Good Governance - Effective use of IT

Written evidence submitted by Software Industry Research Board (IT 32)

SUMMARY

· Public sector organisations are under unprecedented pressure to cut departmental budgets; and IT is not exempt.

· By employing software asset management processes, organisations can control the costs associated with software – which can represent anywhere between 30 – 35 of total IT budgets.

· Effective software management can reduce overall IT costs by more than 20 per cent, helping public sector organisations to achieve significant savings without affecting public services.

· There are other, equally important benefits of implementing a software asset management programme, including compliance, reliability and performance optimisation.

1) INTRODUCTION

1.1. The £18 billion annual public sector IT budget is one of the areas earmarked for cuts in the government’s plans to reduce departmental budgets by between 20 and 40 per cent.

1.2. These austerity plans are forcing every government department to look at alternative ways of delivering services and new technologies that can provide cost savings.

1.3. Budget reductions in the public sector are nothing new. Socitm, the Society of IT management in the public sector, recently published a report revealing that since 2006 local government IT spending has fallen by 19.3 per cent in real terms. The difference with today’s budget reductions is that they will affect every level of government. These cuts will be very real and arguably will be the hardest to manage in our recent history.

1.4. In the run-up to the last election, both opposition parties committed to making cuts in government IT spending. Since then, the new coalition government has confirmed that ID Cards will be scrapped; the ContactPoint child protection database terminated; and the cost of England’s NHS National Programme for IT (NPfIT) re-examined. Additionally, a number of quangos have been or will be abolished. These include the UK Film Council, the Health Protection Agency, National Patient Safety Agency, Appointments Commission, Human Tissue Authority, NHS Institute for Innovation and Improvement, all eight regional government offices, eight of the nine regional development agencies, Investors in People UK and a host of others.

1.5. Public sector IT projects have had a poor reputation, both in terms of value for money and on-time delivery. Whether or not this reputation is fully justified, all departments must exercise rigorous control over their technology spending if they are to meet the targets set by government and withstand closer public scrutiny.

1.6. This paper aims to demonstrate that software, like any other asset, must be managed throughout its lifecycle to achieve its maximum, potential benefit. Furthermore, it will show that public sector organisations can make significant savings from their IT budgets if they learn to manage their software assets more effectively. Software can represent anywhere between 30 – 35 of the total IT budget, and effective software management can reduce overall IT costs by more than 20 per cent. Consequently, in this era of austerity and cuts, it is a rare example of where the public sector can save significant amounts of money without impairing public services.

2) SOFTWARE ASSET MANAGEMENT

2.1. During the last 25 years software has evolved into an invaluable business asset; however, a considerable proportion of organisations continue to manage the software lifecycle in an ad-hoc fashion. Furthermore, the proportional value of software has increased in relation to overall IT budgets: while hardware costs and human resources costs have both reduced in real terms, the unit cost of software has continued to increase alongside the increased number of applications in any one estate.

2.2. Any single government department may be using thousands of computers, based across the country in a mixture of centralised and remote locations, running numerous versions of operating systems and applications residing in datacentres and distributed environments. Given the highly dispersed nature of many government departments there is an additional reason to manage software – control and compliance.

2.3. Organisations need to keep a detailed view of how, where and which licences to buy. This process is Software Asset Management SAM and should not be viewed as an optional administrative process, but rather as a key mechanism for transforming software from a cost centre to a strategic asset. For a public sector struggling with budget cuts, it can deliver a number of benefits, including controlling costs associated with software assets, improving the performance of those assets as well as the organisation and its employees and compliance with the law.

2.4. Over the last ten years, the main driver for Software Asset Management has been compliance. Research conducted on behalf of the Software Industry Research Board (SIRB) shows that 76 per cent of organisations with an SAM programme consider ‘surviving’ a software audit one of their key SAM goals – more so than any other objective.

2.5. As more organisations recognise their legal obligation or are reminded of it by the software industry, enforcement groups or publishers, many have been driven simply to complete a license compliance review which has little return and in most cases has been seen as a costly exercise.

