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Software Asset Management:

Optimizing the Value of Software Investments

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Introduction

Information Technology Asset Management (ITAM) offers a holistic approach to managing IT resources across their lifecycles. While the preceding article explored Hardware Asset Management (HAM), another equally important dimension is Software Asset Management (SAM). SAM governs the acquisition, deployment, utilization, and retirement of software applications, licenses, and subscriptions, ensuring that organizations maximize value while minimizing compliance and financial risks. According to ISO/IEC 19770-1:2017, SAM is designed to provide both transparency and control over software resources, aligning them with organizational needs and external regulations.

 

Defining Software Asset Management

SAM is not simply about tracking installations; it represents a structured discipline aimed at ensuring that every software product within an organization is licensed, used, and maintained in alignment with business objectives. Barone (2020) notes that SAM encompasses processes for license compliance, vendor management, contract optimization, and financial accountability. For example, when a company purchases enterprise-wide Microsoft 365 subscriptions, SAM ensures that these licenses are assigned correctly, monitored for usage, and reallocated where underutilization is identified.

The Software Asset Lifecycle

Much like HAM, SAM operates within a lifecycle framework. The journey begins with planning and acquisition, where organizations forecast their software needs, negotiate vendor contracts, and evaluate licensing models. A financial institution, for instance, may analyze whether a per-user, per-device, or enterprise agreement best suits its workforce.

Once software is acquired, it enters the deployment stage, where installations are monitored, entitlement records are updated, and licensing data is centralized. This ensures that each installation is traceable, preventing accidental over-deployment.

During the usage and optimization stage, SAM provides insight into how software is consumed. Usage analytics often reveal that many licensed applications remain underutilized. By reharvesting unused licenses or downgrading subscriptions, organizations can achieve substantial cost reductions.

Finally, the lifecycle concludes with retirement and decommissioning, where unused or outdated applications are removed, contracts terminated, and compliance risks reduced. This process also prevents “shelfware,” or purchased software that sits idle without providing business value (Gartner, 2021).

Benefits of Software Asset Management

The advantages of SAM extend beyond financial savings. Cost optimization is a primary benefit, as reallocation of unused licenses often translates to millions in savings for large organizations. Compliance is equally critical, particularly in light of vendor audits, which can impose significant penalties for noncompliance. A proactive SAM program reduces the risk of audit failure by maintaining accurate entitlement and usage records.

Operational efficiency also improves when software usage data informs decision-making. For instance, if analytics show that only a fraction of employees are using advanced features of a premium software suite, the organization may switch to lower-cost alternatives without compromising productivity. Furthermore, SAM supports strategic vendor negotiations by providing accurate consumption data, strengthening the organization’s position in renewal discussions (Thomas & Tanner, 2020).

Challenges in Implementing SAM

Despite its benefits, SAM introduces several challenges. One of the most pressing issues is the complexity of software licensing models, which vary widely across vendors and products. Enterprises managing hundreds of applications may struggle to interpret terms and conditions consistently.

Cloud-based software introduces another challenge. With the growth of Software as a Service (SaaS), organizations must adapt their SAM practices to track subscriptions, auto-renewals, and consumption patterns. Shadow IT further complicates this process, as employees may independently subscribe to SaaS applications without IT oversight.

Integration remains a hurdle as well. Without alignment between SAM tools and IT Service Management (ITSM) systems, software data may remain siloed, limiting visibility and undermining compliance efforts.

SAM and Its Relationship with ITAM and HAM

SAM does not operate in isolation. When combined with HAM and other ITAM domains, it provides a comprehensive view of organizational assets. For example, linking SAM with HAM ensures that software entitlements are aligned with the hardware on which they are installed, strengthening audit readiness. Integration with Service Asset and Configuration Management (SACM) further enhances visibility, as software is recorded as configuration items in the CMDB, providing clear dependencies between services and applications (Axelos, 2019).

Conclusion

Software Asset Management is a vital component of IT Asset Management, enabling organizations to achieve cost optimization, compliance assurance, and strategic alignment of software resources. By managing the lifecycle of software assets from acquisition to retirement, SAM helps organizations avoid unnecessary expenditures, mitigate compliance risks, and improve decision-making. Although challenges such as licensing complexity, cloud subscriptions, and shadow IT persist, a mature SAM practice provides significant business value. As IT environments continue to evolve, SAM’s role within ITAM remains indispensable, working alongside HAM, CAM, Information Asset Management, and SACM to deliver holistic governance of IT resources.

 

References

• Axelos. (2019). ITIL Foundation: ITIL 4 Edition. AXELOS Limited.

• Barone, P. (2020). IT Asset Management: A Pocket Survival Guide. Van Haren Publishing.

• Gartner. (2021). Market Guide for Software Asset Management Tools. Gartner Research.

• ISO/IEC 19770-1:2017. (2017). Information technology — IT asset management — Part 1: IT asset management systems — Requirements. International Organization for Standardization.

• Thomas, R., & Tanner, M. (2020). Data governance and information asset management: Ensuring compliance and business value. Journal of Information Systems Management, 37(3), 210–220.