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Software Asset Management: Mission Critical or Nice-To-Have?

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In my last post, I briefly mentioned my view that executive management generally views software asset management as a “non-critical” IT initiative. I am here to argue that, especially in a poor economy, software asset management becomes all the more “mission critical.” At first blush, I admit this position might seem a bit somewhat self-serving, given that my paycheck hinges on theenlightened” few IT and business decision-makers in today’s financial climate who agree with me. But before you abandon ship, allow me to make my case (what software vendor worth its mettle wouldn’t?).

One thing we can agree upon is that there’s very little agreement on what, exactly, “mission critical” means. Traditionally, it’s understood to mean any activity, process, equipment, application, etc. that’s critical to the daily operations of a company. In other words, if the mission-critical entity ceased to function, the company itself would cease to operate. The cynic in me can’t resist pointing out that the less “nuanced” among us often casually sling about the term as a means of fortifying and advancing our own professional agendas. (By the way, here’s a very rigorous and academic definition of “mission critical” that most C-level execs would never have the patience (or humility) to adopt.)

So in this post, I’d like to put forth an alternative, or perhaps expanded definition: “Mission-critical” activities are those that allow an organization to operate most profitably. Because ultimately, the mission of any organization is to maximize profits and increase shareholder value (or, in the case of non-profits or government agencies, increase beneficiary value). Using this definition, the meaning is fluid and will necessarily change based on economic conditions. For example, when financial times are good, mission-critical activities may involve implementing systems that help employees be more productive as this will presumably produce some correlated increase in profits after implementation costs have been netted out. But when the economy is bad, making employees more efficient (or prevent them from becoming less efficient) should not necessarily be viewed as mission critical. Why? Because when jobs are being lost in record numbers, employees will generally work longer and harder to ensure they remain valuable to the organization. Likewise, some companies desperately throw cash at sales and marketing initiatives to try to eek out just a few more customers, only to discover diminishing returns characteristic of an anemic economy. These are obviously just a few examples, and they’re certainly not applicable in every situation; but I’d suggest that in many cases, in a poor economy, cost-cutting measures may be regarded as mission critical because they may have a greater positive impact on profit margins and allow organizations to survive what might otherwise be a devastating business cycle.

There’s no question that effective asset management provides the opportunity for enormous savings. The question is whether the costs of implementation exceed the financial benefits, and whether the resulting net savings justify the opportunity cost of not pursuing other activities targeted at increasing profit margins. All too often, software asset management is presumed to be a “nice to have” or “when time allows” initiative to be sacrificed during times of financial hardship. Yet few would dispute that the savings recognized through the establishment of thoughtful and rigorous software asset management practices far outweigh the costs.

You may think I’ve been drinking too much of my own Kool-Aid. And while that may be so, there’s one thing I think we can all agree on: Companies that come through this recession with their balance books intact and best positioned to invest in their future growth will be the ones that re-think the meaning of “mission critical” and rapidly adjust their priorities both to exploit and overcome the present economic realities.