Software Efficiency Report

2011
United Kingdom
 Software Efficiency Report 2011 - U.K.

A licence to print money

In the UK alone, there is over £1.7 billion worth
of preventable and ongoing cost associated
with unused software and shelfware1
Waste is a very significant problem in all aspects of IT. 1E wanted to look
specifically at software waste and what we found astounded us.

Our research shows that when managing software licences and assets, most
organisations here in the UK focus on compliance, rather than on controlling
costs. Organisations are simply buying more software than they use.

Driven by the very real anxiety that a sudden software vendor audit could result
in heavy fines or lengthy litigation, many organisations simply over licence,
buying more and more software just in case. This tendency to err on the side of
caution is only part of the story.

Over 80% of the CIOs and IT Managers we talked to felt that software asset management is overly complex. This
is perhaps not surprising, given the complicated nature of software licence agreements, bundled licence and
maintenance deals and the general vagaries of product names, versions and editions.

You would think that CIOs and IT managers would want to do something about this waste, but our research reveals that
just 8% are actively trying to manage the problem by regularly identifying and reclaiming unused software across their
organisations.

Unfortunately, merely detecting unused software and shelfware

across a myriad of systems, locations, PCs and servers presents Over 80% of
a very real challenge for most, never mind reclaiming and reusing
those licences. respondents agreed
Our findings reveal that the problem of waste is likely to get worse that there was more
if organisations don’t focus on managing their software assets
more efficiently. There is a clear financial imperative in every than £100 worth of
organisation to do so.
waste per PC.
Sumir Karayi
CEO, 1E

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 Software Efficiency Report 2011 - U.K.

Software waste
Over two thirds of organisations in the UK have software waste

When asked directly, most senior managers accept that there is software waste within their own organisations. Two
thirds admitted they had software waste and more worryingly, more than one third admitted that they have no way
to quantify the problem. Businesses are increasingly subject to vendor audits. At a recent Gartner conference, 61%
said they had been audited by at least one software vendor in the past 12 months2. These audits are the cause of
much anxiety.

Software waste adds significant and ongoing additional costs to most organisations across the UK. It is created when
any organisation purchases software which adds no value and is typically made up of:

Unused software - software that is installed on a user’s PC which is not needed or used
Shelfware - software that is purchased but never deployed

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 Software Efficiency Report 2011 - U.K.

“ I advocate what I call “licence optimisation”, which answers

three key questions: what do we own, what are we using, and
what do we really need?3

”
Forrester Research Inc. Principal Analyst quoted in Computing magazine, March 2011

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 Software Efficiency Report 2011 - U.K.

Unused software
Four out of five licence managers we spoke to estimated that the cost
of unused software was more than £100 per PC

There are many scenarios that can lead to software licences Estimate of the value of software
being installed but not used.
installed - but unused - on a typical PC
Licences may be allocated to users based on their
department as opposed to their need, they may be bundled
together by the vendor, or users may be given software for a 15%

specific need or role when they first join the company which is
29%
never reclaimed when that need changes.
30%
Whatever the reason, unused software is a significant drain on
IT budgets - on average costing organisations £432 per PC. 19%

1%

The user’s perspective 6%

Many users are well aware of the problem of unused software

0 5 10 15 20 25 30 35
on their desktops. Nearly three quarters of users believe that
they have some unused software on their PCs. A third believe £50 - £99 £500 - £999
they have five or more applications installed on their
machine that they never use. £100 - £249 £1000 +

£250 - £499 I don’t know

Estimate of how many unused items of software users think are on their machine4

40%

35%

30%

25%

20%

15%

10%

5%

0%
None Fewer than 5 Between 5 and 10 More than 10 Don’t know

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 Software Efficiency Report 2011 - U.K.

Shelfware
92% of managers admit to having shelfware, with an average of 22%
of products destined never to be deployed
Shelfware is, as its name suggests, software that is left to sit, undeployed on the proverbial shelf in a forgotten corner of
the IT department. But even though it remains undeployed, shelfware still incurs maintenance and support charges.

Shelfware costs every organisation in the UK £89 per user per year5

The challenge with shelfware is that, though widespread, it can be hard to find in most organisations. Traditional
systems management tools can only detect software that has been installed, so many organisations are aware of the
problem of shelfware but unable to do much about it.

“ It’s unreasonable to expect customers to continue paying

maintenance on unused products and undeployed capacity.6

”
Forrester Research Inc., April 2011

The manager’s perspective

Shelfware has many different manifestations, but they all cumulatively drain the IT budget every year. IT management
teams need to learn how to hunt down and eliminate shelfware, in order to free up budget for more important activities.

Estimate of the percentage of software purchased but undeployed in UK organisations

12.0% 50 - 100%

4.8% 40 - 49%

8.8% 30 - 39%

17.5% 20 - 29%

19.5% 10 - 19%

29.9% 1 - 9%

7.6% None

0 5 10 15 20 25 30 35

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 Software Efficiency Report 2011 - U.K.

