What is software asset management (SAM)?

Software asset management (SAM) is a set of practices for planning, managing and optimizing software assets throughout their lifecycle.

SAM takes a strategic approach to the purchase, deployment, maintenance, use and disposal of an organization’s software applications. It involves software audits, inventory management, license compliance and other activities. As part of an effective IT strategy, SAM helps organizations streamline their operations, reduce waste and costs, limit risk and maximize the value of their software investments.

SAM began to take shape in the late 1980s, as organizations started to implement software for business use in greater numbers. Over time, it progressed from basic license compliance to managing the full software lifecycle. SAM advanced further in the early 2000s, as the introduction of software as a service (SaaS) and cloud computing presented new challenges.

Today, software asset managers and others are adapting their approach to SAM. They must now account for a more complex technology ecosystem that includes artificial intelligence (AI), automation tools and collaborative open source software.

Software asset management gives organizations better visibility into their software assets and helps ensure they are being used efficiently, effectively and responsibly.

Organizations are increasingly reliant on software to drive operations. But are they actually using every application? And are they using applications efficiently and to their full potential? Without proper management, businesses lack transparency about what software assets they have and how they are being implemented within the company. They end up overspending on applications and might become vulnerable to audits and penalties if software is misused.

With a SAM strategy, organizations can discover unused or under-used software licenses. This discovery allows the organization to optimize purchases and secure cost savings. SAM also supports informed decision-making about new investments and software vendor relationships. According to Gartner, integrating effective SAM and financial operations (FinOps) into a central governance function might reduce financial waste from software and cloud investments by 60% by 2026.¹

SAM solutions might also help organizations avoid legal issues and fines. For example, SAM practices can help ensure that organizations remain in line with the terms of software licensing agreements, which helps them avoid the negative consequences of noncompliance.

The main features of an effective SAM program include:

• Software inventory
• Usage monitoring
• License management
• Procurement processes
• Software audits
• Lifecycle management

Software inventory practices involve systematically tracking and organizing an organization's software assets. These activities focus on identifying all installed software, including on-premises, cloud-based and software as a service (SaaS) applications.

Organizations can use automated tools as part of a discovery process to scan for software installed on devices, from servers to desktops, laptops and mobile devices. A centralized inventory database might track details such as software installation dates, versions and licenses. This centralized tracking allows for a better understanding of software entitlements, or the software the business owns or is allowed to use.

Usage monitoring involves tracking how software is used across an organization. Data is collected through tools that monitor software activity metrics such as frequency of use, duration of use and general access patterns. This data then allows organizations to identify underused or redundant software and eliminate unnecessary software costs. For SaaS and cloud-based solutions, SAM aims to monitor consumption metrics such as active users or data storage to optimize subscription plans.

License management involves ensuring compliance with licensing agreements and optimizing license usage. Organizations must regularly verify that software usage adheres to licensing terms, avoiding overuse (overlicensing) or unauthorized installations (underlicensing). SAM practices look at all software entitlements and include tracking license types (such as perpetual licenses versus subscriptions) and monitoring compliance with vendor agreements.

Organizations can then optimize licensing, reallocating or eliminating unused licenses and consolidating related licenses where possible. They can also automate renewals where appropriate to help prevent disruptive lapses in access or service.

Software procurement processes streamline software purchases and renewals. By centralizing procurement efforts, organizations can help control costs and avoid redundant purchases. They can also implement approval processes for software acquisitions to ensure alignment with budget and goals.

These efforts can help build stronger relationships with suppliers and streamline contract management. They might also help prevent the internal spread of shadow IT, or software products and tools that are used by employees without the company’s knowledge or oversight.

Regular software audits allow organizations to proactively examine their overall software inventory, licenses and compliance with vendor agreements. The audit process might include cross-checking the software installed on company devices against a centralized inventory. This way, auditors can identify unauthorized or outdated applications.

Periodically reassessing usage and confirming license compliance is a key way to preempt potential risks and ensure cost efficiency. Keeping software networks audit-ready makes it easier to handle inquiries and reviews as they arise.

Lifecycle management helps ensure optimal software use and compliance from acquisition to retirement. This process includes procuring the right software for business needs at the best possible price from preferred providers. It also includes ensuring authorized installation and configuration on necessary devices and scheduling regular updates, patches and maintenance.

When software reaches end-of-life, SAM practices help to retire it smoothly by removing installations, terminating licenses and ensuring secure data removal. Various SAM tools can automate tracking of software deployment and reporting across the software’s lifecycle for better transparency and control of the assets.

Various software asset management tools and technologies can make implementing and managing SAM processes more efficient and accurate. These technologies include:

• Software inventory tools: Organizations might use software inventory tools and discovery tools to automatically scan and identify software installed across devices, creating a centralized inventory.
  
  
• License management systems: These centralized systems help with software license management, including usage rights and renewals. They help ensure compliance with licensing agreements.
  
  
• Software metering tools: These tools monitor and measure software usage, and can offer valuable usage insights. They might be integrated with real-time data or used to identify long-term patterns over time.
  
  
• IT service management (ITSM) programs: These more comprehensive IT service management solutions integrate hardware, software and cloud assets for broader workflow management. They provide enterprise service management of IT and operational technology (OT) assets and processes.

Companies can use artificial intelligence (AI) in SAM to enhance decision-making and optimize software usage and software expense. AI-powered tools can detect and categorize software assets across networks, reducing the need for manual tracking and making it easier to maintain a comprehensive inventory. AI-powered analytics can provide insights into software usage patterns, helping organizations identify under-utilized licenses and opportunities for cost savings. And predictive analytics help AI tools anticipate future software needs based on historical and real-time data.

Perhaps AI’s greatest strength for SAM practices is automation. The technology can be used to automate routine tasks such as license tracking and compliance checks, freeing up resources for more strategic activities and preventing human error along the way.

SAM standards and best practices are established by various industry bodies, such as the International Organization for Standardization (ISO) and the International Association of IT Asset Managers (IAITAM). These organizations provide guidelines for implementing effective SAM programs and ensuring compliance with licensing agreements. The Information Technology Infrastructure Library (ITIL) is a set of best practices for IT service management, including guidance on SAM processes.

SAM is just one element in the overall management of information technology operations. It is a subset of IT asset management (ITAM).

ITAM is the end-to-end tracking and management of all IT assets. It can be broken down into: 

• Software asset management (SAM), which focuses specifically on software assets.
• Hardware asset management (HAM), which focuses on hardware assets, such as computers, mobile devices and servers.