10 ways to avoid wasting money on software


10 ways to avoid wasting money on software

The federal government spends more than $6 billion per year just on software.  Without a governmentwide software asset management strategy in place, as much as 25 percent of that software spend  --  or $1.5 billion -- can be wasted.

That waste occurs because software is a fundamentally complex and difficult asset to manage.  Without people, processes and technology in place focusing on software asset management, federal agencies can’t negotiate license agreements that make economic sense because they don’t know how much software they need and how much they use. 

Moving existing software licenses to the cloud, or investing in cloud-based, software-as-a-service applications makes risk reduction and cost containment even more difficult to manage without an automated software asset management solution capable of tracking and applications running in those environments.

Agencies’ problems managing software have been documented by the Government Accountability Office in its recent report, “Federal Software Licenses: Better Management Needed to Achieve Significant Savings Government-Wide.” Congress also acknowledged the software procurement and license management problem in the Federal Information Technology Acquisition Reform Act, which directs federal agencies to do a better job managing software.  Mapping out the logistics of such a solution fell to the Office of Management and Budget, which just released its category management policy on software licensing. 

As federal buyers begin to implement this new category management policy, they would be wise to avoid these common mistakes that result in wasted software spend:

1. Making ad hoc purchases. Fully leverage global enterprise agreements rather than allow decentralized purchases under local agreements.

2. Not tracking installation and use. Agencies may be able to substantially reduce ongoing maintenance payments and/or defer new license purchases by reclaiming and reallocating existing licenses for unused software.

3. No central repository. With proof of software license entitlements managed in a central repository, IT managers can reconcile licenses with installations understand their current license position.  They can also more quickly comply with vendor audit requests, saving time and money.

4. Not tracking renewal dates. Failure to keep track of software license agreements and renewal dates makes agencies vulnerable to lapses in maintenance or loss of their ability to take advantage of software use rights, both of which can prove costly.

5. Not leveraging product use rights. Accurately applying product use rights can drastically reduce license consumption and reduce the need for more licences.

6. No communication between IT and procurement. IT operations must work with procurement to ensure that software is installed and used in accordance with the license agreements to avoid compliance issues and ensure that the right license types are being purchased to best meet the needs of the agency at the lowest cost.

7. Purchasing licenses before ascertaining strategic requirements. Signing a software license deal without determining the agency’s current and future software requirements could be an expensive mistake.

8. Assuming licensing rules and metrics don’t change.  Failure to stay on top of licensing rule changes can result in software license non-compliance and subject the agency to costly license true-up fees.

9. Not purchasing maintenance at the right time.  If and when software maintenance should be purchased can have major impact on overall software costs.

10. Not automating software asset management and license optimization. Automated solutions allow agencies to easily and accurately collect all the necessary data and apply license entitlement rules to ensure continual compliance and optimization. 

OMB has taken the right steps in issuing common-sense guidelines for software license management and even suggested agencies leverage commercially available IT to support processes for compiling and maintaining software license inventories.

Now agencies should take the next step and implement proven software asset management and license optimization best practice processes and technology to enjoy the cost savings and risk reduction envisioned by those guidelines.

About the Author

Jim Ryan is president and CEO of Flexera Software.


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