Five Cost Reduction Strategies in Software Asset Management

Software Cost Reduction

K2’s entitlement-based approach to Software Asset Management can get companies to cost reduction very quickly. We regularly receive feedback from customers who experience great success at hardware and software cost reduction and cost containment. K2 helps them to efficiently deliver software and hardware assets and IT services to their user communities. There are many specific ways to identify cost savings opportunities using K2. We’ll cover some of the most common examples here.

Harvest & Reallocate

The most obvious way to use detailed, accurate usage data is to simply identify software that is installed but is not being used – and then uninstall it, reclaim the licensing and redeploy it onto computers where it is needed. This is such an easy way to save money – reusing unused assets rather than buying new ones – but it is impossible without a good Software Asset Management tool.

We frequently work with companies who want to move from a limited view of where things are installed to a richer data set that includes usage details. Without fail, they are always surprised when they are able to view their actual usage. Usage never matches their guess, and the majority of the time, usage is much lower than they expected. When they started using K2, one company with 10,000 computers identified seven applications that each had over 1,200 unused installations. They harvested these licenses, uninstalled the software, reduced their maintenance contracts, and in some cases, redeployed some of the software to other computers. A bit of usage analysis for these 7 products alone resulted in a savings of over $220,000.

Software Asset Management - Cost Reduction

Results from four software cost reduction initiatives.

Right-sized Licensing

Many software publishers offer a variety of product suites with different, overlapping programs. Commonly when an organization purchases these suites, they either don’t evaluate which programs they actually need, or they look to their “power users” and conclude that the “Pro” version is necessary. Then they simply buy this more comprehensive and more expensive suite for all users who need the software. The more economical “Standard” suite versions that would actually satisfy many users gets overlooked.

During the first 4 months of engaging an entitlement-based Software Asset Management (SAM) agenda with Sassafras K2, one company discovered through usage analysis that although they had exclusively purchased Microsoft Office Pro, less than 10% of their Microsoft Office users were using the Pro tools. Fortunately, their Microsoft Enterprise Agreement (EA) was coming up for renewal. So they modified the agreement to change to the Office Standard edition for 90% of their end users. This saved them $450,000.

Improved Provisioning

Some cases are more subtle than software that is completely unused, or for which only certain programs within a product are used. You may find instead that software is rarely used on certain machines. The same company that found 1,200 unused installations of seven applications also found 2,200 rarely used installations of the same seven apps. The IT managers decided to install application kiosks at convenient locations in their facilities instead of making the software immediately available to infrequent users. By doing so they accrued an additional savings of over $260,000.

Appropriate Licensing Model

Software is often sold under multiple types of licenses, and it can be hard to know which purchase would make the most financial sense. Usually for an initial purchase you have to make a best guess. But for subsequent purchases and renewals, you could buy a different license type – if only you had the data that would inform such a decision.

In a real-world example, K2’s usage analysis of two software products – each purchased as node locked licenses and each licensed for over 8,000 computers – showed concurrent use of less than 10 at any one time. At the next upgrade interval, the company renegotiated licensing terms for both products to move to floating (concurrent use) licensing, achieving savings of over $125,000.

Operational Efficiencies can also Reduct Costs

In addition to the four illustrations above of software cost reduction, K2 users can also benefit from streamlined IT operational efficiencies. For example, during hardware harvesting and refresh cycles, having data already collected and available means you can easily identify outdated computer models by location and target them for refresh. Convenient reporting tools that summarize audit and usage data for both physical and virtual computers running Windows, Mac, or Linux operating systems can answer many unanticipated questions.

Conclusion

The hard numbers in the examples above all come from a company in the US automotive manufacturing sector. This customer manages IT assets for 10,000 computers globally. They have IT Department staff in the United States, Russia, China, and the Philippines.

The firm had experienced a downsizing in operations and they needed to conduct reassessment of certain aspects of their Software Asset Management / IT Asset Management (SAM/ITAM) program. They needed especially to find ways to reduce costs.

In the final analysis, in roughly four months, with a simple deployment of the K2-KeyServer, the company was able to identify and generate over $1-Million in real cost reductions.

The IT Asset Management consultant who orchestrated the implementation of Sassafras-K2 in the company said: “I have saved clients millions of dollars annually by mining usage metrics and utilizing them to eliminate software waste, improve operational efficiency, forecast needs, negotiate more favorable terms, and avoid costly liability risks.”

“The use of K2 helps build trust between an organization and a software vendor. For good reason software vendors fear piracy and lost profits due to unmanaged environments. With K2 I have negotiated previously unacceptable license terms because I can guarantee compliance and offer usage metrics to support vendor marketing efforts.”

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