Software Efficiency Report-UK 2011

8/6/2019 Software Efficiency Report-UK 2011

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Software Efciency Report2 0 1 1

United Kingdom


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Software Efciency Report 2011 - U.K

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A licence to print money

In the UK alone, there is over 1.7 billion worthof preventable and ongoing cost associatedwith unused software and shelfware1

Waste is a very signicant problem in all aspects of IT. 1E wanted to look

specically at software waste and what we found astounded us.

Our research shows that when managing software licences and assets, most

organisations here in the UK focus on compliance, rather than on controlling

costs. Organisations are simply buying more software than they use.

Driven by the very real anxiety that a sudden software vendor audit could result

in heavy nes or lengthy l itigation, many organisations simply over licence,

buying more and more software just in case. This tendency to err on the side of

caution is only part of the story.

Over 80% of the CIOs and IT Managers we talked to felt that software asset management is overly complex. This

is perhaps not surprising, given the complicated nature of software licence agreements, bundled licence and

maintenance deals and the general vagaries of product names, versions and editions.

You would think that CIOs and IT managers would want to do something about this waste, but our research reveals that

just 8% are actively trying to manage the problem by regularly identifying and reclaiming unused software across their

organisations.

Unfortunately, merely detecting unused software and shelfware

across a myriad of systems, locations, PCs and servers presents

a very real challenge for most, never mind reclaiming and reusing

those licences.

Our ndings reveal that the problem of waste is likely to get worse

if organisations dont focus on managing their software assets

more efciently. There is a clear nancial imperative in everyorganisation to do so.

Sumir Karayi

CEO, 1E

Over 80% of

respondents agreedthat there was more

than 100 worth ofwaste per PC.


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Software waste

Over two thirds of organisations in the UK have software waste

When asked directly, most senior managers accept that there is software waste within their own organisations. Two

thirds admitted they had software waste and more worryingly, more than one third admitted that they have no way

to quantify the problem. Businesses are increasingly subject to vendor audits. At a recent Gartner conference, 61%

said they had been audited by at least one software vendor in the past 12 months2. These audits are the cause of

much anxiety.

Software waste adds signicant and ongoing additional costs to most organisations across the UK. It is created when

any organisation purchases software which adds no value and is typically made up of:

Unused software - software that is installed on a users PC which is not needed or used

Shelfware - software that is purchased but never deployed


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I advocate what I call licence optimisation, which answersthree key questions: what do we own, what are we using, andwhat do we really need?3

Forrester Research Inc. Principal Analyst quoted in Computing magazine, March 2011


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Unused software

Four out of ve licence managers we spoke to estimated that the costof unused software was more than 100 per PC

Estimate of the value of softwareinstalled - but unused - on a typical PC

0 5 10 15 20 25 30 35

15%

29%

30%

19%

6%

1%

50 - 99

100 - 249

250 - 499

500 - 999

1000 +

I dont know

There are many scenarios that can lead to software licences

being installed but not used.

Licences may be allocated to users based on their

department as opposed to their need, they may be bundled

together by the vendor, or users may be given software for a

specic need or role when they rst join the company which is

never reclaimed when that need changes.

Whatever the reason, unused software is a signicant drain on

IT budgets - on average costing organisations 432 per PC.

The users perspective

Many users are well aware of the problem of unused software

on their desktops. Nearly three quarters of users believe thatthey have some unused software on their PCs. A third believe

they have ve or more applications installed on their

machine that they never use.

Estimate of how many unused items of software users think are on their machine4

0%None Fewer than 5 Between 5 and 10 More than 10 Dont know

25%

20%

15%

10%

5%

30%

35%

40%


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Shelfware

92% of managers admit to having shelfware, with an average of 22%of products destined never to be deployed

Shelfware is, as its name suggests, software that is left to sit, undeployed on the proverbial shelf in a forgotten corner of

the IT department. But even though it remains undeployed, shelfware still incurs maintenance and support charges.

Shelfware costs every organisation in the UK 89 per user per year5

The challenge with shelfware is that, though widespread, it can be hard to nd in most organisations. Traditional

systems management tools can only detect software that has been installed, so many organisations are aware of the

problem of shelfware but unable to do much about it.

Its unreasonable to expect customers to continue payingmaintenance on unused products and undeployed capacity.6

Forrester Research Inc., April 2011

The managers perspective

Shelfware has many different manifestations, but they all cumulatively drain the IT budget every year. IT management

teams need to learn how to hunt down and eliminate shelfware, in order to free up budget for more important activities.

