Software Utilization – Tech Due Diligence Supporting M&A and Value Creation

IT is a cost management nightmare. Everyone needs IT, everyone thinks they know how to buy IT and often everyone thinks they know how to manage IT.

In reality, IT is not that different from any other asset in a business and needs treating as such. You need to know what you are buying – the spec and the demand…then what you have bought, who should have it and that they received it – IT asset management or ITAM. You need to know who looks after it, how often and that maintenance is up to date. In the software world – this is called SAM or software asset management – and every piece of this process has a cost you need to understand.

Trouble is, people move around (Joiner, Mover, Leaver or JML) and there are many other reasons that the overall inventory needs admin:

• People ask for applications that they do not really need (Bloatware and Shelfware).
• People buy their own software on expenses or local budgets (Shadow IT).
• People install ‘free’ that is not really free (Freeware and Freemium).
• Instances or Servers get spun up, tested and forgotten (Projectware).
• Equipment gets moved, broken, lost, and replaced – not always in that order!

The problem is that your shiny database of IT assets, Cloud assets or software assets get dirty and dull – but your bills remain the same (or worse go up) because you lost the ability to know what is actually in use and pay accordingly. This is bad enough in a Business as Usual (BAU) organization, but when the M&A Diligence team arrives for that merger, sale, or acquisition, forget the EBITDA impact, the risk carried can really hurt a valuation:

If you are the seller, you HAVE trouble. If you are the buyer, you can MAKE trouble.

Creating and maintaining a real-time view of asset utilization is an underrated necessity in an IT ecosystem – so you might want to use a partner to set it up, clean it up and then hand you an up-to-date view with options to drive value improvement and cost savings. You can even let them do the heavy lifting and implement – in a cost-controlled manner of course!

Let us focus on Software alone for the moment.

Lots of companies can offer or deploy tools to find your ‘bought assets’ – comparing old SAM data to corporate contracts and entitlements, running an ‘installed only’ review at device start-up and so on. You probably have some of the off-the-shelf versions of these tools already, but you may already need help to run this or train you to run this immediately.

Alternatively, at Uptrend labs we have additional tooling that uses real-time forensic analysis and reporting of who is using what, where, when and for how long. It is now possible to track the actual use of all individual applications INCLUDING all websites visited and usage from thin clients, mobiles, and private devices as well as printers and USB activity. This gives us detailed usage metrics on how users interact with OS and applications that we can then analyze to plan migrations, upgrades, and actions.

Using our tools, we can determine whether an application is being used as read-only or read/write or not at all. By tracking the actual use interaction of individual executables, it is possible to distinguish between employees who require a full copy of an application versus those who can work effectively with a lower-cost license. Knowing your utilized assets allows you to recycle/harvest/redeploy licensing to save money and reduce risk.

Recent experience in a Global company showed expenses-driven Shadow IT out in the business held 60% more licenses for a common platform than were available on the corporate agreement no one was using!! Using our approach to Software Utilization, it is possible to achieve in the range of 10 – 40 percent reduction in the total software budget in the first year alone.

Back to M&A – if you are the Seller and the Commercial Due Diligence (CDD) team arrives to review the possible acquisition or merger, it is too late when they ask for this information. They will ask for your data, previous audits by Vendors, and a real-time view – and then kick you in the multipliers for holding unnecessary risk, let alone the EBITDA issues. Here at Uptrend labs we can help…

If you’re the Buyer – you really need to know what you’re buying and if you might get exposed to remedial fees easily in the $100k’s or even $millions for having too many users at the next audit, or being unaware of data or GDPR issues (don’t forget, maximum fines seen to 2023 for GDPR are in the $100m’s, with up to 4% of global turnover at stake). Again, here at Uptrend labs we can help.

Even if you are not in either of these scenarios, as we documented in an earlier insight article on software audits, the same assessment makes you much less likely to be non-compliant when any Vendor wants to investigate your entitlements and usage under an ongoing agreement.

These software utilization audits are enormously powerful assessments that can support businesses drive real value from their software, purely from the in-depth visibility that they provide to what is often a hidden underworld of application installation. If you would like a no-obligation initial discussion with our expert Uptrend labs team on how this toolkit can support your organization’s needs then please get in touch with us through our Contact us form. We will be eager to help you through the process.