • Control. Know what you have and use. Ask how many licenses are fully utilized, or underutilized. Determine whether you can purchase versions that are less expensive or negotiate full-upgrade discounts.
  • Comply. Reconcile licenses with actual usage so you can get in compliance with vendor and internal policies. Don’t wait for the threat of an audit to get a grip on the situation.
  • Optimize. Eliminate excess spending on licenses and maintenance by purchasing only what you need. Set up a chargeback system to ensure that departments pay for what they use.

Don't do it yourself

Software license management is a simple way to divert budget to things that actually matter, but managing it on your own can be complex. HP has a range of software and services to help enterprises dramatically cut licensing expenses, and help put IT in the strategic position the business demands.

For more information, read about HP’s Asset Manager solution.

 

*"The Nexus of Forces Works Its Way into the Enterprise," Chris Howard and Daryl Plummer, Gartner, Sept. 6, 2013.


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