47% of enterprises still use

spreadsheets to record software
licences, with 6% still using a
paper-based filing system
and a staggering 16% using
nothing whatsoever.

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 Software Efficiency Report 2011 - U.K.

Managing complexity
84% of those surveyed believe that software asset management is
overly complex

The root of the problem in identifying all this waste lies in the massive complexity caused by bundled licence and
maintenance deals. This is compounded by unfathomable software licence and entitlement options, the general
vagaries of product names, versions, editions and increasingly, virtualisation.

Organisations across the UK face a daily challenge to reconcile the software What does your organisation
they have deployed with the software they have licensed. Answering this
use to manage licences?
seemingly simple question is a real issue for many - which is why projects
aimed at understanding and managing software compliance and licensing
frequently run on for many years and struggle to demonstrate any return on 16%

investment (ROI). 47%

39%

Few organisations are totally aware of how much money and waste can be 4%

tied up in software and how much they could save with efficient management 6%

of their software licences. 6%

“Software sourcing managers faced tough

2%

0 5 10 15 20 25 30 35 40 45 50

challenges in 2010. Under continued pressure to

control costs in an uncertain economic environment,
We don’t use anything

We use spreadsheet(s)
they also faced ever-more complex licensing rules, We use an internally developed solution

increased licence audit activity and proliferating We have an off the shelf solution

commercial models.6
”
Filing cabinet / paper based system

Document management system

Forrester Research Inc., April 2011 Other - please state

Multi select

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 Software Efficiency Report 2011 - U.K.

“ Each year, greater numbers fall foul of

compliance audits, face unexpected costs,
or suffer unreasonable restrictions on their
use of the software they’ve purchased or
thought they’d purchased.8

”
Forrester Research Inc., December 2010

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 Software Efficiency Report 2011 - U.K.

Audit anxiety
Over two thirds of organisations in the UK find preparing for a
software vendor audit challenging
The number of audits from ever more vigilant software vendors
is on the rise.

It is perhaps not surprising then that many organisations in the

UK have come to believe that their number one priority when it
comes to managing software is to ensure compliance, not to
cut waste or reduce costs.

This is particularly true given the potentially damaging

results of failing a vendor audit - heavy fines, substantial
back-charges and the threat of legal action. When coupled
with the time and complexity involved in comparing the
amount of software being used with the amount being paid
for, it becomes easier for many organisations to over provision
licences just in case.

By focusing solely on preparing for an audit, organisations are

buying ever increasing amounts of software, ignoring the very
real danger that much of it will never be deployed, never be
used and never add value.

Perhaps unsurprisingly, the number of organisations that find

a software vendor audit challenging rises to nearly 90% as the
number of software products in the environment increases.

“ Forrester sees many software licence agreements that are

seriously flawed. [...]These flaws result in problems, unexpected
software costs, and, sometimes, legal disputes.8

Forrester Research Inc., December 2010
”
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 Software Efficiency Report 2011 - U.K.

The majority of organisations (77%)

have never reclaimed any unused
software licences.

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 Software Efficiency Report 2011 - U.K.

A missed opportunity?
Only 8% of organisations in the UK are regularly reclaiming software
licences to save money
Uninstalling unused software and redeploying those wasted licences will drive down costs and deliver a better return on
investment from existing assets. Despite the obvious benefits of software licence reclaim and the staggering cost
associated with unused software and waste, three quarters of UK organisations have never done it.

Their biggest obstacle is usually fear.

Have you ever considered reclaiming unused software licences to reduce costs?

8%
No
26%
15% Yes & we’ve done it occasionally

Yes & we do this regularly

52%
Yes, would like to but can’t - Risk
18%
25% Yes, would like to but can’t - User Objection

8% Yes, would like to but can’t - Lack Tools

Over half of respondents said that they had considered actively uninstalling and redeploying licences, but that they are
unable or unwilling to take the next step. Reclaiming unused software would mean that many organisations would be
able to avoid buying new licences until they actually need them, which could have very real financial impact on the value
they get from their software.

Despite only 19% of managers responsible for software licences in the UK stating that their primary goal is cost control,
we believe there is a clear financial imperative for every organisation to identify and reduce software licence waste.

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 Software Efficiency Report 2011 - U.K.

“ There’s a software licence time bomb

armed, ticking and buried deep in the
foundations of many a Global 200 firm’s
elegant IT architecture.10

”


Forrester Research Inc., July 2010

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 Software Efficiency Report 2011 - U.K.

Financial imperative
Unused software and shelfware in the UK accounts for £1.7 billion in
preventable and on-going costs1
Organisations are frequently concerned about software
vendor audits and compliance, so they often overlook the
huge waste involved in shelfware and unused software.
This anxiety, coupled with the complexity of software
licensing, is generating significant inefficiency and waste in
many businesses.

