Software-Asset-Management-KPI

Measuring Software Asset Management and Why It Matters

For many of the largest corporations in the world, the Software Asset Management (SAM) function is under-resourced and under-invested. Though a well-run SAM capability can significantly reduce a company’s overall software expense, the capability itself is not broadly understood and is commonly perceived as an administrative vendor management function.

When people talk about SAM, they are often confronted with objectives related to compliance, license cost savings, reducing license waste and other topics. Of course, these topics are vital for the SAM manager, but senior leadership should think of SAM first when they think about running a lean IT organization without waste.

One way to create visibility for a lean IT organization is to create and monitor key performance indicators (KPIs). KPIs should be easy-to-understand and easy-to-use metrics that inform the decision-making process. KPIs shouldn’t be a big headache to create; a SAM manager should guarantee compliance for the company’s software, not spend an inordinate time designing and tracking KPIs.

One KPI that has proven to be effective is the percentage and monetary value of licenses the SAM team recycles every month, quarter or year. What does this mean? If you recycle a license, you prevent your company from creating an external spend to a software vendor by purchasing new licenses, which means you keep the money in the business. You are re-using existing licenses that have become available to the business, through an employee leaving the company, for example, and releasing the license consequently.

Sound trivial? Maybe, but this KPI can be significant. First, it will demonstrate to your senior executives that you have a system in place that can detect and track details like software installations, software deinstallations, hardware inventory, employee leave process, license inventory, license pooling, monetary license values and licensing contracts, just to name a few. That alone will catch the attention of the SAM manager.

It also shows the CFO precisely how SAM saves money for the business, on a monthly, quarterly and yearly basis. The value should be registered as “cost avoidance,” if you are speaking in procurement terms. And, when you review your past 12 months of SAM activities, you can even determine SAM's contribution to the company’s EBITDA. Every penny not spent on licenses directly and positively impacts the organization’s profit and loss statement.

Creating accurate and reliable SAM KPIs requires a proper framework of SAM tools with robust but not over-engineered processes and methods. Also, the SAM team should partner with the IT organization when deciding on software projects.

A strong SAM toolbox contains many KPIs to support your SAM team as it creates and maintains visibility. ISG helps enterprises build and run successful SAM organizations that are tailored to your business culture, working practices and preconditions. Contact us to find out how we can help you.

About the author

Michael Bonk successfully consults and supports his customers in various software contract negotiation projects as well as Software Asset Management programs. With a professional experience of 15 years, his customers benefit on the one hand from his wide SAM and IT Procurement expertise and on the other hand on his deep software provider licensing understanding.