Their Take: Software Asset Management in the Age of Blockchain

by Jeremy L. Boerger

CIOs, CTOs and even CFOs face an enormous challenge: how to keep track of their information technology investment and ensure IT is adding value to the overall business.  There is a dizzying array of acronyms — ITAMS, SAMS, FinOps, CMDB, SaaS, etc. — that promise to provide clarity to the chaos and yet fail to deliver.  But, more importantly, there is a solution on the horizon: blockchain.

First, a quick primer:

How SAM Fits into ITAM

ITAM (Internet Technology Asset Management) allows you to plan and manage the entire lifecycle of all of your IT assets. ITAM enables you to maximize value, control costs, manage risks, meet regulatory and contractual requirements, and make the right decisions.  SAM (Software Asset Management) is a subset of ITAM. In theory, SAM enables you to administer effectively, control and protect your software assets by managing their acquisition, development, release, deployment, maintenance and (eventual) retirement.

Your organization should be able to cut spending for software licenses by as much as 30% as a result of implementing a strong SAM program. But few, if any, organizations report even coming close to break-even with their ITAM and SAM programs.  According to a recent survey, more than 60% of executives surveyed admit their ITAM program is not even self-funding, let alone delivering cost-reductions, and nearly half acknowledge they are unlikely to do so within the next two years!

Why Do Most SAM Programs Fail?  Blame the Three-Headed Monster

Current SAM programs and tools are pulled in three different directions by three different groups, each with their own goals and agendas.  Failure to recognize their needs and demands are the primary drivers of bloated IT budgets:

Head #1: Software Publishers — Their goal is to generate revenue above all else. Revenue enables them to develop innovative products, stay competitive and make their shareholders happy.

Head #2: Corporate Customers (you) — Yes, you.  Your goal is to acquire the best, fastest and most cost-effective IT services and achieve an excellent ROI over the lifetime of each product.  It seems obvious to state your part in this problem, but, as they say, knowledge of the problem inherently changes the nature of the problem.

Head #3: Corporate End-Users — Their goal is to be able to use the latest and greatest software so they can meet and exceed their business requirements and project goals.

Each group cannot trust the other two to not undermine their goals. The software publishers are worried about software piracy undercutting their sales revenue; the corporate customers are worried about cost, compliance, and license audits; and the corporate end-users just want to get the job done the fastest and easiest way they know how.

Enter the Dragon: Blockchain

A blockchain-based SAM could solve this problem because blockchain was invented to foster trust between hesitant participants. Here’s how:

Smart Contracts: Smart Contracts contain automated instructions and rules stored within the Distributed Ledger (more on that below). They guide the formation of block data without user intervention. As a corporate client, you could stop worrying about going out of compliance — when you need a license and don’t have one, the Smart Contract would automatically transfer a license not being used or kickoff the purchase of a new one.

Distributed Ledgers: Every participant in the blockchain network has access to a copy of the record of transactions, or the ledger.  Furthermore, all these transactions are automatically shared between them. Everyone can instantaneously see when a transaction is happening. A blockchain-based SAM tool would allow software publishers to see which version of their software is being used.

Even better, all the copies of the ledger should be encrypted and limited – publishers would know how many of their licenses are being used at all times but they can’t view exact names, the nature of the work, IP addresses, etc. – all of which are cyber-security risks.

Immutable Records:  With blockchains, every action is encrypted in such a way that if a participant attempts to alter a record after it has been entered and accepted into the Distributed Ledger, all participants are instantly alerted and can come together to agree on a solution.

You can see how SAM Blockchain could foster trust between participants that inherently can’t trust each other.

The Benefits Of SAM Blockchain

Here’s how the Blockchain would benefit each head of the 3-Headed Monster:

  • For Software Publishers: It’s been estimated that a whopping 40% of software publisher sales revenue comes from software license audits. But that 40% costs them, considering how much they have to pay auditors to claw back that money.
  • For Corporate Clients (that’s you, remember): Software license audits force you to stop what you’re doing and scramble. SAM Blockchain would save you time, energy and money.
  • For Corporate End-Users: Employees would no longer have to worry about getting in trouble in order to do their jobs.

It’s painfully apparent that our current SAM tools and techniques aren’t delivering on their promises. We still deal with untrustworthy data, software breaches and painful audit penalties. I believe a SAM Blockchain solution could be the key to solving the underpinning problems and trust issues that cause most SAM and ITAM programs to fail.

Jeremy L. Boerger, the ITAM Coach, founded BOERGER CONSULTING with the idea of helping organizations “cut their software budget without buying less software”.  He also speaks professionally to pass along his 20+ years’ experience to the next generation of ITAM and SAM professionals.  His book, “Rethinking Information Technology Asset Management,” is in paperback and ebooks.  He makes his home in Cincinnati, Ohio, with his wife and three children.

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