By John Lipsey
Amidst the deafening uproar over the fiscal cliff negotiations in late December, you may not have realized that Congress passed the National Defense Authorization Act (NDAA) – a massive 700 page bill that outlines the budget and authorizes spending by the Department of Defense (DOD). The President signed it into law on January 2.
Why is that relevant to a Software License Optimization blog? Because buried within this piece of legislation in Section 937 (pp. 256-257) is recognition – now enshrined into law – that Software License Optimization is a prudent framework for managing the software estate of the DOD.
The Fiscal Year 2013 NDAA includes both statutory and report language requiring the DOD’s CIO to conduct a department-wide software license inventory, an examination of current license utilization rates, and an assessment of the means by which the DOD can achieve the greatest possible economies of scale and cost savings in the procurement, use, and optimization of selected software licenses. Based on the results of this assessment, the bill directs the CIO to establish a performance plan to align the number and type of software licenses with the needs of the Department. Upon completion of the inventory and assessment, the CIO will brief the results to the congressional defense committees on an annual basis.
Here are exerpts of Section 937’s relevant language:
SEC. 937. SOFTWARE LICENSES OF THE DEPARTMENT OF DEFENSE.
(a) PLAN FOR INVENTORY OF LICENSES.—
(1) IN GENERAL.—Not later than 180 days after the date of the enactment of this Act, the Chief Information Officer of the Department of the Defense shall, in consultation with the chief information officers of the military departments and the Defense
Agencies, issue a plan for the inventory of selected software licenses of the Department of Defense, including a comparison of licenses purchased with licenses installed.
(2) SELECTED SOFTWARE LICENSES.—The Chief Information
Officer shall determine the …
(C) Means by which the Department can achieve the greatest possible economies of scale and cost savings in the procurement, use, and optimization of selected software licenses.
(b) PERFORMANCE PLAN.—If the Chief Information Officer determines through the inventory conducted … that the number of selected software licenses … exceeds the needs of the Department for such software licenses, the Secretary of Defense shall implement a plan to bring the number of such software licenses into balance with the needs of the Department.
The report language, included on page 185 of the Joint Explanatory Statement, serves to clarify Congress’ intent when passing the Software License Optimization section. The report language, in part, states:
…The conferees expect DOD to effectively and efficiently manage its resources, including the number of software licenses it procures, to eliminate waste and unnecessary duplication to the maximum extent practicable…
So what does this mean, practically speaking? The federal government is under immense pressure right now to cut spending and eliminate waste. And we know there is a lot of waste in software spend. So this means that there is now recognition that a Software License Optimization program can help the federal government meet it’s spending reduction goals through more effective software asset management.
Flexera Software’s 2012 Key Trends in Software Pricing and Licensing Survey, prepared with assistance from IDC, shines a light on some of the true costs of software spend waste. According to the survey, 38% of organizations indicated that 11% or more of their application spend was associated with out of compliance use, up from 26% one year ago. Likewise, 56% of organizations said that 11% or more of their application spend was for under-used software (shelfware), up from 49% last year.
IDC estimates that the Federal government spent over $9.4 B on software in 2012. Applying the waste figures from the Flexera Software report to the Feds – if 11% of was spent on shelfware and/or under-utilized software licenses, a Software License Optimization strategy adopted government-wide could net more than $1 billion in savings – without cutting essential services.
This is more than just theory. Many of Flexera Software customers’ savings actually bear out these numbers. One federal military agency will actually be able to achieve its entire mandated IT budget cut through implementation of a Software License Optimization strategy utilizing FlexNet Manager Suite.
Flexera Software applauds the federal government’s recognition that Software License Optimization can play a positive, productive role in helping to eliminate government waste and reduce spending on the software estate.