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Software Asset Management: What It Is and Why It’s Time for a Change

5 min read Sanjay Krishna

The average mid-market company uses 137 SaaS applications at any given time. How can anyone keep track of that many contracts, licenses, and renewal dates? Unfortunately, many businesses don’t, resulting in $40 billion in wasted software

Hard facts: SaaS contributes to $40 billion in wasted software spend. Click To Tweet

If you’re wondering how to get ahead of problems like this, now’s the time to learn about software asset management (SAM). SAM helps businesses follow best practices to manage their tools, save money, and develop better relationships with vendors.

What is Software Asset Management?

Software asset management is a business practice that manages all of your cloud and on-prem software spend through a centralized system of record. (Like a software management or SaaS management platform.)

When your business is small, it’s not hard to keep track of which SaaS tools your team is using. But as your company grows, rogue purchases start to pile up. Today, it’s so easy to buy software that employees can purchase tools without having to go through an IT manager. Before long, you end up with duplicate apps, shelfware, and shadow IT – each with their own contracts, pricing models, and renewal dates. 

This is where SAM comes in. Companies that have a formal SAM strategy are able to track which software, and how much of it, exists in their organizations. They’ll know which employees are using those licenses, the terms of the contracts, and whether they’re out of compliance with the vendor’s policies. 

Core elements of Software Asset Management

Asset management has many moving parts. Pricing can fluctuate based on tiers and quantity, contracts can be negotiated, and your relationship with a vendor can score you additional features for no extra charge. 

To manage these intricacies, SAM focuses on three core elements: 

Software license management 

Without a SAM strategy, employees can purchase applications or sign up for free trials (that convert into paid accounts after 30 days), without having to run their plan through a SaaS manager first. 

SAM practitioners can avoid this by monitoring which vendors you have licenses with and how many of those licenses are being used. They can also go deeper by discussing whether those licenses are the right fit. The upshot: you save money and secure free training from a vendor who wants to improve your license utilization. 

Software vendor management

It’s important to stay in compliance with all of your vendor contracts. Providers may perform audits of your usage, so if you’re unknowingly using more of their product than you are paying for, get ready to receive a surprise bill. 

Vendor management isn’t just about compliance, though. It’s about building and maintaining a strong working relationship with all of your software providers in order to get the best pricing, be the first to know about new features, and enjoy a smoother renewal process. 

Software spend management

With spend management software, you control costs and plan for the future by implementing a governance process for new purchases. When your IT managers are aware of every purchase, it’s easier for them to identify software that’s going unused. 

Ask these questions to understand your current spend: 

  • Which applications are we paying for and how much are we paying per app? 
  • Are there cheaper alternatives available? 
  • How many people are using this app? Are there unused licenses?
  • Are we using all of the functionality of this app? 

Spend management also helps businesses tackle shadow IT, software that’s purchased without the company’s knowledge. Without oversight, your organization could have multiple small contracts with the same vendor, and no one is aware. 

Benefits of SAM

SAM allows companies to take ownership of and increase their visibility into their entire tech stack. This helps rid an organization of another hidden cost called shelfware. These are applications that were never used, and can take up 30% of your SaaS budget.

When you can see every piece of software in your business, you’re more likely to identify risk. Third party apps are a big source of data leakage which can compromise the security of your systems. Each contract should be reviewed by your SaaS manager to avoid financial or legal consequences. 

A SAM solution also helps organizations avoid dark pattern billing practices. These include silent recurring transactions, misleading cancelation policies, and a lack of notifications when trials convert from free to paid. Instead of dealing with unethical vendors, your team can focus on building relationships with vendors who want to be your partner.    

What’s the difference between SAM, ITAM, and SaaS optimization?

Right now, software asset management and SaaS management/optimization are popular terms. But they’re actually subsets of a broader approach to tool management called IT asset management. 

IT asset management

IT assets include everything that’s either software or hardware, or in other terms, physical or digital. This includes SaaS tools like CRM, marketing automation, and application performance monitoring, plus on-premise hardware and software, like servers and legacy applications. 

ITAM also manages all employee devices like computers and mobile phones. Each of these devices will eventually need to be upgraded, replaced, or serviced at some point and since they connect to your company’s internet service, their security is paramount.

Software asset management (SAM)

SAM is focused on software, both cloud and on premise. New businesses may be SaaS only, but many older and larger organizations are still undergoing digital transformations. 

Managing on-premise costs is a bit different from SaaS costs. Instead of a subscription model like with cloud solutions, on-prem software is mostly bought and owned outright, but still requires maintenance work and upgrades, which incurs additional fees.        

SaaS Optimization/SaaS Management

Quolum helps our customers with SaaS management by monitoring cloud-based software. While SAM can help with the big picture of your stack, SaaS management tools dig into the weeds: monitoring usage, billing cycles, relationships and more. 

Optimizing your SaaS subscriptions can help you save money, get the most out of your licensing feature sets, and get rid of tools that aren’t useful anymore. 

Getting started with SAM

With software asset management, you can manage the tools you’re using, how much you’re spending, and identify where you can save budget.

With SaaS Management, procurement professionals get more granular with cost optimization and more proactive with sourcing processes.  

To learn more about how to get the most out of your software contracts, check out Quolum’s SaaS Management platform.  

Frequently Asked Questions

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