The link between Cricket and Software Asset Management might be a bit tenuous, but England victories are few and far between so we have to make the most of it!
It was a fantastic achievement by England to win the Ashes back from Australia. We are reminded that, despite individual talents, the success of the team is due team members operating as a cohesive unit. The following article has been contributed by Kylie Fowler.
SAM is a Team Sport
One recurring piece of advice given to anyone beginning their Software Asset Management programme is that in order to implement truly effective Software Asset Management they need to get Board-level sponsorship of their activities.
My experience is that they rarely explain why!
The answer is because SAM is a team sport. Unlike many IT management functions, it can’t be carried out effectively just by utilising the resources and relationships available within IT. As a result, the different groups who need to be involved have different management paths which frequently only meet at board level. In order to obtain the time and effort of these different team members, it is helpful if the organisation board itself supports the effort.
So what positions should we have on our team? and why? Let’s go through them one by one.
ITAM Administrator / Analyst
Activities: Internal requisitioning, software and maintenance administration; accountable for conducting reconciliations and maintaining compliance with licensing EULAs.
In the front line we have the ITAM administrators. They’re our solid, reliable work horses, doing the day to day activities that keep our SAM effort on track and in compliance. The IT Asset Analyst needs a solid understanding of software contracts, EULAs, and licensing principles to ensure that the IT Department doesn’t breach the terms and conditions of their licenses.
Activities: Raising purchase orders, liaising with suppliers on a day to day basis, contract administration. This position may sit either within IT or within Procurement/Finance. The principle of “Segregation of duties” indicates that the procurement administrator and the IT administrator functions should be fulfilled separately.
As the player who raises the purchases orders, this person is responsible for coding software purchases/maintenance so that they are accounted for correctly in the company accounts. Ideally, you should be able to quickly and easily run reports of all software and maintenance purchases which can then be used for reconciliation purposes. It is crucial that this coding is carried out correctly, both for any purchases made and credit notes received so that reports are accurate and comprehensive.
Of course, showing that a purchase order was raised for a particular purchase is not proof of purchase, but it IS a necessary first step.
This person is also likely to be responsible for ensuring that contracts are reviewed and renewed in a timely manner and aren’t forgotten. This is a particularly important aspect of the role because support and maintenance are intangible services and the group benefiting from the contracts will only realise the renewal was not completed when service is denied. The purchasing administrator should regularly run an open purchase order report to identify POs which have not been goods receipted and / or had an invoice charged to them.
Activities: negotiating contract terms and conditions with major suppliers, including software vendors.
These guys are worth their weight in gold, which at the moment means that an average contract negotiator weighing 80kg is worth nearly GBP1.5m! Skillful negotiators can significantly reduce costs on new license purchases, reduce ongoing maintenance costs, negotiate advantageous EULAs and basically save your company oodles of money. Often the benefits of their activities will not be obvious to your average IT Joe but as they generally work with the largest and most sensitive software contracts – the Microsofts, IBMs, Oracles and CAs of this world, their work has a big impact on the company’s bottom line.
Activities: Reviewing contracts to ensure they are not detrimental to the organisation, ensuring the company is aware of all its legal obligations.
The company solicitor has the responsibility for reading all contracts before they are signed and ensuring there are no clauses that may be detrimental to the organisation. They rarely have specific experience writing software / maintenance contracts, and so rely heavily on the contract negotiator’s ability to get the most favourable terms and conditions for the contract. The Company Solicitor will also provide advice if the company wishes to contest the meaning of any terms in any contracts.
In general, Company Solicitors will have a strict policy of prioritizing contracts in a certain order –contracts that relate directly to income generation for the firm will naturally be first in line, while next in line will be those large contracts identified as high priority by the procurement department. Contracts which are negotiated solely by IT, without the assistance of the procurement department, will often come a long way down the list and may be subject to significant delays in review and approval. One of the significant benefits for IT of developing a strong relationship with the procurement department is that IT can then leverage the relationship between procurement and the legal department to ensure speedy attention to important contracts.
The Role of the Board
As you can see, members of our SAM team have reporting lines that end with the CIO, the CFO and the CLO – each of which will have very different ideas about what the priorities for their teams should be. Although SAM is likely to have been identified by the CIO as one of his/her priorities, it will barely be on the radar of the CFO, and the CLO is unlikely to have even heard of it! The aim of a SAM presentation to the board is to help the board members understand that SAM presents major risks and opportunities for the organisation as a whole, and that containing these risks will require the time and effort of people in many different teams and departments. Of course the ultimate goal is for the Chief Officers of each function to assign appropriate personnel from their departments to work at least part time on the SAM effort.
The board should also decide at where and at what level responsibility for the SAM function should reside. It may come as a shock, but the board could reasonably decide that ultimate accountability should reside with the CFO rather than the CIO – after all, the ‘difficult’ bits of SAM revolve around the interpretation and negotiation of service contracts, which is the procurement department’s specialty, while the compliance aspects of SAM should, if the function is established effectively, be a purely technical matter that can be dealt on a day to day basis by a SAM Analyst.
Although some organisations have found it possible to achieve compliance without the involvement of the non-IT players on our ideal team, the majority will find it very difficult. It is also extremely unlikely that an organisation will be able to take advantage of their SAM activities to optimize their licenses and contracts without the formation of a specialised team to manage the function effectively.