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Benefts o IT and Sotware Asset ManagementIn today’s increasingly competitive business environment, companies are realizing they canno longer aord to treat IT and Sotware Asset Management (IT/SAM) as an initiative toimplement “when time allows.” It is rapidly becoming a strategic imperative compelled bythe need to keep IT costs in line and manage the risk associated with IT assets, while achievingmaximum value rom existing and uture IT investments. Gartner Research validates thistrend, estimating that “Enterprises that systematically manage the lie cycle o their IT assets

will reduce cost per asset by as much as 30 percent during the frst year, and between 5percent and 10 percent annually during the next fve years.” 1

As more and more organizations embrace IT/SAM practices, they fnd that the savingsgenerated by these programs usually pay or the necessary investment many times over.Specifcally, the implementation o eective IT/SAM programs has helped companies:

1) Reduce TCO related to IT assets by eliminating time-consuming manual audits,determining where an organization is overspending on sotware licenses and reducinghelp desk costs.

2) Manage technology change by developing sotware procurement models that map tocurrent and uture needs and by collecting data that assists with technology migrationand upgrade planning.

3) Minimize security risks by preventing the use o unauthorized sotware and enorcing

desktop standards.4) Limit compliance risk by identiying PCs with unlicensed applications, preventing

employees rom using unlicensed sotware and producing accurate reports to vendorsin the event o an audit.

Although the reasons or adopting an IT/SAM program are many, IT managers requentlyhave a difcult time justiying an increase in spending to procure yet another application thatpromises to deliver a panacea o business benefts, while making their jobs easier—much lessdevelop and implement processes and dedicate personnel to support that application. ITmanagers are consequently required to demonstrate an unqualifed and immediate returnon any IT investment.

The purpose o this document is to quantiy the immediate and ongoing savings andinvestment associated with the implementation o a best-o-breed IT/SAM tool, as well as

to estimate the return on investment (ROI) based on those measures. Ater reading thisdocument, you should be able to quantiy in approximate terms your own organization’sROI or implementing an IT/SAM solution.

Note: It is important to keep in mind that an IT/SAM tool is only one component—albeit a critical one—o a successul IT/SAM program. This document deals specifcally with the ROI that can beachieved by implementing an IT/SAM tool—that is, technology that provides the data and insight necessary to carry out a successul IT/SAM program.

•1 Patricia Adams, “IT Asset Management Stages: Stairway to Success” presentation, Gartner IT Asset Management and

TCO Summit, 2003

Quantifying ROI: Building the Business Casefor IT and Software Asset Management

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Savings Associated with IT and Sotware Asset ManagementIn order to compute the return on investment, you must frst identiy and calculate the savings realizedby implementing an eective IT/SAM tool.

Eliminating manual inventories Today, many companies conduct an inventory o their hardware and sotware assets by physicallyvisiting individual workstations and documenting the hardware confgurations, along with thesotware that is installed. These manual inventories can be triggered by a number o events, includingvendor audits, sotware purchasing cycles, or technology upgrades or migrations. This inormation isgenerally recorded in a spreadsheet and maintained by someone in the IT department or helpdesk.Not only is this an error-prone and non-scalable procedure, it can be extremely time-consuming andcostly, depending on the size o the organization, the complexity o the IT environment, and therequency with which an organization conducts such inventories. Furthermore, organizations arelimited in their ability to report on this inormation eectively.

An automated IT/SAM tool eliminates the human resource costs associated with conducting manualPC inventories by intelligently discovering, recognizing and reporting on all the hardware and sotwareinstalled across a network. A tool should also provide a central location where sotware licensinginormation can be stored and reconciled against actual installations. And, with the right tool, thisdata can be generated at any time and reviewed in ormats that best match the organization’s IT andpurchasing processes.

Eliminating or re-allocating underutilized softwareAccording to Gartner Research, 41.9% o CRM licenses purchased worldwide go unused2—just oneexample o how companies oten invest heavily in sotware that is not utilized or, perhaps morecommonly, underutilized. Companies requently buy sotware licenses or everyone in the organizationbecause they are concerned about compliance or, more likely, because they do not have insight intowhich applications are actually being used—or used enough—to justiy ownership o the licenses.

This means that much o the sotware purchased goes unused—a colossal waste o money. Companiesare also paying or maintenance rom sotware vendors—not to mention internal help desk support—

or unused and underutilized licenses, which urther adds to the cost o ownership.

An IT/SAM program should include a tool that collects and reports on sotware usage, allowingorganizations to determine which licenses are being used, by whom, and how oten. This inormationallows IT and procurement departments to orecast license needs more accurately, select a licensingplan that matches actual usage patterns and determine to whom various licenses should be allocated.Likewise, i some licenses are being underutilized, they can be reassigned to individuals that are morelikely to use them without increased licensing costs.