2.6. Recent developments such as the Sarbanes-Oxley Act in the US, the Turnbull Report’s recommendation in the UK, the publication of the ‘Best Practice for Software Asset Management’ guideline from the IT Infrastructure Library (ITIL) and the launch of the ISO/IEC 19770-1 Software Asset Management International Standard, have meant that Software Asset Management has risen up the business agenda and has become a priority for CIOs.

2.7. Despite this, not all CIOs are aware of the importance of SAM. Inevitably, that means IT overspend on software continues apace, while organisations remain open to risk.

2.8. The primary objective of Software Asset Management, therefore, is to manage, control and protect an organisation’s software assets, minimising legal risks while maximising return on investment (ROI).

3) WHY MANAGE SOFTWARE?

3.1. Whether you are operating in the public or private sector – the challenges remain the same. What is driving the challenge for the public sector is the urgent need not only to contain costs, but to reduce them while keeping control of processes. Managing software estates is essential to deliver three core outcomes:

• Cost reduction and control

• Performance optimisation

• Compliance management

3.2. Cost reduction and control

This is the most powerful argument for software asset management in the public sector.

Broadly speaking there are four core areas where cost savings can be found:

• Control of software acquisition costs

• Control of hardware costs

• Control of software support costs

• Risk mitigation of legal costs

3.3. Software acquisition

Procurement practices need to be clearly defined so that effective management processes are in place to minimise software acquisition costs. This can be achieved by identifying and communicating existing and future software needs, budgeting for acquisition and buying only what is needed.

3.3.1. A Software Asset Management programme empowers procurement teams and align strategies. By providing management information as an output of measuring application utilisation and identifying redundant assets where project-based demand has expired, existing software assts can be readily identified. This redues both ad-hoc purchase requirements and mis-licensing, while supporting accurate project budgeting.

3.3.2. Within the IT budget, planned software spend needs to be a separate line item; and an effective tracking mechanism is needed to keep an eye on planned versus actual purchasing.

3.4. Hardware

A Software Asset Management programme enables any organisation to identify and communicate to employees what software is currently supported, as well as expected upgrades, disposals and retention polices for data and programs.

3.4.1. In collating and sharing this information, all software, data and programs can be managed in an effective way with the minimum of disruption.

3.4.2. The removal, or retirement, of software program which are no longer used or supported frees space and alleviates system demands on hardware platforms. This means organisations can avoid the cost of expensive hardware upgrades caused by memory being taken up unnecessarily.

3.5. Software support and maintenance costs

By identifying what software you have, what you intend to have and when you will cease to support legacy programs, you can control your software support and maintenance costs.

3.5.1. Any organisation with effective software management processes can identify the degree to which support and maintenance contracts should be renewed.

3.5.2. In organisations where new project requirements are limited and the environment is largely static, support and maintenance software costs may represent almost the entire software budget and can only be effectively reduced with accurate usage and demand detail.

3.6. Risk mitigation

Managing your estate through a software asset management process will reduce exposure to the risk of legal challenges, fines and reputational damage., Crucially, it also reduces ‘unplanned spend’. One of the most common and damaging outcomes of non-compliance is that few firms prepare for the fines that they could incur. This unplanned expenditure can have a serious impact on an organisation’s cash flow and bank balance.

3.6.1. The process will create a record of all the documentation you need to avoid this risk, including:

• A written statement of your organisation’s software policy

• Evidence of communication with employees

• A total inventory of your estate

• All documentation of actions undertaken in support of

management processes

4) ADDITIONAL BENEFITS

4.1. Performance optimisation

Cost control is not the only benefit associated with software asset management. Performance improvements across an organisation can also be delivered through efficiencies or soft benefits.

4.2. Reliability and quality

The process of adopting a software asset management programme will ensure the quality and reliability of the software estate itself due to constant review of software relative to business requirements.

