June 02, 2009, 1:27 PM — Everyone realizes that companies today are doing everything they can to cut costs. From layoffs to forced furloughs and salary reductions, large and small firms alike are scrambling to find a way to wring out just a few more dollars in savings. For IT departments, that often translates into delayed projects and purchasing freezes – which can have a serious impact on innovation. The ultimate goal is to ensure IT can continue to support business-as-usual services and provide room to innovate without growing in size and cost. But while many companies are embarking on what they believe to be cost cutting initiatives, they’re actually missing a big chunk of what they could save.
More than 4.4 million jobs have been eliminated in the U.S. since December 2007. While that represents a cost savings in terms of headcount – what about the cost savings in terms of IT assets? The truth is that many companies that were forced to make employees redundant to meet cost cutting mandates probably don’t realize they have a serious mismatch between IT assets they previously purchased and staff that are still around to use them.
Typically about 5 percent of hardware is orphaned in corporate data centers. Each of those servers has associated administration, software license, facilities, power and cooling costs. Perhaps more startling, Forrester Research estimates that more than one in five businesses that have had software audits are holding on to unused software, and the average company spends 10 percent of its software maintenance payments on shelfware. Add these up and suddenly we’re talking about real money.
Most businesses have historically relied on tribal knowledge and ad hoc IT record-keeping to track hardware assets and software licenses. But when organizations leave crucial information like this in the hands of a few individuals, orphaned machines and unused licenses can slowly pile up, and security can be jeopardized. And when redundancies hit, you may find even that ad hoc tribal knowledge walking out the door.
Any IT cost cutting program should include software license management to identify and eliminate unused licenses in the data center. In fact, most firms could quickly reduce software maintenance costs by around 5 percent simply by identifying over-licensing and eliminating extraneous product instances. Not surprisingly, license management and optimization are now becoming much more attractive to IT executives as a means to lower overall software spend and reduce compliance risks.
Before a company can embark on a software license management program, they first need to understand what is actually being used in the environment. That may seem difficult in these challenging times, particularly for a company that has gone through major redundancies. Fortunately, leveraging tools that provide deep visibility into where and how software products are deployed will let firms easily and quickly run a single, high-value internal software audit. Armed with that information, they can optimize their hardware assets and software licenses – even with a reduced workforce – and structure an end-of-life program to improve efficiency and identify additional cost savings opportunities. Plus, they’ll safeguard against the security risks of putting too much data in the hands of too few employees.
Think simply running a software audit can’t possibly save you any substantial amount of money? Consider this: We had one customer reduce their Oracle license renewal exposure from $5,258,000 to $1,470,000 simply by getting a better understanding of their license position. This allowed them to improve their license management in terms of partitioning and users – to the tune of several million dollars.
Your licenses are lonely. They’re sitting out there taking up space and eating up money. Can you really afford to leave them there?
Richard Muirhead is Founder and CEO of Tideway