Reducing help desk costsGartner Research estimates that up to 50% o time spent on a help desk call is associated with tryingto determine the confguration o the user’s PC. This occurs when help desk sta don’t have immediateaccess to this inormation and are required to lead callers through a series o steps to obtain it.In addition, having non-standard desktops within an organization can be costly, as support personnelneed to amiliarize themselves with multiple versions o a particular application or learn sotware romdierent publishers that serve the same general purpose. Other help desk costs include those issuesrelated to supporting unauthorized applications (such as chat or P2P programs) that may introduce

22003 Press Release, Gartner web site, http://www.gartner.com/press_releases/pr6mar2003a.html

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security or machine perormance issues; the costs o troubleshooting and resolving such issues couldotherwise be eliminated i the applications were not installed and/or launched in the frst place.

Any IT/SAM program should include a tool that allows helpdesk sta to gain immediate visibility intoindividual users’ desktops to view their specifc hardware confgurations such as unused disk space,RAM, processor speed and the existence o video cards/drivers, as well as Service Pack installations orsotware that could be impacting PC perormance or causing other user issues. An IT/SAM tool shouldprovide granular insight into the sotware and versions installed on desktops, so decisions can be madeas to whether standardization will save money, even i it means upgrading some users to a newer versionor purchasing new sotware to create a common environment among all employees. IT administrators

should also have the ability to limit the launch o certain types o applications that could potentiallyintroduce viruses, spy ware or other security threats. Together, these measures can signifcantly reducethe average time spent on support calls, as well as support costs related to preventable problems.

Avoiding license compliance risks and penaltiesGartner Research estimates that through 2008, 70% o mid- to large-sized organizations will undergoan external sotware audit.3 Many organizations are concerned about the outcome o a sotware

audit, due to their lack o insight into the gap between how much sotware has been installed onusers’ desktops and how many licenses have actually been purchased. Additionally, i companies can’tprovide inormation that corroborates their licensing agreements when a sotware vendor makes anad-hoc request, the risk o a ormal audit increases signifcantly. Although the costs o an audit can betricky to quantiy, the costs o being ound out o compliance can be staggering: twice the retail costo regular licenses needed to regain compliance, penalties o up to $150,000 per inringed-uponapplication and litigation ees. Furthermore, there are “sot” costs that are difcult to quantiy butcan be particularly damaging, such as the disruption to daily business operations and negative PR.

An IT/SAM tool should oer the ability to reconcile the number o licenses installed—or, in the caseo concurrent licenses, in use—throughout the organization with actual purchasing data, so thatcompanies can true-up any desktops that are out o compliance. The tool should give you the abilityto block the launch o unlicensed applications in order to avoid uture risk o non-compliance. And,

i you have any applications licensed concurrently, you should consider a tool that helps you ensurethat the number o applications running at any given time does not exceed the number o concurrentlicenses you own. Together, these capabilities will give you more confdence in your ability todemonstrate sotware license compliance in the event o an audit.

A brief note on true-up costs: Some organizations argue that when computing the ROI o adoptingan IT/SAM program, they should include the costs o true-ing up any unlicensed sotware necessaryto become compliant. In some scenarios, this cost can be signifcant, producing what appears to bea negative ROI. However, this cost should be regarded as a balance sheet liability that existed priorto the adoption o the IT/SAM program. The money is owed to the sotware publisher by law, whetheror not an IT/SAM program is implemented and the discrepancy is discovered; thereore, it should notbe considered in the ROI computation.

3Jack Heine and Alvin Park, “The IT Asset Management Scenario” presentation, Gartner IT and Sotware Asset Management Summit, 2005

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Minimizing “hidden” costs related to freeware/sharewareNot only can organizations recognize savings related to legitimately licensed sotware, but they canalso minimize costly risks associated with sotware that is classifed as reeware or shareware. Mostorganizations do not account or such costs, due to the lack o insight into employees’ usage o suchprograms. However, many organizations, when provided the means, realize that business productivityis being dampened by the use o chat programs, games and P2P applications among employees.

Security risks can also be introduced through the unintentional download o executables that carryviruses or spy ware, and it is oten difcult to determine whether employees have the required antivirussotware or security patches installed on their machines. In addition, many companies have ound thatthe downloading and sharing o large fles such as MP3s can negatively impact server resources andnetwork perormance. Finally, because companies can be held accountable or the activities o theiremployees, the use o unmonitored chat programs to exchange sensitive data can expose companiesin regulated industries (such as health care, fnance, law or government) to signifcant liability.

An IT/SAM program will help you limit these costs and risks i it includes a tool that allows you todiscover the extent to which unauthorized applications are used within your organization, as well asblock the use o applications you deem a threat. A good tool will also be able tell you whether any o your users have ailed to install a required security program or patch, so you can take corrective actionto address such vulnerabilities.

