Software licensing used to be easy. One simply had to have a single license for every PC a product was installed on. PCs were easy to count as they never left the desk — laptops, mobile, and the cloud were not even on the radar.
Eventually, the IT industry became more efficient, including moving from power-hungry mainframes and desktops to virtualized servers, mobile apps, and the cloud. With this transformation, the ways that software is used and licensed have evolved, but the ability to track IT assets effectively has not kept up.
A recent report entitled The Real Cost of Unused Software analyzed data from over 1,800 software titles deployed on 3.6 million desktops. The results were staggering — on average, companies are wasting 37% of their software spend — a proportion that would be deemed unacceptable in any other part of the business. In the U.S. alone, this amounts to $30 billion in wasted IT dollars.
Guest article by Buffi Neal, Director of IT Financial Analysis at 1E
Over four years of analyzing software waste trends in this report, the statistics have barely changed. Yet behind this headline-grabbing figure lies the real cost of this waste to business — one that is robbing businesses of the ability to survive by becoming truly digital.
Why aren’t businesses doing anything to become less wasteful?
The answer lies in a shift in the way organizations approach IT. In 2015, CIOs are no longer concerned with driving down costs. Instead, they’ve turned their gaze towards adding value. Because of this, eliminating software waste, often seen as a cost-cutting measure, has slipped to a far lower place in their priorities. This de-prioritization is a mistake, because controlling and reducing software waste adds value to the business in a number of ways.
Part of the IT mandate to add value involves equipping employees with the tools they need, as soon as they need them. Employees need the ability to get as close as possible to customers, and that often requires having the latest devices and applications on hand. Given the speed at which technology becomes out of date, IT budgets are struggling to keep up. How often do employees request an important tool, only to be told there is no budget for it?
A risky business
While the short-term financial implications of spending money on unused software are acute, the cost to a business’ health can be even greater. The failure of organizations to keep a handle on their software estates exposes them to many other risks, including cyber-attacks on uncontrolled software and audits from revenue-hungry vendors.
Recent high-profile data breaches have put cyber security at the forefront of the agenda for most risk managers, yet few will concentrate on optimizing their software licence strategy. This is a costly mistake, as the more unused or unaudited software present within an IT estate, the greater the organization’s vulnerability to attack.
As for software license vendor audits, these are becoming increasingly frequent, and a typical audit can cost companies dearly in both time and money. Yet by understanding and managing software usage effectively, organizations can arm themselves with the data they need for an impending audit, saving millions in the process.
Adding value in a wasteful age
While CIOs who adopt automated software licence strategies to remove unused software will no doubt save their companies significant amounts of money, the real value to business is far greater. Namely, it lies in a decreased risk of cyber-attacks, audits, and patch time, and 37% of the software budget now free to reinvest in innovative digital technologies.
For more in this area, check out Aberdeen’s Business Planning and Execution research.
Buffi Neal is Director of IT Financial Analysis at 1E, which empowers the world’s largest organizations to simplify and speed up the complete software lifecycle, from request to delivery, management, retirement, and procurement of software.
With over 23 years of experience in IT, Buffi received an MS of Computer Science from Lehigh University and a BS of Physics & Mathematics. As past CEO of a successful software development company, Buffi designed complex enterprise-wide systems for client companies including Prudential, Allmerica, Goldman Sachs, and Bank of America. Over the past few years, as an IT Financial Analyst, Buffi has worked with hundreds of companies helping them identify their software waste, quantify the potential, and focus on high-yield reclamation. Her work in the field of Software License Optimization Benchmarking has yielded the 2014/2015 SLO Report, a frequently cited study on global software waste.