Estimate of the percentage of software purchased but undeployed in UK organisations

0 5 10 15 20 25 30 35

12.0%

4.8%

8.8%

17.5%

29.9%

7.6%

19.5%

50 - 100%

40 - 49%

30 - 39%

20 - 29%

10 - 19%

1 - 9%

None


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47% of enterprises still usespreadsheets to record software

licences, with 6% still using apaper-based ling system

and a staggering 16% usingnothing whatsoever.


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Multi select

Managing complexity

84% of those surveyed believe that software asset management isoverly complex

The root of the problem in identifying all this waste lies in the massive complexity caused by bundled licence and

maintenance deals. This is compounded by unfathomable software licence and entitlement options, the general

vagaries of product names, versions, editions and increasingly, virtualisation.

What does your organisationuse to manage licences?

Organisations across the UK face a daily challenge to reconcile the softwarethey have deployed with the software they have licensed. Answering this

seemingly simple question is a real issue for many - which is why projects

aimed at understanding and managing software compliance and licensing

frequently run on for many years and struggle to demonstrate any return on

investment (ROI).

Few organisations are totally aware of how much money and waste can be

tied up in software and how much they could save with efcient management

of their software licences.

Software sourcing managers faced toughchallenges in 2010. Under continued pressure tocontrol costs in an uncertain economic environment,they also faced ever-more complex licensing rules,increased licence audit activity and proliferatingcommercial models.6

Forrester Research Inc., April 2011

0 5 10 15 20 25 30 35 40

We dont use anything

We use spreadsheet(s)

We use an internally developed solution

We have an off the shelf solution

Filing cabinet / paper based system

16%

47%

39%

4%

6%

2%

6%

45 50

Document management system

Other - please state


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Each year, greater numbers fall foul ofcompliance audits, face unexpected costs,or suffer unreasonable restrictions on theiruse of the software theyve purchased or

thought theyd purchased.8

Forrester Research Inc., December 2010


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Audit anxiety

Over two thirds of organisations in the UK nd preparing for asoftware vendor audit challenging

The number of audits from ever more vigilant software vendors

is on the rise.

It is perhaps not surprising then that many organisations in the

UK have come to believe that their number one priority when it

comes to managing software is to ensure compliance, not to

cut waste or reduce costs.

This is particularly true given the potentially damaging

results of failing a vendor audit - heavy nes, substantial

back-charges and the threat of legal action. When coupled

with the time and complexity involved in comparing the

amount of software being used with the amount being paid

for, it becomes easier for many organisations to over provision

licences just in case.

By focusing solely on preparing for an audit, organisations are

buying ever increasing amounts of software, ignoring the veryreal danger that much of it will never be deployed, never be

used and never add value.

Perhaps unsurprisingly, the number of organisations that nd

a software vendor audit challenging rises to nearly 90% as the

number of software products in the environment increases.

Forrester sees many software licence agreements that are

seriously awed. [...]These aws result in problems, unexpectedsoftware costs, and, sometimes, legal disputes.8

Forrester Research Inc., December 2010


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The majority of organisations (77%)

have never reclaimed any unusedsoftware licences.


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A missed opportunity?

Only 8% of organisations in the UK are regularly reclaiming softwarelicences to save money

Uninstalling unused software and redeploying those wasted licences will drive down costs and deliver a better return on

investment from existing assets. Despite the obvious benets of software licence reclaim and the staggering cost

associated with unused software and waste, three quarters of UK organisations have never done it.

Their biggest obstacle is usually fear.

Have you ever considered reclaiming unused software licences to reduce costs?

No

Yes & weve done it occasionally

Yes & we do this regularly

Yes, would like to but cant - Risk

Yes, would like to but cant - User Objection

Yes, would like to but cant - Lack Tools

52%

25%

15%

8%

26%

18%

8%

Over half of respondents said that they had considered actively uninstalling and redeploying licences, but that they are

unable or unwilling to take the next step. Reclaiming unused software would mean that many organisations would be

able to avoid buying new licences until they actually need them, which could have very real nancial impact on the value

they get from their software.

Despite only 19% of managers responsible for software licences in the UK stating that their primary goal is cost control,

we believe there is a clear nancial imperative for every organisation to identify and reduce software licence waste.


