Do You Really Need Software Asset Management? Ask the Dutch Police….
Firstly, let’s differentiate between software licence management and software asset management to frame the story:
- Software licence management is where licences are procured, applications are deployed, maintenance on licences are paid (or not) and eventually the licensing is replaced, retired or disposed
- Software asset management is where the process, people and technology is in place at a mature level to substantiate a number of the tasks with licence management coupled with additional processes that span across ITIL processes and possibly now even into security / cyber and HR management.
Back to the story… In 2008, a Dutch law enforcement employee accidentally ordered 13,656 licences for a special home working edition of Microsoft Office. Whilst this order is now known to be in error this resulted in a payment to Microsoft for these licences just short of €3m.
How do we know this? The Dutch police filed a lawsuit asking the purchase order to be cancelled and the total amount paid to be returned. The court found in favour of Microsoft as the procurement was a contract that was rightly observed by Microsoft.
In our experience, unless you can find a sympathetic representative at a vendor where a mistaken purchase has been placed, it is not down to the vendor to validate the purchase request.
What makes this even more interesting is that in 2005, a similar error in purchase was made by the Dutch Police to Microsoft to the tune of €765k. At this time, there was a sympathetic view from Microsoft in that as a one-time only gesture of goodwill they would ignore the purchase order and returned the full payment.
So, it seems lessons weren’t learnt from the previous error and in the second time not only was the amount nearly 4x the first error’s amount, but they are now expecting a legal bill of around €10k.
So how would Software Asset Management have helped?
- Implementing policies, processes and procedures would have identified the current licence usage as well as the requirements;
- Alignment with Request Management would have provided software licence/asset guidance and advice on the course of decision making they were taking;
- Strong software and procurement governance would have challenged not only the requirement of the specific edition, but volumes and actual approval structures. Generally in any organisation a spend of €3m would have some stringent oversight from senior management with business case justification quite normal in these cases;
- Central repository of information would have given the Dutch Police a ‘single pane of glass’ for all of their software information to have the base data to make decisions;
- Utilising Software Licence/Asset Management as a ‘hub’ for all software or infrastructure queries would provide a short, medium and long term plan for technical, operational and commercial challenges if a specific course of action was taken including mitigation plans for alternative architectural approaches.
The Bad News…
As software becomes more complex in its utilisation and the licensing terms and conditions becomes more complicated, this problem isn’t going away.
Software Asset Management is also becoming more complicated even if you are moving to cloud consumption ‘as a service’ models as the financial impact could be felt much sooner than in this example. This is because you pay immediately for any mistakes you make.
The Good News…
SCC’s Software Services have a number of offerings to help you understand, mitigate or plan for increases, including:
- Software Smart-Buy informs and keeps you updated on changes and its impact;
- Software Asset Management services helps you optimise the utilisation of software;
- Software Professional Services helps you re-architect your software environments to optimise this further.
Contact SCC to help you optimise your software consumption using the contact form below, or email [email protected]