In a technology-driven world, applications take center stage, running our personal lives (e.g. think iPhone and iPad), our businesses and our government. Indeed, according to research firm IDC – the government spent about $8 billion last year on software apps. And according to application usage management specialist Flexera Software – anywhere from 5-30% of that $8 billion (up to $2.4 billion) was likely wasted. Wasted on misunderstood license entitlements, wasted on shelfware because it wasn’t used or needed in the first place, or wasted on inefficient processes and high deployment costs.

As the government scrambles to cut federal spending in increasingly contentious budget hearings, finding the “low hanging fruit” that both parties can readily agree on – is a no brainer. Private enterprises have long understood that application usage management – which includes application readiness and enterprise license optimization — is critical. And it’s time for the government to follow suit and acknowledge the billions of dollars of waste hidden within its software budget – and do something about it.

Application Usage Management: Optimizing Costs Throughout Application Lifecycle

A common misconception holds that the software purchase price represents the predominant cost associated with enterprise software. This presumes that government agencies actually understand how much software they need and will use in order to arrive at the proper quantities to license. As we’ll see, this presumption is largely faulty. Most governments have little visibility into their own software installations, how that software is being used, by whom, and whether that usage is in compliance with the software license agreement.

Moreover, software that is acquired by the government must then be packaged and delivered to individual workers for them to do their jobs. While this seems to be a statement of simple fact – achieving this can actually be a highly time consuming and costly task – especially when you consider the different methods by which software is delivered and consumed – on premise installations, application streaming, mobile devices, and, increasingly, browser based via the Cloud. Then consider that each application purchased must be kept up to date as new versions, bug fixes, new operating systems and technologies are integrated into the mix. Applications must be migrated, tested, fixed and readied for reliable deployment on an ongoing basis – not just at the time of original purchase.

Multiply these processes by hundreds or thousands of applications within an agency’s software estate – and there you have the software cost iceberg lurking beneath the surface – waiting to rip a hole into the hull of IT’s budget if the CIO is unaware. Within this context, Application Usage Management has emerged as a strategic imperative. Best practice processes and automation increasingly are being adopted by the private and public sectors to shine a light on the hidden costs associated with software usage and eliminate waste and inefficiency.

Enterprise License Optimization: Buy What You Need, Use What You Have

The first part of the Application Usage Management story lies in software license management and optimization. If you’ve ever actually read one of those software license agreements that can run dozens if not hundreds of pages long, then you understand that there is a complex set of rules that dictate how the software can be installed and/or used.

Failure to strictly comply with software contract terms can result in the agency falling out of license compliance and being subject to software audits and unbudgeted true-up costs – that can and frequently do run into the millions of dollars per audit. To further complicate matters, employees have been known to download and run software on their own – unbeknownst to IT management – for which the agency is financially liable in the event of a software audit. Finally, government agencies must be able to track whether employees actually are using the software – in order to understand whether they are overbuying applications – and wasting resources on “shelfware”. Agencies must also understand complex software product use rights-right of second use, multiple installation rights, virtual use rights, etc. – to ensure that they are not over buying licenses.

Given the complexity of vendor-specific software license agreements and their product use rights, the moving targets that are users who must be assigned those licenses (software licenses must be assigned to new hires and re-absorbed when employees leave), the accountability required for software downloaded by employees – most government agencies have little visibility into their software estates, and even less control.

Government CIOs are faced with the following software license optimization challenge:

• Capturing accurate application usage data for key vendors such as SAP and selecting the most appropriate user license types
• Optimizing software spend due to an incomplete picture of what is being used compared to what is owned
• Exposure to over/under spending on software due to the complex license models and purchase agreements created by vendors
• Reconciling contracts and license entitlements with software installations
• Managing licenses in an on-going, consistent and effective way across vendors
• Software audits and unbudgeted true-up expenses due to non-compliance

Given the size and complexity of the problem, it is impossible for government IT organizations to manage this problem manually. That’s why in the private sector, and increasingly in the government sector, software license optimization has emerged to help the CIO and IT management, manage their IT assets to ensure continual license compliance and cost control. These tools capture hardware and software inventory and usage data across the IT estate, and reconcile this with purchase order data and the product use rights found in the software license agreements – to determine an accurate license position for each vendor. This provides the agency with a picture of not only the software that it has and is using – but also a report on how software licensing could be optimized so that the agency is only buying what it needs and using what it has.

