In today’s fast-paced technological landscape, managing IT assets effectively is more crucial than ever. Yet, the findings from the Flexera 2024 State of ITAM Report reveal a significant challenge: rising software audit costs and the persistent visibility gap in IT Asset Management (ITAM). These issues present substantial hurdles for organizations looking to optimize their technology investments. While technological advancements provide opportunities for growth and efficiency, the inability to fully visualize and manage IT assets hampers organizational performance, leading to ballooning costs and elevated risks.
Increasing Challenges with IT Visibility
A recurring issue plaguing IT teams is the struggle for complete visibility into their technology investments. According to the Flexera report, 53% of IT teams face challenges in gaining full visibility. This visibility gap translates into overspending, heightened cybersecurity and compliance risks, poorer IT service management (ITSM) data quality, and slowed growth initiatives. The lack of transparency in IT asset usage and costs can undermine an organization’s ability to make informed decisions, leading to inefficiencies and escalated operating expenses.One core cause of this visibility gap is the presence of siloed teams and systems within organizations. When teams operate in silos, vital information about IT assets becomes fragmented and uncoordinated, impeding a comprehensive view of technology investments. Becky Trevino, Chief Product Officer at Flexera, suggests a unified approach integrating technology, people, and systems across FinOps (Financial Operations) and ITAM. By bringing these areas together, organizations can close the visibility gap, optimize technology spending, and mitigate associated risks. This holistic strategy aims to not only enhance visibility but also enable IT teams to deliver more accurate and actionable insights.The Rising Cost of Software Audits
The report indicates that software audit costs have soared in recent years, impacting IT budgets significantly. Nearly a quarter (22%) of global IT leaders surveyed have spent over $5 million on audit costs in the past three years, up from 15% in 2023. These figures highlight an alarming upward trend driven by several major vendors, including Oracle, IBM, and ServiceNow, who have stepped up their audit activities. Such intensified scrutiny strains already tight IT budgets, compelling organizations to allocate more resources to audit compliance rather than innovating or scaling their operations.Organizations spending over $10 million on audits have nearly doubled from 7% to 12%, underscoring the urgent need for robust audit response strategies. The exponential rise in audit costs emphasizes the need for IT teams to be prepared and vigilant. The necessity for effective audit management is clear, but many organizations still lack cohesive strategies to handle these rising costs. Without a structured response plan, enterprises may struggle to navigate the complexities and financial burdens imposed by these audits, affecting their overall financial health and operational stability.Cross-Functional Collaboration: A Path to Better ITAM
The Flexera report emphasizes the critical role of cross-functional collaboration in overcoming ITAM challenges. There is a noted increase in engagement with FinOps, rising to 32% from 25% the previous year, illustrating the growing interdependence of financial operations and IT asset management. This rise in collaboration signals a recognition that ITAM cannot function in isolation and must work seamlessly with other departments, particularly financial operations, to achieve a common understanding of IT expenditures and asset utilization.The connection with C-level executives also remains strong at 44%, underscoring the importance of executive support in ITAM efforts. With top-level backing, ITAM initiatives gain the visibility and resources needed to succeed. Collaboration across these disciplines positions ITAM professionals as key providers of essential IT data and insights, especially in areas like SaaS tracking, security analysis, contract renewals, and software licensing management. This holistic approach facilitates better decision-making and a more strategic management of technology assets, ensuring alignment with organizational goals.Improving Visibility in IT Spending
While visibility into IT spend is reportedly improving, significant challenges remain, particularly in tracking SaaS usage. Although around two-thirds of respondents feel they have an accurate view of their on-premises software (67%), on-premises hardware (65%), and cloud instances (64%), visibility into SaaS usage lags behind at 54%. This discrepancy indicates that despite progress, organizations still grapple with understanding their complete IT landscape.Only 19% of respondents are confident in their Bring Your Own License (BYOL) posture, further complicating efforts to manage IT expenditures. This disparity highlights the ongoing struggle to manage the entire IT ecosystem effectively. Increasing visibility into all facets of IT spend, especially in the increasingly vital SaaS context, is essential for optimizing costs and ensuring compliance. Enhancing SaaS visibility involves implementing advanced tracking and monitoring tools that provide granular insights into software usage and compliance status.Strategies for Cost Avoidance
Cost avoidance emerges as a primary method for Software Asset Management (SAM) teams to drive savings. According to the survey, 45% of respondents cite the reuse of licenses to avoid purchases of new ones (non-cloud) as a significant strategy. This approach leverages existing assets to curtail unnecessary expenditure on new licenses, helping organizations stretch their IT budgets further. Other methods include better negotiation of vendor contracts (37%), reduction of maintenance spend on unused software (36%), and opting for less expensive license options (34%).These strategies underscore the importance of proactive asset management and negotiation skills in reducing IT expenditures. SAM teams need to continually refine their approaches to audit response and license management to contain costs effectively. Techniques such as regular audits of current software usage, renegotiating contracts to reflect actual needs, and exploring cost-effective alternatives can help organizations minimize software expenditure and improve overall financial efficiency.Vendor-Specific Audit Trends
Understanding which vendors are most likely to conduct audits can help ITAM teams prioritize their audit preparation and response strategies. The Flexera report identifies Microsoft as the leading auditor at 50%, followed by IBM (42%), Oracle (31%), SAP (30%), Salesforce (25%), Adobe (24%), and ServiceNow (20%). These statistics indicate the importance of maintaining vigilance and detailed records for software from these vendors, as they are more likely to conduct audits that could have significant financial repercussions.By focusing on these high-audit-risk vendors, organizations can develop more targeted and effective audit management plans. Preparing for specific vendor audits involves anticipating the particular demands and audit styles of these companies, which can save significant resources and reduce the overall financial impact of these audits. Proactive measures, such as maintaining up-to-date asset inventories and ensuring compliance with vendor licensing agreements, are key components of a successful audit readiness strategy.The Evolving Role of ITAM in Cloud Environments
In today’s rapidly evolving technological landscape, the effective management of IT assets has become more essential than ever. Despite this, the Flexera 2024 State of ITAM Report uncovers a troubling challenge: escalating software audit costs and a continuing lack of visibility in IT Asset Management (ITAM). These issues pose significant obstacles for organizations striving to optimize their technology investments. Technological advancements offer numerous prospects for growth and efficiency, yet the inability to fully visualize and manage IT assets effectively hampers organizational performance. This shortcoming leads to increased costs, higher risks, and reduced efficiency.Organizations must recognize that while technology can drive progress, the key to leveraging it effectively lies in robust ITAM practices. Enhancing visibility and control over IT assets not only curtails expenses but also mitigates risks, ultimately facilitating a more streamlined and successful technological environment. Therefore, addressing these challenges head-on is vital for organizations aiming to thrive in an increasingly digital world.
