The proliferation of enterprise software over the last twenty years has contributed more to accelerate efficiencies and cost savings within companies than nearly any other innovation. Indeed software has been so successful in transforming organisations into lean competing machines, that many organisations credit automation and efficiencies gained through software as helping them weather the downturn and emerge stronger than before.
But the news is not all good. While software is one of the most strategic assets in which an organisation invests - it is also one of the most difficult and convoluted assets to manage. And a new survey recently released by Flexera Software, prepared jointly with research firm IDC, has found that a significant portion of that new tech investment is being wasted - and even mismanaged.
Lean Organisations Are Bloated with Unused Software
According to the survey, organisations are still investing heavily in software. 44 percent of survey respondents indicated that their software budgets would increase over the next 18 to 24 months.
But the survey also reveals a big problem emerging within these growing IT budgets - unused software, or shelfware. 56 percent of respondents (up from 49 percent only a year ago) say that 11 percent or more of their software spend is associated with shelfware, up from 49 percent last year. According to IDC, the market for packaged software was about $325 billion in 2011*, suggesting that the global overspend on shelfware could be staggering.
This statistic should signal a warning for CIOs and CFOs. Corporations have become expert in leveraging software to offset leaner staff during difficult economic times. But they've developed a blind spot - investing heavily in efficiency-creating technologies like software without really understanding how to ensure this critical asset is being optimally used. Consequently, an unacceptable proportion of that expenditure is wasted.
Organisations Acknowledge Their Processes & Controls Are Lacking
The survey also reveals that companies know they are bloated with expensive shelfware - and that it is a problem. A third of all respondents indicated they are either dissatisfied or very dissatisfied with their current method for managing software licences and usage (almost half of large companies over $1 billion in revenues reported dissatisfaction).
Moreover, those surveyed admitted that they do not have the systems in place to ensure optimised use of their software. For instance, due to the complexity of software licences and tracking licence usage, simply understanding the number of licences purchased and used is insufficient. Product use rights (i.e. upgrade rights, downgrade rights, secondary use rights, etc.) contained in the software contract detail how software licences can be used, by whom, in what circumstances and on what devices.
Only by optimising the software licence estate - reconciling product use rights with how employees are actually using the software - can organisations hope to buy only what they need and use what they have. Whether enterprises take into account product use rights in the management of their licences is critical to eliminating wasteful purchasing.
* IDC Market Analysis: WorldwideSoftware 2012-2016 Forecast Summary, Patrick Melgarejo, June, 2012.