October 22, 2009, 12:13 PM — According to Goldman Sachs, US companies spend more than $25 billion each year managing their business contracts. And while all contracts are important, many experts will argue that IT contracts are, by far, the most critical, and must be tracked and administered in the most efficient and effective manner possible.
IT contracts come in many forms. There are software licenses, hardware leases, subscriptions to online services such as salesforce.com or SAManage, maintenance and service agreements, and warranties – just to name a few. Each of these IT contracts includes different terms, restrictions, and conditions, and may be acquired through various different sources (directly from a vendor, through a reseller, via an OEM partner, etc.). This makes accurate organization, monitoring, and maintenance a complex and overwhelming challenge.
Additionally, since many companies manually manage the very technology assets that are directly related to those contracts, the ability to correlate agreements to their hardware and software inventory in order to ensure adherence to all contract guidelines is nearly impossible. For example, companies that haven’t automated their IT asset management processes often lose track of systems when they are reallocated or reassigned. This, in turn, can hinder software license compliance and put them at significant risk.
Proactive IT contract management is the key. By implementing an automated system to streamline the tracking and management of all IT contracts, as well as the technology assets they govern, organizations can:
* Reduce excessive or wasteful IT expenditures by knowing exactly what they need, and purchasing solutions/licenses in accordance with specific business requirements
* Minimize the risks associated with poor software license management, and avoid the fines and penalties imposed for illegal software use by rapidly identifying and correcting compliance gaps
* Demonstrate full compliance in the event of an IT audit
* Improve vendor relationships by more efficiently managing contract renewals
* Enhance IT budget management by better tracking upcoming contract expiration dates, giving them more time to shop around for better or more economical solutions