4.2.1. Illegal software will be flushed out and with it the inherent threat of viruses. Licensed software on the other hand offers the assurance of product authentication and quality as well as the warranty of the software publisher, all documentation, manuals, tutorials, product support and upgrades.

4.3. Rationalisation and compatibility

Given the sheer number of software applications on the market today, one of the biggest issues confronting IT departments is that of compatibility.

4.3.1 By managing the lifecycle of all their software assets, organisations can generate the information they need to address this issue effectively, ensuring that employees in one arm of an organisation can access and use documentation from another.

4.4. Change

Anticipating future software needs is integral to the software asset management process. By undertaking a comprehensive review, organisations will be in a far stronger position to anticipate future software requirements, enabling cost efficiency of projects and accurate decisions on risk.

4.4.1. This process will also help organisations avoid acquiring software outdated software that vendors or publishers is likely to discontinue, or from which they remove support.

4.5. Productivity

Software asset management ensures that employees have the tools they need to do their jobs efficiently, and the training they need to use these tools effectively.

4.6. Managing complexity

The evolution of new software delivery methods has made the software environment much more complex. The emergence of terminal services, desktop virtualisation, cloud computing and other delivery models means that end users typically take a hybrid approach to software delivery.

4.6.1. Conventional management techniques and approaches connected with native software installation will continue to be required: often, however, data integration and de-duplication reflecting various elements of the organisation’s estate will be required.

4.6.2. Collectively, the complexity of hybrid approaches and licensing programmes creates an enhanced requirement for a robust and efficient Software Asset Management programme capable of managing demands of evolving approaches to software delivery.

4.7. Compliance management

Software is protected under copyright law and cannot be used, reproduced or distributed without the express consent of the rights holder or publisher.

4.7.1. Software is licensed to a user – not sold. This limits the right to use, reproduce and even distribute that program to the terms of the software licence agreement. This, it must be remembered, is a valid legal contract between the licensee and the software publisher.

4.7.2. In many cases a licensed copy of a software program can be installed and used on only one computer, unless otherwise stated. Each licence differs in its usage; this needs to be understood before any software package is installed and used.

4.7.3. Furthermore, copyright law exists to protect the publisher from infringements such as the unauthorised distribution and copying of the program itself. UK law is clear – violations are punishable with a maximum jail sentence of ten years and the potential for substantial financial penalties, let alone the damage to reputation of those being found to infringe copyright law.

4.7.4. Given the role government plays in the protection of intellectual property – it is, after all, the body that creates the legal framework in which the publishers and licensees operate – it would be highly embarrassing if a department failed to comply and was convicted of doing so.

5) CASE STUDIES

5.1 Hinchingbrooke Health Care NHS Trust

Hinchingbrooke Health Care NHS Trust provides a full range of inpatient and outpatient healthcare services to more than 161,000 people in West Cambridgeshire. The Trust has an annual budget of £63 million and is currently undergoing a major ward upgrade programme to help improve the patient experience.

5.1.1. Business Challenge

With the NHS charged with saving £15 billion by 2014, organisations like Hinchingbrooke Health Care NHS Trust need to make better use of their resources – whether it involves clinical staff or IT systems.

5.1.1.1. Software asset management is a key area for NHS organisations looking to reduce cost, and therefore a core component of the NHS IT Maturity Model (NIMM).

Developed by NHS Connecting for Health, NIMM aims to encourage trusts to enhance their IT management processes and move towards greater IT standardisation and optimisation.

5.1.1.2. Regaining control of the software estate would require extensive resources and licensing expertise. "We wanted to verify our licence position, but with 1,200 desktop computers and 70 servers this was a significant project and we were keen to complete it in the most accurate and efficient manner," said the Trust’s Desktop Services Manager, Barry Patton.

5.1.2. Software asset discovery

The Trust used software asset discovery and appraisal service from Computacenter. The service is designed to reconcile the software installed and used by organisations against the licences held to reveal an accurate licence position.

