By Andy McCue, 4 August 2005 15:15
NEWS Businesses are paying higher software costs and risk falling foul of the law by leaving the management and monitoring of licences in the hands of IT departments rather than accountants, according to a new survey.
More than half of the 400 senior finance professionals questioned in the Institute of Chartered Accountants in England and Wales (ICAEW) research, sponsored by Microsoft, said they leave the monitoring, auditing and policing of software use within their organisations to their IT departments.
More than two-thirds said they have processes in place to manage software assets but only one in five said they include a software audit within their financial review. Most checks are also done annually with only four per cent doing monitoring on a monthly basis.
Dr Paul Booth, technical manager at the ICAEW, warned that businesses need to take a risk-based approach to their use of software.
"They need to make a careful judgement of what they should do in the way of monitoring and control, bearing in mind the serious risks. On the one side, they risk wasting money if they are paying too much and, on the other side, they risk finding themselves on the wrong end of a dispute with a software supplier if they are paying too little," he said in a statement about the survey.
Vaughan Smith, head of software asset management at Microsoft, said it is vital that the finance department views software as an important company asset and manages it that way.
"Not only should it be good business sense for companies to know what software licences they own and what software they're using, they could be saving as much as 25 per cent on the costs of owning, maintaining and supporting this asset - but they need to gain control of it first and monitor it on a frequent and ongoing basis," he said.
Microsoft claims the benefits of good software management include financial security from unexpected licensing costs, elimination of software that is not being used but is still maintained, and good corporate governance.
"There needs to be much stronger involvement of finance departments when it comes to managing software assets," said Smith.
Comments
There are 5 comments. Join the discussion
1. Malcolm Smith
Why accountants, for goodness sake? There can be any number of professional functionaries within an organisation who should be responsible for the custody and good husbandry of items in use. In the Services, we used to appoint an inverntory holder to be responsible for a certain number of items, be they beds in a barrack block or navigational radar equipments in an aircraft. In civilian industry, it is unusual for items to be managed so closely, but there is no reason why it shouldn't be and no reason for software to be any different from hardware. At a mobile 'phone company I worked for I introduced an "Inverntory for Software", and it helped us to regulate how many licenses we needed for each application and helped us reduce maintenance payments. However, I would never have proposed the finance department as the area responsible for this inventory. In fact, the IT depapartment is ideally suited as they are the ones who sho know when an application is no longer providing any benefit for the company, or has a reduced number of users, or has been superceded by more cost-effective software.
2. Chris Walker
I agree with Malcolm Smith on this subject. The IT department, in conjunction with their users, are the only ones who know what software is installed, has become redundant, etc.
Of course, the accountants need to know what software is owned because it is an asset that needs to be tracked and depreciated in the company's accounts.
Why not just institute a system of communication to provide this information between the IT staff, who have it and can maintain it, and the accountants who need it but cannot hope to keep track but need the current information from time to time?
3. Simon Grey
My experience of accounts departments suggest that they are the last department who want or should be given responsibility for anything to do with IT asset management. I think that this is because what "Accounts" have foremost in their minds is complying with the regulatory aspects of their task in an organisation. Do they have the time, man power or skill sets required for anything that could be viewed as secondary to their role? I don't think so!
Take a look at the amount of redundant kit that can not be removed or has been in long term storage because the Accounts Department have no idea of it's value. Or their inability to provide detailed analysis of any assets in use at any given time - this information is nearly always provided by the IT Department. Perhaps the real solution is integrating your asset management to your finacial systems. Just a thought but is Microsoft going to release software that does this anytime soon?
4. Michael Fischer
MS thinks accountants count better ....
Apparently Microsoft found that accountants order more licences than IT folks. I think if you watch the tone, keep your eyes on 'risk'.
5. anonymous
Lets see an accountant try and figure out how to license a quad processor Oracle 11i server, or figure out the license requirements for a Citrix farm hosting a multitiude of applications licensed to different degrees to different organisations.
I'd like to see an accountant who understands the implications of a terminal services license being issued on a per-machine basis and understand that they need more of this type of license especially when the terminal server is available publicly irrespective of whether it hosts Citrix or not.
I'd like to see one accountant who has a clue about what happens on the desktop level right up to the software requirements of a server.
I'd like to see one accountant who when using an auditing package uncovers 1 installed copy of office on a terminal/citrix server, and then watch them try and figure out why this is when they are licensed for 50 copies on a network with 50 client computers. I'd like to watch the look of shock in their eyes when they work out the implications of installing a single licensed copy on the same server for everyone to use. Just because you are licensed for 50 copies of an app, doesnt mean that you are licensed for 50 connections to use that app.
Licensing works best with those that understand the requirements of the infrastructure deployed.