October 17, 2016
Globally, more than one-third of all software installed by organizations is wasted. In the U.S. alone, the value of waste is a staggering $30 billion. Putting that into perspective, $30 billion is the projected valuation of large global brand AIRBNB — that is the magnitude of waste that is occurring. It comes to $259 of unwarranted wasted per end-user — a cost that is fairly avoidable and easily manageable.
The findings are from a study about software waste conducted by a U.K.-based software lifecycle information firm. The report also goes on to show the underlying causes of software waste and ways to avoid it.
What is software waste?
Before we get into the findings of the report, let us first understand what software waste is and how it has been defined in the study. According to the study, software waste is software that has already been purchased and deployed to end-users’ desktops, laptops, or workstations, and goes unused for at least 90 days.
In order to represent a cost of waste, the study selected 35 software titles (out of the sample size of 1,800) to reach a conservative value. The results were interesting:
• Attachmate, Autodesk, and Microsoft applications had the highest average rate of software waste.
• Autodesk’s AutoCAD LT and Inventor had average waste of 58 percent and 61 percent respectively. These were followed by Attachmate’s Reflection X and Microsoft’s Visio Standard, each with 52 percent waste.
• Another interesting statistic showed that large corporates had lesser rates of waste than mid-sized ones. For example, companies with more than 100,000 employees suffered a 37 percent waste rate, while companies with less than 2,000 employees suffered a 41 percent waste rate.
The results also varied significantly by industry.
What are the causes of software waste?
It goes without saying that software waste has acute financial implications for the business. And we can analyze where this waste is occurring. But, to eliminate software waste, it is essential to identify what is causing purchased software to go unused. The study reveals that, globally, 37 percent of all software installed goes wasted. This problem isn’t getting any better either. The 37 percent number had not moved since they started tracking the data during the four-year long benchmark study.
So what is causing this waste and why aren’t businesses able to reduce it? The answer lies in the general approach toward IT that these organizations have taken. CIOs have de-prioritized cost-cutting and instead have turned their gaze toward adding value. Reducing software waste, which is seen as a cost-cutting measure, therefore, is often neglected. Another downside to this approach is these businesses would miss out on the value that reduction in software waste would have added to their organizations through improved innovation and lowered risk levels.
One more factor that was responsible for a poor software asset management program was when some companies adopted a one-size-fits-all approach, and in some others, it was the failure to communicate.
“Companies buy software they don’t need because of lack of communication and alignment between decision makers,” says J. Lance Reese, chief operating officer at The LIMU Company.
A business-user and an IT person evaluate software differently. While a business unit chooses software based on what it can do for them, the IT department would choose software based on how it works, its APIs, its database, etc. This disparity leads to software being purchased by the IT department that may not fit business requirements; or on the flip side, purchases made by the business units that go unsupported by IT or may not work in compliance with the business competencies. Either way, the end result is the same – software waste.
So how do you eliminate waste?
One of the key steps to reduce software waste and costs is to enable communication and compromise, led at the CIO level. A lot of time, money and frustration can be saved by understanding the business unit’s needs, and making the right software purchases for them.
Ironically another solution for addressing software waste is for IT departments to adopt automation. Automation helps address the problem of user-adoption. There are various software on the market that help increase user adoption of applications within an organization. However, the challenge most software asset management (SAM) professionals face is to secure a budget for automation merely on basis of a projected risk. But once the risk turns into a disaster, things can become expensive and off budget. This is where presenting a solid business case based on an organization’s own data comes into play. Building a business case based on not only how much the organization stands to lose, but also on how much it can gain by implementing automation, can empower an IT team to obtain the all-important budget sanctions.
Take a look at the detailed report of the study and the magnitude of software waste that occurs globally every year for more details.
Lucjan Zaborowski is the head of digital for 1E. Lucjan is also an experienced marketer and project manager with a solid understanding of digital acquisition and optimization, product marketing and program management. He has over six years of experience in multi-channel digital acquisition. He is keen to learn and stay up to date with the latest marketing trends.