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Theres a software licence time bombarmed, ticking and buried deep in the

foundations of many a Global 200 rmselegant IT architecture.10

Forrester Research Inc., July 2010


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Financial imperative

Unused software and shelfware in the UK accounts for 1.7 billion inpreventable and on-going costs1

Organisations are frequently concerned about software

vendor audits and compliance, so they often overlook the

huge waste involved in shelfware and unused software.

This anxiety, coupled with the complexity of software

licensing, is generating signicant inefciency and waste in

many businesses.

These costs are largely preventable. As this reporthighlights, few organisations are truly aware of how much

money can be tied up in software waste and how much

money they could be saving.

The software sitting unused on PCs in the UK couldhave historically cost those organisations 7.3 billion.11

Software waste per PC per year 16

Software waste Unused software Shelfware

Purchase cost 144 89

Maintenance cost 86 18

Total per PC per year 230 107

When considering this over a typical three year replacement cycle, a UK organisation with 1,000 users has 432,000

worth of unused software sitting on its PCs. It wastes a further 104,000 yearly on ongoing maintenance and support

charges for software that has either been installed but not used or literally left on the shelf.


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About the researchThis survey was conducted online within the United States and United Kingdom by Opinion Matters, an independent

research company, in March 2011. It was commissioned by 1E and analyses the results from over 500 IT professionals

who are responsible for managing software licences in companies with more than 500 employees.

This report focuses on the United Kingdom results.

U.S. U.K.

0 50 100 150

500 - 999

1000 - 9,999

More than

10,00038

33

115

105

103

112

0 50 100 150

IT Operations

Pocurement

Other

SA Manager

IT Manager

Head of IT

CIO22

60

110

110

6

1

34

29

6

4

13

9

42

60

U.S. U.K.

A majority of workers in the US and UK regularly use a PC to do their jobs

U.S.108 million employees

U.K.17 million employees

What is your job title? What size company do you work for?

About Opinion MattersOpinion Matters is an Independent International Market Research Agency. Consultancy and client service are placed

rmly at the top of its agenda, and creative thinking at its core. Opinion Matters reaches and engages audiences,

ranging from the general public through to the leaders of industry, delivering robust results with advocacy.

Opinion Matters complies with the Market Research Society (MRS) Code of Conduct in the UK and the ICC/ESOMAR

Code and ESOMAR World Research Guidelines.

For more information, please visit: http://www.opinionmatters.co.uk/

Source: Harris Interactive


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About 1E1E believes every one of our customers should expect more from their IT. Founded in 1997, 1E is recognized as a

leader in software and services that improve IT efciency by identifying and reducing costs and waste in hardware,

software, energy and time.

1E pioneered advanced PC power management with the release of ground-breaking solutions like NightWatchman

and WakeUp. That innovative approach has continued with the development of revolutionary concepts like Useful

Work, Drowsy Server, Computer Health and Shopping as part of a unique range of industry-leading solutions.

Headquartered in London and New York and with 16 million licences deployed world-wide, over 1,400 organizations in

42 countries have trusted us to help them to work effectively, productively and sustainably. To date, we have helped our

customers save in excess of 350 million in energy costs alone, reducing their electricity consumption by 5.8 mil lion

megawatts and cutting CO2 emissions by 4 million metric tonnes. For more information, please visit http://www.1e.com

About AppClarityAppClarity, from 1E, offers an immediate reduction in software costs by intelligently helping organisations to manage

their software assets more effectively. AppClarity enables you to nancially quantify software waste on all applications by

identifying and controlling unused software across the whole enterprise.


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About FAST IiSThe Federation Against Software Theft (FAST) and Investors in Software (IiS), two of the most respected independent

names in the UK software industry, have joined forces to strengthen and clarify the advice given to the end user

community relating to best practice for Software Asset Management (SAM) and achieving cost efcient licence

compliance.

In bringing the two organisations together the market will benet from a single organization able to balance the

often-polar positions of reducing licensing costs and mitigating compliance risks within the context of Software Licence

Management (SLM). FAST and IiS share common goals and complement each others strengths and capabilities. The

collaboration enables a holistic approach to SAM & SLM best practice and the protection of software publishers rights.

The entity, under the auspices and management of The Federation, will keep both the well-known brands of FAST

and IiS to respectively maintain focus on their core propositions. The FAST brand will continue to strenuously lobby

government for a robust, effective and efcient IP regime in the UK and protect the IP rights of its members as

appropriate. The IiS brand will remain focused on driving best practice and consistent standards to advance the

professionalism in SAM.

