The federal government spends more than $6 billion per year on software. Without a government-wide Software Asset Management strategy in place, Flexera estimates that as much as 25 percent of that software spend – or $1.5 billion – is wasted annually.
That waste occurs because software is a fundamentally complex and difficult asset to manage. Without Software Asset Management (SAM)/Software License Optimization people, processes and technology in place focusing on the problem – you can’t negotiate a prudent software license agreement because you won’t know how much software you need and how much you use. You can’t stay in compliance with those agreements because you can’t reconcile your software installations and usage with contract terms. You can’t ensure you’re actually using the software you already own – resulting in overspend on “shelfware.” And as a consequence – you’ll also be wasting money paying maintenance fees for software you’re not using, and purchasing new licenses for software you don’t even need.
The General Accounting Office effectively confirmed as much in its recent scathing report, “Federal Software Licenses: Better Management Needed to Achieve Significant Savings Government-Wide.”
Congress acknowledged the massive software licensing waste problem in its recently enacted Federal Information Technology Acquisition Reform Act (FITARA) by directing federal agencies to get their act together when it comes to managing software. But the legislation didn’t say how.
That job fell to the Office of Management and Budget (OMB), which just released its FITARA guidelines on Improving the Acquisition and Management of Software Licensing. And by all accounts, OMB got it right. Among other things the guidelines require Federal agencies to:
- Appoint a Software Manager that will lead the agency-wide effort to centralize license management and implement strategies to reduce duplication and ensure adoption of software management best practices.
- Maintain an agency-wide inventory of software licenses, including licenses purchased, deployed and in use, as well as spending on subscription services (including cloud/SaaS).
- Leverage commercially available IT tools to support processes for compiling and maintaining software license inventories. (It defined commonly used IT tools, which enable best practices and reporting on software inventory, costs and usage, to include Software Asset Management/Software Licensing Optimization solutions, among others.)
- Use this technology to automate hardware and software asset discovery, IT asset inventory tracking, software inventory normalization, contract management, purchase and product use rights license reconciliation, software license optimization and SAM data sharing capabilities.
- Develop automated, repeatable processes to aggregate software license and maintenance requirements for commercial off the shelf software and software acquisition. Analyze inventory to ensure compliance, consolidate redundant applications and identify other cost savings opportunities.
- Centralize, streamline and establish best practices in software procurement and contracting.
These guidelines reflect OMB’s understanding of the heart of the problem – that without Software Asset Management people, processes and technology in place – the Federal Government is powerless to reign in its runaway software spend. They also reflect best practices that have already been adopted by the world’s most respected and well-governed enterprises – best practices that increasingly are becoming standard operating procedure across organizations globally.
Flexera supports the OMB’s new Software Licensing Acquisition and Management guidelines and we are confident that these common-sense rules will lead to significant Federal savings that can be put to more productive use.