Innovation and risk management should go hand in hand

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The role of the CIO has changed dramatically over the last few years, according to the most recent Harvey Nash and KPMG CIO Survey. The role of  IT bosses is becoming more and more strategic, whilst software has become an indispensable element within the business model of many companies. Adopting a mature software asset management strategy should be the next logical step.

Results of the 2016 CIO Survey show that ever more companies are going through a digital transformation. IT, and especially software, has become indispensable for virtually every organization. That has been the case for some time now, but what’s new is that aside from a purely operational and supporting function it is now taking a central role in the business model. For the CIO, this means that “traditional” CIO tasks such as operational efficiency and stable IT performance are disappearing more and more into the background.

Digital strategy

The CIO has become much more prominent when it comes to strategy and innovation and is moving more toward the business side. He is expected to initiate IT projects that generate money, rather than focusing solely on reducing costs. Nowadays one in five companies has a digital strategy, with organizations with IT budgets exceeding 100 million leading the way. In the FD (the leading Dutch financial newspaper) this week, ING states that ‘not the banker, but the digital system is what creates added value for customers.’ A perfect example of the growing business importance of software.

Financial risks

Precisely because of this growing interest, you would expect proper management of software to become increasingly important. However, Software Asset Management is not being mentioned in the research and doesn’t appear on the radar of CIOs. That’s surprising, since the more important software becomes to organizations, the more important it is to understand the financial risks associated to it. Those risks appear mainly in the area of licensing. If you do not meet the contractually agreed conditions, it is not uncommon for software vendors such as Oracle and Microsoft to claim large amounts of  money  – especially given their current and frequent auditing practices. A profitable IT project might suddenly become not so profitable.

True cost of IT

Considering the big budgets and financial relevance it is only logical that companies want to gain insight on where money is being spent. For “physical” assets such as buildings, this is normal practice, but strangely enough not for the administration of software and associated licenses. For many CIOs “the true cost of IT” is a black box. A good SAM strategy provides costs transparency. And that’s not all: cost savings of thirty to forty percent within three years are no exception.

The money that is being saved can subsequently be used to start new innovative IT projects. Which is exactly what is expected from a CIO nowadays. A mature SAM strategy fits seamlessly with the increasingly strategic role of the CIO: a true strategist who balances innovation and risk.

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This article was published on 01-07-2016