By Eric J. Feldman
Financial literacy has always been a personal interest of mine. I am sure that you have heard of a person of modest means who turns out to be very wealthy, or someone with a very high income that is constantly in debt with no retirement savings. I have always been fascinated with how different people approach finances, so I was quite interested in the recently published “Global Financial Literacy Survey” by Standard & Poor’s Ratings Services.
This survey asks just 5 questions covering four financial concepts: debt, risk, inflation, and savings, and compiled data from more than 150,000 adults in 148 countries. The goal was to create a measurement of global financial literacy. The results are interesting. “Financially literate” as this survey defines, is correctly answering 3 out of 5 questions.
I want to share just a few key points. According to the survey, 57% of adults in the United States are financially literate. Of the 4 topic areas, the concept of interest seems to be the most challenging and least understood. For example, just 58% of adults who save at a financial institution correctly answered the interest question.
And when it comes to retirement savings, the survey shows similar results. 66% of those adults that tend to save for retirement are financially literate, while those who do not save are only 50% literate.
My personal conclusion around the survey findings is that people who are more financially literate are better able to manage debt, shop for financial products, and save for retirement.
Let's compare personal finance with software asset management. When we look at the software estate in your enterprise, I think the corollary to financial literacy is software asset management maturity.
If we were going to survey your company, similar to how Standard & Poor’s asked about finance, we would want to ask if you knew where your assets are deployed. We would also want to know if you knew how your assets are being used—particularly your software assets. Because large, unbudgeted audit true-up expenses can be hazardous to IT careers, companies are always looking to avoid software audits. Therefore, we would ask if you know whether your organization is compliant with your software licensing terms and conditions. And finally, we would ask if your software estate is optimized—are you fully leveraging all of your software license entitlements (including product use rights) and application usage data to optimize utilization of assets and reduce software costs?
Figure 1: Software Asset Management and License Optimization Maturity Model
Just as higher financial literacy can equate to lower debt and higher retirement savings, higher software asset management maturity equates to reduced manual effort and associated IT labor cost savings, lower software license and maintenance costs, and reduced risk of software license audits. A person’s effort to become financially literate can provide huge rewards in terms of money saved and debt reduced, and an investment in the tools and processes for greater financial maturity can provide a tremendous return on investment (ROI).
Similarly, an investment in SAM and Software License Optimization processes and tools leads to greater ROI for your SAM program and your organization as a whole.
Just starting out on your software asset management maturity journey? You can download the free white paper “Moving Up the Software License Optimization Maturity Curve to Drive Business Value.”