SAM knocks with chances for channel

Every year the software industry loses billions of dollars in revenue through the illegal use of pirated software. According to the Fourth Annual Business Software Association (BSA) and IDC Global Software Piracy Study, 29 percent of all software in Australia is pirated. Alarmingly, piracy across the Asia Pacific region is a staggering 55 percent.

IDC goes on to report that the present retail value of pirated software in Australia is more than $640 million. Furthermore, for each dollar of software revenue, at least another dollar of revenue is generated in services sold to design install, customise and support the software. This puts the economic loss for the Australian software and service industry at more than $1.2 billion.

However, the story does not end there. In fact for the channel, this is where it starts. IDC also calculates that an additional $1 for every $1 of software is lost in channel revenue. So, an additional $640 million is lost on top of the $1.2 billion.

These facts and their economic magnitude shed some light on why now more than ever, the major software vendors are crusading to minimise software piracy. It also suggests the channel needs to come to terms with how they can take advantage of this changing landscape.

In the case of Australian corporate use, pirated software tends to propagate not for malicious or overtly illegal reasons, but simply because the companies in question do not know the extent of their software estate. Despite numerous high-profile legal cases resulting in fines of up to US$250,000, software licensing is still a corporate governance blind spot for many companies.

Typically, the most common cause of unauthorised software proliferation is employees acting on their own initiative, without the approval of those responsible for licensing. This can range from one-off duplication to large-scale copying to potentially hundreds of machines. The main culprits are ignorance, laziness and a disregard for what can be very serious consequences.

For those poor souls actually responsible for tracking software licensing, tracking hundreds of applications on potentially thousands of machines is virtually impossible using traditional manual audit methods. What’s more, this still needs to be married to the company’s various licensing agreements with different vendors.

It is the perceived difficulty of auditing the network, plus the additional burden of license reconciliation, that leads many organisations to bury their heads in the sand and hope the software police do not come knocking. This is far from a sustainable strategy however, and knocking they will come, sooner or later.

The major software vendors have long been aware of the ‘head in the sand’ approach taken by some companies. It appears however that the software industry is no longer prepared to accept this approach, with vendors putting in place new programs, including those extending to the channel, to combat piracy.

Opportunity knocks

So how does this all affect the average software reseller? The good news is that, for once, the reseller would appear to be in a win/win situation. Firstly, the customer demand for SAM (Software Asset Management) solutions is growing sharply as companies respond to compliance needs. Secondly, resellers are being encouraged into the SAM business and given support by the major software vendors, who in some instances are linking the provision of SAM services to performance targets. Suddenly the SAM business starts to look quite appealing.

In order to effectively sell and support SAM solutions, it’s important for resellers to understand the different types of solutions available and their varying degrees of sophistication and functionality. In just the last couple of years, software to audit and monitor IT assets has evolved significantly, with many vendors offering ‘modulised’ add-ons to add features and enhance value.

It’s also important for resellers to understand the process associated with software asset management, which should not be viewed as a one-time or periodic project – it is an ongoing process of continually monitoring software on the network and how it is being used. Effective SAM involves the following steps:

•Carry out a complete audit of the software installed across the network using a software discovery tool to list all installed software

• Track the usage levels of installed applications to ensure that the software installed is actually still being used

• Determine the extent of valid licences – this provides a list to compare against the actual software assets installed

• Highlight old applications no longer used and remove copies to avoid paying for licences that are not in use

• Liaise with software vendors to ‘true-up’ under-licensing and renegotiate support contracts where there is overlicensing

Contrary to popular belief, not all organisations find themselves under- licensed upon conducting a self-audit.In some cases, companies find they’re paying for licenses and support for software simply not utilised. In these cases, an investment in a SAM solution can turn from a pure cost, into an exercise in cost saving, with a genuine return on investment (ROI).

Improved security

Implementing a SAM solution can improve network security through the elimination of unauthorised software. SAM software can work in tandem with a patch management application, with some vendors offering add-on modules to identify vulnerable or ‘un-patched’ software.

Organisations with a full and up-to-date IT inventory know which machines are affected or potentially exposed and where they are on the network. Armed with this information, administrators can quickly deploy a patch or even quarantine the affected machines.
The presence of large quantities of files such as MP3s, JPGs and other non-business documents can point to wider security and productivity issues.

ISO 19770 compliance

An international standard has now been developed to help organisations put in place processes and procedures for effective software asset management. For resellers to effectively and authoritatively advise customers on their SAM requirements and issues, it is advisable to have at least an awareness, if not a thorough understanding of this standard.

Regardless of whether an organisation is seeking ISO accreditation, the standard helps manage risk, control costs and meet governance requirements.

There are two parts to the standard:

• ISO 19770-1 focuses on the importance of effective management of software assets

• ISO 19770-2 defines the data requirements to support ISO 19770-1

Historically, most SAM implementations focus only on compliance. The standard however, actually defines a framework for the ongoing effective management of an organisation’s software estate and related IT assets. In order to meet the requirements of the standard, a SAM solution must be able to deliver key intelligence and functionality to enable control over risk, costs and deliver against corporate governance initiatives.

The reseller role

Given that software asset management is not a one-off activity, but an ongoing process, the opportunity exists for resellers to build a robust practice around selling, implementing and servicing clients’ software asset management needs and can also advise organisations on how to extend the functionality of their software with add-on modules. This in turn creates further sales and revenue opportunities.

Software resellers wanting to get into the SAM business may also find willing and accommodating partners in the software vendors themselves, who are keen to minimise piracy in the business sector. As the efforts of these vendors and associated industry bodies such as the BSA increasingly bear fruit (Australian software piracy dropped from 31 percent in 2005 to 29 percent in 2006), more and more channel revenue will flow as a result, with SAM being a key slice of the overall pie. What size helping would you like?