Over the past couple of months I have attended a series of
roundtables with IT managers, talking about asset management. They
revealed that one of the biggest barriers to them taking greater
control over their software assets was a lack of board
understanding and support.
Given that this year companies in Western Europe are predicted
to spend more than £395bn on IT, you would have thought company
directors would want to understand the value of their assets and
the return on investment they are getting. After all, directors
have a duty to shareholders to provide a true and fair view of
their firm's assets and ensure that systems are in place to monitor
these regularly and rigorously.
So are board directors being given the whole picture as to the
real state of their IT? Are they in a position to accurately assess
the risks to their business from their IT systems?
Hands-off approach
Board directors are not receiving, or in many cases, even asking
for the information they need to fulfil this role effectively.
According to the Institute of Chartered Accountants in England and
Wales, more than 50% of senior finance professionals in companies
of 50 to 500 staff leave the monitoring, auditing and policing of
software use to their IT departments, and only 20% include it in
their financial review.
The institute also highlighted the informal approach to IT taken
by these businesses, with 25% having no IT strategy and only 39%
implementing formal measurement of ROI.
According to Ernst and Young, in companies that use independent
teams to audit their technology, IT directors do not have
confidence that the individuals doing the monitoring have the
resources and skills to provide effective risk assessments.
Being able to pull together basic information about IT assets is
often a challenge for IT departments, which are not given the time
and resources to do the job comprehensively. I have come across
firms that do not know how many PCs they have, so cannot even start
quantifying what software they are using or how much they should be
paying for maintenance and service charges.
Too often I meet companies, large and small, with no technology
purchasing strategy, where individual departments have bought
duplicate licences for software the company already owns. This has
all sorts of implications, including security. Given that they do
not know what is being purchased, how confident are the IT teams
that their companies' assets and data are secure?
These companies are likely to be wasting money that could be
used for other IT projects, if only they had greater control of
their assets. More seriously, by not knowing what assets they have
and are using, they could find that they are over- or
under-licensed.
Persuading the directors
The challenge facing IT heads is how to persuade directors of
the value of asset management. There are potential financial
benefits - according to Gartner, companies could save as much as
25% on the costs of owning, maintaining and supporting their
software assets. Centrica, parent company of the AA and British
Gas, estimates it will save £10m on software licensing costs alone
as a result of implementing software asset management.
Help is available for boards who want greater control of their
software assets. As a result of the work by Investors in Software,
a UK-based independent group of software asset management
practitioners, there is now a draft ISO standard for software asset
management. As part of the certification process, boards will
receive an annual statement summarising their assets and licence
liabilities.
I appreciate that there is a huge fear of the unknown in making
the relationship between IT staff and directors more open and
transparent. There are two ways to go: continue with the status quo
and hope the problem goes away, or start to gain the board's
engagement by identifying a potential issue for the business and
working together to build a business case that addresses it.
Of course, software suppliers have a role to play. Microsoft for
one wants to break down the barriers that exist between the company
and its customers, to build a relationship that is long-term and
mutually beneficial. A willingness to engage at both board and IT
level will help us achieve this.
Vaughan Smith is head of software asset management at
Microsoft