Keen to maximize revenue and profits, software vendors are becoming increasingly vigilant about customer software licensing. These license audits come at a cost, whether it’s the time it takes to prepare and respond to requests, or the need for rapid purchase of licenses to ensure compliance.
The fact is, many organizations are actually licensed correctly, but have also paid for and deployed software that is not being used. Businesses also typically have some visibility over the software installed across the organization, but the majority are in the dark about the value of their unused software – and it is costing them millions.
Guest article by Sumir Karayi, Founder and CEO, 1E
1E recently conducted research among 100 UK and 200 US decision makers, with 500+ employees, to see how businesses are managing their software estates, audit requests and the software license processes. The report, entitled The Hidden Cost of Unused Software, presents these findings, providing insights into how organizations can take control and optimize their software asset management approach.
IT Overspending and Software Waste Trends
After analyzing 1.8 million corporate desktops and measuring waste across 74 organizations, our team has uncovered a variety of software audit and software license optimization trends. Perhaps most surprisingly, organizations with more than 500 employees in the US and UK have collectively paid over $7 billion for software that isn’t being used. Of software deployed in the enterprise, 28 percent goes unused or rarely used, which results in losses of $224 per PC.
While software waste is steadily increasing, the frequency of software vendor audits has also risen to an average of four per year, though alarmingly, 10 percent of US companies are audited between 11 and 15 times per year. With all of these software audits, one would think organizations would limit their waste. Yet it seems that companies do not have the appropriate processes in place to fully understand and manage their software assets. Only 44 percent of IT decision makers can put an accurate figure on their annual software licensing spend, and less than half (47 percent) can identify the cost of unused software across the organization. Additionally, two-thirds of organizations do not have a software asset optimization policy in place.
While the cost of software audits can run into millions of dollars for large organizations, many do not realize they can make significant savings by reclaiming unused applications, and gaining full visibility and control over their sprawling software estates. This data clearly demonstrates that organizations are not optimizing their software assets in a way that reduces cost. A figure of 28 percent of installed, but unused, software is staggering and should serve as a clear message to every CxO and IT asset manager to implement processes to ensure that installed software is not only licensed, but being used.
Improving Software Optimization and Management
The sheer magnitude of unused software represents a clear opportunity for businesses to reclaim unused licenses and redeploy precious IT budgets. A typical software license vendor audit can cost companies dearly, but 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.
Overall, businesses still have a big job to do to gain full visibility and control over their sprawling software estates – and to reclaim the cost of their unwanted applications and IT. While organizations are adopting more automated systems for identifying the software they have and what is being used, the tendency is to use a combination of manual and software-led processes to build up a picture of ownership and usage.
Unfortunately, a great deal of this scrambling around to ensure software license compliance, leads organizations to acquire more software than they need. If they believe a vendor is coming in to conduct an audit, the common approach is to simply acquire additional licenses for that product, whether they are using their existing licenses or not. While this is clearly a positive result for the vendor, it exposes a more fundamental failure in business process – it highlights that organizations do not take enough time to learn who is using each product, how often and whether the software they have is already sufficient for actual needs. The good news for businesses is that there are solutions available that will not only give full visibility of all software, but that also provide the means to manage future licensing and usage, take control to understand the software estate, prove compliance, and ultimately save your company millions.
While software licensing is a necessity, paying for unused software isn’t. Accurate visibility into the entire software estate and the ability to reclaim unused software will save significant amounts of money. It will also turn the tables in favor of your organization in vendor audits, compliance and license negotiation.
For more in this area, check out Aberdeen’s Business Planning and Execution research
Sumir Karayi founded 1E in 1997 with the goal to drive down the cost of IT for organizations of all sizes by identifying and eliminating IT waste. Sumir pioneered PC power management and established a market-leading role for his company. He has driven 1E innovations to achieve $2.3bn in IT efficiency savings for its customers, $1.3bn of which come from energy efficiencies alone, cutting CO2 emissions by 11.5 million tons. Under Sumir’s leadership, 1E remains privately held and is headquartered in London and New York and with 26 million licenses deployed across more than 1,700 organizations.