The UK & Europe: Open for Business? – ITAM Update from IAITAM’s EU Managing Director

By John Lovelock

Editor’s Note: Former Chief Executive of the Federation Against Software Theft (FAST), John joined IAITAM to establish a London office, offering ITAM certification courses as well as other IAITAM resources to the UK and the E.U.

The deepest part of the worst recession of the post-war era may be behind us, but recent news from the Bank of England now places a swift economic recovery in real doubt. The UK economy actually slipped into negative growth in the final quarter of 2010 and stuttering growth in the first half of 2011, and even the most optimistic forecasts predict economic recovery over the coming years to be sluggish at best. Greece as part of the EU continues to threaten stability in the Eurozone while Germany and France collaborate on a rescue plan for them, yet again, at least as big as the first loan.

In these uncertain times, belts continue to be tightened across the business world as organisations freeze recruitment, make redundancies and pare back budgets to the bare minimum in order to prepare for further economic turbulence or simply to survive another slump.

The challenge facing organisations is how to reduce budgets, control costs, maximise efficiency and achieve the best possible value for money from their suppliers, while remaining competitive and ensuring that employees have access to the resources they need to perform their jobs effectively.

Nowhere are these aims harder to reconcile than in the organisation’s IT department. While organisations have become ever-more dependent on a widening range of software applications and equipment to work effectively, the cost, number and complexity of these assets have risen dramatically over the last two decades. With the proliferation and diversification of software applications, many organisations find it extremely difficult to keep track of and manage their software assets effectively. Added to this is all the hardware, servers, PCs, laptops, networked printers, PDAs etc. which, whilst often added to the organisation fixed asset register, are rarely tracked and managed effectively to reap greater Return on Investment (ROI) and Total Cost of Ownership (TCO) of IT hardware.

Just as it would be unimaginable for any organisation not to have full visibility of their human or financial resources, so it should be equally unthinkable for any large organisation to have no facility to keep track of their software and hardware assets. Given that software is one of the biggest single elements of organisation technology budgets, typically around 30 to 35 per cent of all IT spend, this is a state of affairs that no cost-conscious organisation can afford to tolerate.

As IT estates (environments) grow and become ever more complex, organisations are faced with the problem of keeping track of software inventory and renewal dates; owned/leased hardware while with the growth in outsourcing and cloud computing, this has become even harder to control. Without proper software and hardware management tools in place, the difficulty of keeping track of IT assets is directly proportionate to the number of different applications, equipment and suppliers that the organisation uses. Organisations, after all, are not static entities: they are almost by nature protean, and their demands ebb and flow with changing circumstances. As businesses shrink or grow, their IT requirements will change accordingly.

IAITAM advises that simply keeping track of software and hardware inventory and renewal dates in a spreadsheet does little or nothing to help managers make decisions about allocation, upgrades, change, re-use, retire, disposal of assets and how it will affect the organisation. Nor does that approach enable the management of assets efficiently across an organisation that might comprise thousands of employees and hundreds of offices in dozens of countries and data centres around the world. Just as this plethora of software and hardware makes it very difficult to plan and budget for the future, poor asset management makes it extremely difficult for organisations to negotiate effectively with suppliers, and use their purchasing power to achieve considerable savings.

In my eight years of experience in the UK software market, I have struggled to convince CEOs and boards to recognize IT as a profit centre rather than an overhead or burden and the need to manage all their IT assets. Many businesses here give scant regard for software until subjected to a vendor review or forced audit then run around like headless chickens trying to rectify their deficiencies. Yes, here in “the most mature market in terms of adoption and spend on SAM and ITAM,” as many so-called experts in asset management would regularly advise me and my board.

At the same time, the UK is struggling with a software piracy rate that has simply not budged since 2006 according to the latest joint study by the IDC and Business Software Alliance (BSA). According to the findings of the organisations’ seventh annual Global Piracy Study, the UK piracy rate remained unchanged between 2008 and 2009 at 27 per cent, equating to a loss of £1bn to the UK software economy last year alone.

To put these figures in perspective, the figures mark the UK out as having the sixth lowest software piracy rate in the world. The US came to the top with 20 per cent, Luxembourg and Japan were joint second at 21 per cent and Denmark came third at 26 per cent.

The worst-performing countries in the survey were Georgia (95 per cent), Zimbabwe (92 per cent) and, in joint third position, Bangladesh and Moldova (91 per cent).

Overall, the worldwide piracy rate increased from 41 per cent in 2008 to 43 per cent in 2009, with the IDC attributing this to the growing number of software deployments in emerging economies, such as India, China and Brazil.

The cost of software

With software representing anywhere between 30 – 35% of an organisation’s total IT budget, it makes good sense to keep a detailed view on how software assets are procured, managed, controlled, retired and protected across every stage of their lifecycle.

This practice is Software Asset Management (SAM), a well known and growing industry in the U.K. with solutions for organisations in both the public and private sectors.

As more and more businesses recognise their legal obligations, or are reminded of them by the software industry enforcement groups or publishers, many have been driven to complete a reactionary license compliance review. There is little positive return from a reactionary license compliance review and in most cases is a costly exercise.

Proactive software asset management mitigates the cost and disruption caused by vendor forced audits or raids by enforcement agencies on their behalf, but without policies, procedures and processes in place for complete IT asset management, organisations will continue to be ravaged by these actions.

From my background with the Federation Against Software Theft (FAST), I learned that software management is extremely important to the organisation, but without suitably managed hardware, it is like having a brand new car with an old engine. Looks good but is it reliable for the journey? Software Asset Management relies on a complete IT Asset Management program.

Recent developments such as the Sarbanes-Oxley Act in the USA, the recommendations made in the Turnbull Report in the UK, the amended Companies Act, the Digital Economy Act, the WEEE Directive, the publication of the ‘Best Practice for Software Asset Management’ guideline as part of the IT Infrastructure Library (ITIL) and the launch of the ISO/IEC 19770-1 Software Asset Management International Standard, have raised Software and Hardware Asset Management up the business agenda and its priority has been upgraded by CIOs.

However, despite this attention, ITAM is still not getting the mindshare of all CIOs, many of whom are not on board for reasons alluded to earlier, and that leads to IT overspends on IT assets and organisations remaining open to all the risks associated with poor IT asset management.

The overall primary objective of IT asset management is to manage, control and protect an organisation’s IT assets, minimising legal, financial, security and productivity risks while maximising return on investment (ROI). Over the next few years the role of standards bodies and software industry organisations is going to be vital to educating corporate Britain on the importance and impact of effective software asset management. And this is a message that is resonating.

Risk mitigation

Managing your estate through software and hardware asset management processes as offered by IAITAM Inc. with CSAM™ (Certified Software Asset Manager) and CHAMP (Certified Hardware Asset Management Professional) will reduce your exposure to the risk of legal challenges, fines, operational and reputational damage.

Mitigating risk is not, however, solely about protecting the organisation from fines. Effective IT asset management also plays an important role in reducing security threats. By creating a catalogue of approved applications and hardware, businesses reduce the security risks associated with unapproved applications or hardware coming onto the network.

Given the role governments have in the protection of intellectual property – they are the bodies that create the legal framework in which the manufacturers, publishers and licensees operate – it would be highly embarrassing if a department failed to comply and was convicted of doing so.

Hmmm, something to cap my career perhaps?


Seventh Annual BSA/IDC Global Piracy Study:

About the Author

John Lovelock is the Managing Director Europe of IAITAM.