Investment Required to Implement an IT/SAM ToolNow that the savings associated with an IT/SAM tool have been discussed, you must identiy hard dollarand resource investments your company must make to successully implement the tool.

Initial purchase of product In order to recognize signifcant savings rom an IT/SAM program, it is necessary to purchase an IT/SAMtool that provides unctionality that includes (but is not limited to) hardware and sotware inventory,reconciliation o inventory data with purchasing data, sotware usage metering, application control,

and robust, comprehensive reporting. IT/SAM tools are generally licensed on a per-seat basis basedon the number o desktops (whether in-network or remote) in your organization. You should alsoconsider uture growth o your organization and the resulting addition o more desktops to yournetwork, as well as ongoing maintenance ees.

Tool and process implementationAs any IT manager is aware, there are unavoidable costs associated with learning, deploying and

maintaining any tool within an organization’s inrastructure. And all too oten, technology solutionsare implemented, but the processes needed to support the tool and enable business decisions areneglected. In order to get the most out o the investment, it is necessary to establish a set o objectivesand processes around IT/SAM that address the ollowing types o questions:• What specifc data should be collected by the tool—and how requently—in order to make

key decisions?• Does the tool leverage industry standard technologies (such as SQL Server, client/server or web

service architectures, WMI, etc.)• What kind o inormation should be made available to whom?• What are the parameters or evaluating results?• Who will be responsible or various tasks?• How will key fndings and recommendations be communicated to decision-makers?

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The investment required to implement a tool and its related processes are typically in the orm o human resources and opportunity costs relative to other initiatives within the IT organization. However,depending on the skills, priorities and capacity o your IT organization, there may be hard dollarsinvolved with hiring a consultant or service provider to assist with tool and/or process implementation.

Ongoing administration and process management You must also take into account the resources required to administer and maintain the IT/SAM tooland manage its associated processes over time. This involves periodically evaluating the inormationthat is gathered, as well as the eectiveness o the process in terms o achieving the program goals.

Calculating Total Return on Investment (ROI)

The fnal step in building a business case or IT and Sotware Asset Management is to compute yourorganization’s ROI. While people oten think ROI involves incremental earnings as a result o a particularinvestment, in this case, we will use savings in place o earnings. (A penny saved is a penny earned!)

To get the percentage return (or ROI), sum all the savings discussed above, subtract the investmentrequired, and fnally divide the remainder by the total amount invested.

The chart on the last page o this document shows the computation o ROI over the frst three yearso a typical company’s IT/SAM program using the methods discussed above; in reality, you will wantto calculate ROI as ar into the uture as possible, so that the total lietime value can be recognized.It is important to note that ROI appears to decrease with subsequent years because the largestinvestment and savings are seen in the initial year, and your ability to manage your organization’s ITassets will improve over time. Thereore, you should compare the savings or any given year to thesavings without the program in place, instead o comparing savings year-over-year.

ConclusionOrganizations have a great deal to gain in terms o savings rom a relatively small investment in anIT/SAM tool and the processes that support it. The insight obtained rom a best-o-breed tool can helpcompanies with a broad range o challenges, including controlling IT costs, planning or new technologyroll-outs, managing security risks and remaining compliant with sotware licensing agreements. Whilethe cost savings vary rom organization to organization based on each company’s unique situation andneeds, an IT/SAM tool is an integral part o any asset management program, and the costs to implementsuch a tool generally ar outweigh the necessary investment.

About Express MetrixExpress Metrix has proven leadership in sotware license metering and asset management sotwareduring more than 11 years o experience ocused on this feld and through its installed base o over1,100 active customers. Winner o the 2005 Sotware Asset Management Partner o the Year awardrom Microsot, Express Metrix solutions allow enterprises to ensure sotware license compliance, planor technology migrations and sotware upgrades, and eectively manage their IT assets and budgets.

Express Metrix oers a suite o sotware asset management tools that provide the streamlined solutionscompanies need to conduct in-depth analysis and management o desktop PCs and applications. TheExpress product line includes Express Sotware Manager Proessional®, Express Sotware ManagerStandard®, Express Inventory® and Express Meter®. Express Metrix currently holds Gold CertifedPartner status in the Microsot® Partner Program. More inormation on Express Metrix can be oundon the company’s web site at www.expressmetrix.com.

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Express Metrix, Express Sotware Manager Proessional, Express Sotware Manager Standard, Express Sotware Manager,Express Inventory, and Express Meter are registered trademarks o Express Metrix, LLC. Al l other trademarks, trade names,or company names reerenced herein are used or identifcation only and are the property o their respective owners.

200 West Mercer St, Ste 300Seattle, WA 98119 USA+1.206.691.7900+1.206.691.7901 [email protected]

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