For more information, please visit: http://www.fastiis.org

About IAITAMThe International Association of Information Technology Asset Managers Inc. (IAITAM) is the professional association

for individuals, organizations and providers involved in any aspect of IT Asset Management (ITAM), Software Asset

Management (SAM), Hardware Asset Management, and the lifecycle processes for IT Asset Management in

organizations of every size and industry across the globe.

IAITAMs mission is to provide real-world based skills development, and to support IT Asset Managers already setting

the standards for successful ITAM business practices such as, saving money, gaining control, reducing risk, increasing

accountability and improving performance.

Over the past 9 years, IAITAM has strived to support the IT Asset Management industry through expert training and

advice as well as lead the profession down a path of best practice to enhance the business drivers of ROI, Efciency,

Risk Avoidance and Professional Development for themselves and their organizations.

For more information, please visit: http://www.iaitam.org/


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References1. 432.30 is the average amount of unused software on a users PC

Typically support and maintenance costs 20% of initial software licence cost12

432.30 x 20% = 86.46 on-going software maintenance costs on unused software

89.36 is the cost of new licences that become shelfware / user / year5

89.36 x 20% = 17.87 on-going software maintenance costs on shelfware

86.46 + 17.87 = 104.33 total maintenance cost on wasted software licences / year

17m regular business PC users in the UK15

17m x 104.33 = 1,773,631,818 spent on maintaining unused software and shelfware licences in the UK each

year

2. In a survey of attendees at Gartners IT Asset Management, Procurement and IT Financial Management

Conference conducted in November 2010, 61% of the 144 respondents said they had been audited by at least

one software vendor in the past 12 months. Gartner Survey Analysis:

Survey Shows Another Increase in Software Vendor Audits? IT Asset Managers Should Prepare Now.

Jane B. Disbrow, Alexa Bona, Stewart Buchanan, Frank DeSalvo, Frances OBrien, Jo Ann Rosenberger, March

2, 2011

3. Duncan Jones, Principal Analyst at Forrester Research Inc., as quoted in Computing magazine, March 8, 2011

http://www.computing.co.uk/ctg/feature/2032105/cut-waste-licence-optimisation#ixzz1Im6d6zL7

4. Helpdesk Efciency Report 2010, Vanson Bourne

http://www.1e.com/contenthub/doc_download.aspx?id=44674123

5. IT budget = $12,350 / user / year12

1 GBP = 1.63 USD13

IT budget in GBP ($12,350 / 1.63) = 7,576.69

21% IT budget spent on software12

21% of 7,576.99 = 1591.10 spent on software per user per year

26% of software spend is on new software14

26% of 1591.10 = 413.69 spent on new software per user per year

21.6% of new software becomes shelfware (this report)

21.6% of 413.69 = 89.36

This gure does not include on-going maintenance

6. Duncan Jones with Chris Andrews, Rory Stanton, Forrester Research Inc., as quoted in

Software Pricing And Licensing Trends 2011: Software Sourcing Leaders Should Create Sourcing Strategies

That Take Advantage Of Profound Changes In The Software Market, April 5, 2011

7. Reserved

8. Duncan Jones with Christine Ferrusi Ross and Rory Stanton, Forrester Research Inc., as quoted in

Updated Q4 2010: Check your Software License Agreement for These Common Flaws

Update Familiar Contract Clauses to Accommodate Technology Changes, December 23, 2010


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9. Reserved

10. George Lawrie, Forrester Research Inc., as quoted in

Defuse Software License Time Bombs With Software Asset Management, July 9, 2010

11. 432.30 is the average amount of unused software on a users PC

17m regular business PC users in the UK15

432.30 x 17m = 7,349,100,000 historical total of unused software on PCs in the UK

This gure does not include on-going maintenance

12. IT Key Metrics Data 2011, Gartner, G00208190

13. Bloomberg Currency Conversion, April 7, 2011

14. Forrsights Software Survey, Forrester Research Inc., Q4 2010

15. Harris Interactive Survey for 1E, September 2008

16. Software waste per PC per year calculates as:

Unused software = 144 + 86 = 230

432.30 is the average amount of unused software on a users PC

432.30 / 3 years typical refresh cycle = 144.10 cost per year

432.30 x 20% = 86.46 on-going software maintenance cost per year

Shelfware = 89 + 18 = 107

89.36 new shelfware acquired each year5

Typical software maintenance fee = 20%12

89.36 x 20% = 17.87


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Software Efficiency Report-UK 2011