At the end of 2012, Forrester and the ITAM Review, an IT asset management community site, ran a software asset management (SAM) survey to help understand where SAM is going in 2013. The resulting infographic* and commentary is available to Forrester clients here. For non- (hopefully future-) clients I’ve extracted some content to create this blog.

The focus and drivers for SAM have changed

Since the early 2000s, risk-focused IT professionals have voiced their concern over software compliance and the potential for vendor audits, large financial fines, damage to corporate reputation, and even the imprisonment of company directors. But these concerns weren't necessarily shared by the rest of the organization, which also viewed the SAM technology available as too difficult and complex to justify. As a result, SAM was a low priority on the IT management to-do list.

But this is starting to change as IT organizations realize that their software estates and procurement and provisioning processes are in a state of under-management, if not mismanagement. As a result, these organizations are wasting a significant amount of their IT funding each year on license procurement when they don't need to, maintenance agreement costs for more licenses than they actually use, and supporting and hosting software that should have been decommissioned.

Three of the 19 infographic elements:

I recently reviewed a portfolio of about 600 software artifacts from 16 large IT service providers. This daunting exercise complements a research stream I have been working on since the beginning of the year on the future of the IT services industry. While I believe the move to software asset (SA)-based IT services will drive maturation of the services industry and help IT service providers remain relevant to their clients, the analysis of this SA inventory raises a few significant challenges:

• Most software assets face scalability issues. Traditional sales and marketing organizations within IT service providers fail to sufficiently scale up the number of clients for their SA-based offerings. Case in point: 68% of the software assets analyzed in this inventory have fewer than five clients. This low number raises concerns on the financial viability of these offerings for service providers.
• Service providers will face a SA sprawl over the next couple of years. On average, service providers currently have about 20 SAs in their SA portfolio. The analysis shows that this number is growing exponentially (see below). The number of SAs created has increased by an average of 26% each year since 2009 and is accelerating. More assets were created in the first six months of 2012 than in any previous entire year; SA-related investments are following a similar trajectory.

I recently finalized a report* on software asset (SA) based IT services, this time looking at vendors’ best practices in terms of governance, organization, skills, tools, and processes. Needless to say, the move to software asset-based services will have a huge impact on the traditional operating models of IT services firms.

Obviously, IT services firms need to learn from their large software partners to understand and implement specific software asset management processes such as product sales incentive schemes, product management, product engineering, and release management.

This will induce a formidable cultural change within the IT services vendor’s organization, somewhat similar to the change Western IT service providers had to undergo 10 years ago when they finally embraced offshore delivery models.

I see a few critical steps that IT services firms need to take in order to facilitate this shift towards software asset-based business models:

• Build a client-relevant SA strategy. Building an SA base offering is not (only) about doing an inventory of the existing intellectual property (IP) that you have on employee hard drives and team servers. More importantly, it’s about making sense of this IP and building strategic offerings that are relevant to your clients by centering them aounrd your clients’ most critical business challenges.