Aspera was a sponsor of the Financial World of Information Technology Conferences, held this past July in Texas, so I attended the event. We were the only software license management specialist at the conference and quite a few attendees asked us about license metrics and how license consumption is measured.
After a few conversations, it was pretty clear that many managers understood neither the contractual nor the technical aspects of the licenses, and felt insecure about measuring and allocating software costs because of this. For example, one person spoke about complaints he had received because the company’s financial department could not explain the internal cost charging method for software and therefore could not properly handle discrepancies about the software charges.
What most CFOs don’t know is that a software license management project and resulting processes cover a cross section of IT and finance. So the CFO and Finance Managers stand to gain as much as the CIO and IT Managers.
Many of the problems finance departments have to deal with regarding software costs can be easily solved with license management. There are numerous decision-makers in different legal entities that have their own budgets. So centrally coordinating software decisions is the exception rather than the norm. With this situation, Finance Managers face some serious discrepancies:
- Unnecessary spending. For example because of a lack centralized budgets and transparency, different legal entities close the same contract separately. In the end, the CFO is left with the short straw, having to explain how this expensive inefficiency occurred.
- There is no financial overview of software demand, so no finance manager can accurately plan the budget.
- Despite unknown demand for a software product, the procurement department agrees to a flat rate for it. Now, external pricing and internal cost allocation is not possible.
- An inefficient business model for managing software licenses can create significant, often in the million dollar range, funding gaps that need fixing.
If you’re looking for material you can use to help convince the finance department that software license management needs support, go ahead and send them Software License Financial Management, an overview of how Finance Managers can use best practice software license management to add value to both their IT organization and the business that IT serves.