5.1.2.1 Following an evaluation of the Trust’s IT estate, Computacenter implemented Centennial Discovery as the best-fit discovery and inventory tool. This tool collates information regarding the software installed and used on each desktop, laptop and server throughout the trust’s IT infrastructure. This data formed the basis for a software asset appraisal.

5.1.2.2. As part of the appraisal findings, Computacenter highlighted any discrepancies between the licences owned by the trust and the software installed as well as opportunities to maximise utilisation. The appraisal not only covered standard office-based software but also specialist healthcare applications, and helped to identify unauthorised applications that had been installed on NHS devices.

5.1.2.3. As well as establishing an accurate licensing position, the report made nine key recommendations on how the Trust can enhance software asset management on an ongoing basis. These recommendations included keeping an up-todate inventory of software installed and harvesting licences from end-of-life devices.

5.1.3. Results

The Trust now has a comprehensive understanding of its software assets and is implementing Computacenter’s recommendations to maintain control of its estate. "Computacenter’s report showed that we did not have any significant under- or over-licensing, but without undertaking the project we would not have been able to demonstrate this to vendor auditors or NHS Connecting for Health," comments Barry.

5.1.3.1 This ability to prove compliance will entitle the trust to access centrally managed software in the future, such as Windows 7 and Microsoft Office 2010. The Trust is already assessing Microsoft anti-virus software, which could potentially save the trust £20,000 a year in cost-avoidance.

5.1.3.2. Enhanced visibility and control of its software estate has also enabled the Trust to:

• Enhance the efficiency of software management maintaining a balanced licence position without needing to invest in extensive resources.

• Helping staff to work faster and smarter: The trust now has visibility of the software versions on each hardware device, which means it can ensure staff have access to the latest versions.

• Make cost savings: the Trust has been able to reduce costs by maximising its existing licences in three ways: freeing up idle licences for re-use; harvesting licences for redeployment from end of life devices; and identifying over-licensing, which has resulted in surplus budget to invest elsewhere.

5.1.3.3. "We now have peace of mind that we are fully compliant with our licensing agreements, and are working towards better software asset management practices that will enable us to increase efficiency and reduce cost, freeing up more resources for patient care," concluded Barry.

5.2. Northwest Regional Development Agency

The Northwest Regional Development Agency (NWDA) promotes economic development in Northwest England. The agency leads by example in adhering to established guidelines for IT excellence and encourages businesses to follow best practices. These guidelines include Software Asset Management (SAM). In 2003 the NWDA implemented a SAM program that the agency has continued to refine over the years.

5.2.1. As early as 2003, the NWDA recognised the need to include SAM as a fundamental part of IT operations. At that time, and on its own initiative, the agency conducted an inventory of software and licenses and compared it with an analysis identifying the products that the organisation actually needed. Next, the NWDA developed a comprehensive SAM programme that includes the following policies and practices:

• Standardising the IT environment on the Windows XP and Windows Server 2003 operating systems

• Defining a standard disk image for first-time setup of all agency computers

• Restricting users from making significant system changes

• Establishing a formal, written policy for software usage, distribution and compliance

• Maintaining an up-to-date list of software titles and licenses and storing licensing records in a fireproof safe

• Giving the IT department sole authority for purchasing and distributing software

• Using automated third party tools to deploy software and maintain license keys

• Entering into an Enterprise Agreement to cover Microsoft software

• Licensing standardised software for employees to use on their personal computers at home and establishing usage policies for these computers

• Joining the Microsoft Software Assurance maintenance programme

5.2.2. Through SAM, the NWDA has improved IT efficiency and reduced costs. SAM also contributes to best practices that serve as an example in improving efficiency through high IT management and quality standards. Automated SAM tools help the department use staff more efficiently, avoiding the cost of hiring additional workers. Also the NWDA is a government agency that carefully tracks its licenses, so it benefits from the government’s bulk buying discounts.

5.2.3. The NWDA know exactly what its software assets and needs are before entering into price negotiations with vendors. As a result, the agency buys the right number of licenses at the right price. According to the NWDA it has saved as much as £68,000 a year in IT costs.

January 2011