In 2021, the market for software asset management (SAM) was worth $2 billion, but what really is this practice having such a whopping market worth? Should you invest in it?
By the end of this article, you’ll have a clear understanding of whether or not you must invest in it.
SAM is a practice of monitoring and managing software assets that exist in your organization.
This doesn’t just focus on the number of software licenses you have, but also how often each piece of software is used, who uses it, and if there are any redundant copies floating around.
In the ecommerce world, software asset management systems are especially important to ensure that all licensed software is used correctly and remains compliant with standard licensing terms.
This blog post gives you an overview of SAM and why it’s so critical for ecommerce businesses.
You will learn:
- What is SAM
- Why is it important for ecommerce
- Roles SAM plays in ecommerce
So, let’s get started with the overview of SAM:
Software Asset Management (SAM)
Software asset management is a long-term process of managing software licenses.
This typically begins with identifying all the software that is present in your organization and logging it into the software inventory management system.
In the inventory, you log information such as:
- What software is running on what machines
- How many people are using it
- When it’s due for renewal
- If the license type is appropriate for the usage, etc.
The next step is to track when each software license expires and then renew each one appropriately.
An important note is that this process involves both software licenses for desktop computers and for software that runs in the cloud, such as SaaS services.
To make all of this work smoothly, it’s important to have all of your software licenses centralized in one place, both in the cloud and on premise.
To do this, implement a software asset management tool. Make sure to research some of the best software asset management tools available in the market and choose one that caters to the specific needs of your ecommerce business.
Setting up a software management tool allows you to have a single system of record for all of your software licenses.
Why is SAM Important for ecommerce?
As an ecommerce business scales, it eventually comes across the need for a proper software asset management process.
This is because, with the growth of the business, the number of software products that are being used also increased.
Without an effective method of tracking and managing these licenses, your organization can expect the following problems:
- The risk of non-compliance with licensing terms:
When you’re not compliant with license terms, you might be charged penalties or have your accounts shut down.
- The risk of getting caught in an audit:
If auditors find that you’re not in compliance, they might close down your business. They may even ask you to pay all the illegal fees that you’ve avoided since you first started using the software.
- Lack of visibility:
If you don’t know what is installed and where, you will have a hard time managing it. This includes knowing if you’re using the latest version of the software.
These are just a few problems you may have to incur if a solid software asset management process isn’t in place in your ecommerce business.
If your software asset management isn’t in place, you are pushing your ecommerce business into many other unforeseen complexities.
Roles SAM plays in ecommerce
1) Affects your marketing with help of AI
SAM affects your marketing activities. It deviates a P—price—from 4Ps of your marketing mix.
How? Let us explain:
Most of your ecommerce business’s operations are online, so you use a lot of different software. From onboarding your clients and employees to scheduling your daily business activities to receiving or processing the payments, you use some kind of software tool.
Since you’re using so many software tools, you spend a lot on them, increasing your overall costs, and that has some effect on your pricing strategies—so on your revenue at the end.
Now, let’s remind you why businesses exist. They exist to maximize revenues and earn as much as they can, right?
When you’re using SAM, you have some control over your software spending (as mentioned in the later section) and you won’t be wasting your business earnings on redundant software licences.
Later, when you’ve saved your spending due to SAM, you can use AI for marketing to know the best price for your ecommerce products—the optimal price at which you can earn the most.
Furthermore, you can also use AI for marketing to set dynamic pricing. As the name suggests, dynamic pricing changes with respect to supply and demand.
For instance, if you’ve 5 pieces of a product available in your inventory and their demand is high, AI automatically increases their price. Similarly, if you have many pieces available and their demand is low, AI decreases their prices.
Dynamic pricing is an amazing application of AI for marketing which is used by many ecommerce businesses nowadays.
If you’re not already using it, this is the time you must start doing so, and enjoy the benefits of supply and demand fluctuations.
The first step, though, is to implement a SAM, so that you can cut the software costs of your ecommerce business, and increase the total revenue this way.
2) Helps have complete knowledge of and control over the software spending
One of the major challenges organizations face with regards to software is that they don’t have any visibility or control over their software spending.
In the case of large ecommerce businesses, this can be several millions of dollars. It’s not just about the initial cost but also maintenance, upgrades, and support.
Similarly, for small and medium ecommerce businesses, it is not just the initial cost but also the recurring cost that is a cause for concern.
When you don’t know how much software you have, where it is being used, who is using it, and for what purpose, you don’t know the true cost of ownership. It also leaves room for misuse of the software.
SAM helps you have complete control over your software spending by providing visibility across the entire software lifecycle—from a software’s procurement to its removal.
Using SAM, you can reduce software costs by 30%.
3) Track license usage and identify redundant licenses
Another challenge that organizations face is that they lose a clear picture on how many licenses of software they own if they don’t manage their software licenses properly.
Similarly, they don’t know the number of locations where the software is installed and being used.
This makes it difficult for them to identify the redundant licenses and take corrective actions.
If your ecommerce business is big and you use a lot of different software, you can easily lose track of them if you’re not managing them properly.
SAM helps you track software license usage across the organization to identify the redundant licenses. A more precise license control could result in annual savings of nearly $2 million.
It also helps you identify the locations where the software is installed and being used. By doing this, you identify the unutilized software and take corrective actions.
For example, if you have 50 licenses of a specific software, but only 30 licenses are being used, then you can identify the redundant licenses and take corrective actions such as removal, transfer of licenses to other locations, or reduction in the maintenance.
4) License and contracts management throughout software lifecycle
The SAM system helps you gather information on the existing contracts, license types, and renewal dates.
By registering the purchased software in a SAM system, you can keep track of the software versions, license types, and contract details.
It also helps in monitoring the contract expiry dates so that they can be renewed in advance to avoid any contract breach.
Also, you’ve a bird’s eye view on all of your software so you know when a new version of some software arrives, and you can update it on time.
5) Being license-complaint
When you’ve a lot of software assets being used throughout your ecommerce business, it can be tough to keep track of their licenses.
A software’s license may expire and you’ll have no idea until you get a penalty notice from a random audit over your business.
In an audit carried out by Oracle, 15% of the companies had to pay non-compliance fines of $1 million or more.
However, when you’ve SAM in place, you need not worry when the software license expires. It automatically pings you once a software has reached its licensed use.
Better, setup license’s automatic renewal process, and you’ll never have to worry about using unlicensed software unintentionally.
SAM for ecommerce—a worthwhile investment
All in all, software asset management is an important process that every business should implement.
It’s even more important for ecommerce businesses, as they tend to use more software programs than other businesses and license management is critical for ensuring compliance with software licenses.
This system allows you to easily track all of your software licenses, analyze usage, and make upgrades when necessary.
It also provides insight into your company’s software usage, which is helpful for managing your employees and ensuring that they are using the software appropriately.
By Saifullah Napar