Application Readiness: Deploy Once Run Everywhere

As noted earlier, the other key ingredient to Application Usage Management for government agencies is continual Application Readiness. This involves implementing fundamental best practices for application packaging, migration and deployment, and automating critical aspects of those best practice processes.

Every agency has its own standards regarding the applications it deploys – what features should be turned on and off, how it should look and interact with the user, how it should be supported, etc. For that reason, applications are rarely installed as-is out of the box, but they must be repackaged to conform to the agency’s standards. When applications are repackaged – they must be tested to ensure they function in the agency’s environment or environments, and any errors fixed. This process takes time, labor and, therefore, can be a significantly costly endeavor in today’s mixed IT environments. However, Application Readiness best practices can be combined with automation to slash those costs.

Application Readiness best practices include include:

• Identify – The first step requires obtaining an accurate view of the applications that are deployed across the agency. This is a good time to look at the application inventory and take stock of what is actually being used, as opposed to what is deployed.
• Rationalize – Virtualization projects and operating system upgrades present a prime opportunity to rationalize the agency’s application estate and address desktop application sprawl. With a clear view of both the deployed and used applications, agencies can verify the need to continue to support the applications or to consolidate applications to a reduced number of products and versions which are not used.
• Assess compatibility – Agencies that are implementing applications in new environments, especially virtualized environments like the Cloud, should check for application suitability, as not all applications they own will work. Without automation, it’s difficult to know which applications will have compatibility issues, and thus which will require time
• Plan – The work completed in the Rationalize and Assess Compatibility phases arms IT management with a list of rationalized applications and the details of compatibility issues that need to be addressed. With this information IT will have a clear view of the magnitude of the project enabling them to accurately calculate costs and likely duration timeframes.
• Fix and package – As agencies prepare to deploy in their target environment they will need to convert applications to the required format. Application fixing and format conversion can be a time-consuming, manual process, so utilizing technology to automate this and leveraging investment in packaged applications can yield considerable savings, and ensure a consistent approach to Application Readiness
• Deploy – With these previous steps completed, the agency can now hand off the packaged application to the deployment system for delivery to end users. To further cut costs, create efficiencies and deliver a better experience to end users, more agencies are looking to create App Portals for self service – giving users an iTunes-like enterprise App Store to access approved applications. If the App Portal is linked to the Application Readiness tool, the process for populating the storefront with packaged applications, and making them available to users with requisite access rights can be simple. Moreover, if the App Portal is tied on the back end to the Enterprise License Optimization system, IT can create a seamless App Store experience for end users while still maintaining continual compliance, financial accountability and control.

These Application Readiness best practices apply to IT shops within all government agencies. Some departments attempt to implement some or all of these best practices manually. Depending on their resources, the size and nature of their application estates – manual Application Readiness increasingly is not feasible. Given the complexity of environments, the frequent nature of software upgrades and migrations (as much as 30% of an agency’s applications change on a yearly basis due to enhancements, upgrades, application fixes, etc.) , Application Readiness automation is the only practical means by which IT shops can feasibly stay ahead of the game.

When you combine the best practices and automation now available through the disciplines of Enterprise License Optimization and Application Readiness – Application Usage Management enables organizations to gain control and streamline the management of one of the least understood and most costly aspects of the IT mix – the software estate. This, in turn, reduces the hidden and not so hidden costs associated with that software.

Steve Schmidt is Vice President of Product Management at Flexera Software.