Dive Brief:
- The shift to cloud-based software has added layers of complexity to the already challenging process of managing enterprise IT assets, according to Flexera’s State of ITAM report, released last week.
- As SaaS solutions proliferate, organizations are struggling to keep pace, the report found. Less than half of 500 IT asset managers surveyed by the software company reported success in tracking usage, rightsizing contracts and controlling cost.
- While the frequency of vendor audits didn’t significantly increase year over year, IT asset managers are turning their attention to the fine print of cloud-based software contracts, the report said. “The more complex the licensing scheme, the more likely you're going to have noncompliance problems,” Brian Adler, senior director of cloud market strategy at Flexera, said.
Dive Insight:
Eliminating redundancies, canceling unused seats and consolidating vendor contracts can all help reduce the spread of costly SaaS bloat. But even the leanest IT operation can run afoul of painful vendor audits.
The report found 15% of organizations paid $5 million or more in fines as the result of vendor audits in the past three years, up from just 9% the prior year. Roughly half of those respondents faced fines of $10 million or more.
“Rarely do you get out of an audit scot-free,” Adler said. Companies can easily fall out of compliance with enterprise license agreements, particularly in a hybrid ecosystem running dozens of proprietary applications.
“Licensing in cloud is a whole new ball of wax,” said Adler. Some agreements allow software to run on-prem and in cloud, while others restrict usage to specific environments.
“If you don't make sure all the licensed boxes are checked before you move an application, it may not be in compliance and you end up paying the penalty,” Adler said.
Respondents reported a significant year-over-year increase in the importance of scrutinizing AWS contracts in this year’s survey, a reflection of the shift to cloud-based software consumption.
But Microsoft’s expansive suite of on-prem, SaaS and Azure software products demanded the most attention, the report found.
“Microsoft has more tools, software packages and licensing configurations out there than anybody,” Adler said. “I don’t know anyone who understands the full Microsoft licensing suite.”
Adler said one enterprise client had considered software license analysis as a potential use case for generative AI. “It might be able to read the fine print and check all the boxes that you as a human might miss.”
Pressed to optimize spending, many organizations are turning to FinOps principles for guidance and placing IT and software asset managers in closer proximity to the C-suite.
The number of ITAM teams who report directly to a CIO or CTO nearly doubled to 43% in this year’s survey, up from 22% in 2022.
“We’re starting to see the emergence of ITAM from the depths of vendor management and procurement, which is important,” Adler said. “They’re not going to get the support they need unless they’re in a more visible position, and the CIO/CTO reporting structure gives them that visibility.”
