Outsoured SAM – A Catastrophe?

Software Asset Management is a complex profession, so much so that many organisations entrust the responsibility to other parties. In many cases these parties have some kind of existing relationship with the sponsor, often SAM is supplied by the Strategic Outsourcing Organisation, or Business Partner of a major software supplier.

Since most standard Software License agreements contain clauses prohibiting the transfer of responsibility to external organizations any mistakes made by outsourced SAM remain the responsibility of the sponsoring organization.

This often misunderstood premise can have very expensive consequences for the CIO and board of larger organizations. When SAM is put “out of sight” and “out of mind”, entrusted to third parties that profit from software supply – poor business practice prevails.

Strategic Outsourcing (SO’s) became popular in Australia during the mid 1990’s. Larger organsations then running complex mainframe software began to entrust both the systems management and its software to large SO’s.

These SO’s grew fat in the lucrative governance and financial sector contracts where the vital software and its support streams were absorbed into the outsourcing agreement. Over time much of the business critical software from many software publishers became the property of the SO.

This was presented as an apparent protection against supplier audit, the SAM function for both customer and supplier owned software being supplied under the SO agreement.

SO’s with ties to software vendors rapidly adopted this path as the profit on software was used to prop up otherwise unprofitable contracts and give a veneer of overall cost saving when compared to insourcing.

Gradually this substantial extra profit, sanctioned by many software vendors as it represented a far lower cost of sales dealing with fewer larger entities grew to the degree that it was used to protect the largely old school American companies against the lower cost and fitter Asian entities.

The danger for customers comes in the form that little true communication of the state of the software asset is hidden from the customer and much of the outsourcing stream integrates the overall software billing, hiding any inadvertent redeployment. The true state of the asset is often far better known by the software vendors and their auditors than the customers.

The Lock-In

Fisher Australia maintains that the customer should at all times be exposed to the complete software inventory deployed in the customers name and its true best commercial value. All too often customers are intentionally kept in the dark by the SO’s and since the original vendor relationship is severed the true commercial value is never known.

This all results in an audit catastrophe when the customer either moves or threatens to move to a new lower cost SO that has no tie to below market value software. What looks like an SO bargain often turns to sand when the vendor auditors suddenly appear, armed with all the confidential information (gained thru the SAM back door) ready to perform what is known in the industry as a “Vampire Audit”.

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