These costs are largely preventable. As this report

highlights, few organisations are truly aware of how much
money can be tied up in software waste and how much
money they could be saving.

The software sitting unused on PCs in the UK could

have historically cost those organisations £7.3 billion.11

Software waste per PC per year 16

Software waste Unused software Shelfware

Purchase cost £144 £89

Maintenance cost £86 £18

Total per PC per year £230 £107

When considering this over a typical three year replacement cycle, a UK organisation with 1,000 users has £432,000
worth of unused software sitting on its PCs. It wastes a further £104,000 yearly on ongoing maintenance and support
charges for software that has either been installed but not used or literally left on the shelf.

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 Software Efficiency Report 2011 - U.K.

About the research

This survey was conducted online within the United States and United Kingdom by Opinion Matters, an independent
research company, in March 2011. It was commissioned by 1E and analyses the results from over 500 IT professionals
who are responsible for managing software licences in companies with more than 500 employees.

This report focuses on the United Kingdom results.

A majority of workers in the US and UK regularly use a PC to do their jobs

Source: Harris Interactive

U.S. U.K.
108 million employees 17 million employees

What is your job title? What size company do you work for?

22
CIO
42

60
Head of IT More than
33
60
10,000 38
110
IT Manager
110

6
SA Manager 115
1
1000 - 9,999
34 105
IT Operations
29

6
Pocurement 103
4

13
500 - 999 112
Other
9

0 50 100 150 0 50 100 150

U.S. U.K. U.S. U.K.

About Opinion Matters

Opinion Matters is an Independent International Market Research Agency. Consultancy and client service are placed
firmly at the top of its agenda, and creative thinking at its core. Opinion Matters reaches and engages audiences,
ranging from the general public through to the leaders of industry, delivering robust results with advocacy.

Opinion Matters complies with the Market Research Society (MRS) Code of Conduct in the UK and the ICC/ESOMAR
Code and ESOMAR World Research Guidelines.

For more information, please visit: http://www.opinionmatters.co.uk/

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 Software Efficiency Report 2011 - U.K.

About 1E®
1E believes every one of our customers should expect more from their IT. Founded in 1997, 1E is recognized as a
leader in software and services that improve IT efficiency by identifying and reducing costs and waste in hardware,
software, energy and time.

1E pioneered advanced PC power management with the release of ground-breaking solutions like NightWatchman®
and WakeUp™. That innovative approach has continued with the development of revolutionary concepts like Useful
Work™, Drowsy Server®, Computer Health™ and Shopping™ as part of a unique range of industry-leading solutions.

Headquartered in London and New York and with 16 million licences deployed world-wide, over 1,400 organizations in
42 countries have trusted us to help them to work effectively, productively and sustainably. To date, we have helped our
customers save in excess of £350 million in energy costs alone, reducing their electricity consumption by 5.8 million
megawatts and cutting CO2 emissions by 4 million metric tonnes. For more information, please visit http://www.1e.com

About AppClarity™
AppClarity, from 1E, offers an immediate reduction in software costs by intelligently helping organisations to manage
their software assets more effectively. AppClarity enables you to financially quantify software waste on all applications by
identifying and controlling unused software across the whole enterprise.

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 Software Efficiency Report 2011 - U.K.

About FAST IiS

The Federation Against Software Theft (FAST) and Investors in Software (IiS), two of the most respected independent
names in the UK software industry, have joined forces to strengthen and clarify the advice given to the end user
community relating to best practice for Software Asset Management (SAM) and achieving cost efficient licence
compliance.

In bringing the two organisations together the market will benefit from a single organization able to balance the
often-polar positions of reducing licensing costs and mitigating compliance risks within the context of Software Licence
Management (SLM). FAST and IiS share common goals and complement each other’s strengths and capabilities. The
collaboration enables a holistic approach to SAM & SLM best practice and the protection of software publishers’ rights.

The entity, under the auspices and management of The Federation, will keep both the well-known brands of FAST
and IiS to respectively maintain focus on their core propositions. The FAST brand will continue to strenuously lobby
government for a robust, effective and efficient IP regime in the UK and protect the IP rights of its members as
appropriate. The IiS brand will remain focused on driving best practice and consistent standards to advance the
professionalism in SAM.

For more information, please visit: http://www.fastiis.org

About IAITAM
The International Association of Information Technology Asset Managers Inc. (“IAITAM”) is the professional association
for individuals, organizations and providers involved in any aspect of IT Asset Management (“ITAM”), Software Asset
Management (“SAM”), Hardware Asset Management, and the lifecycle processes for IT Asset Management in
organizations of every size and industry across the globe.

IAITAM’s mission is to provide real-world based skills development, and to support IT Asset Managers already setting
the standards for successful ITAM business practices such as, saving money, gaining control, reducing risk, increasing
accountability and improving performance.

Over the past 9 years, IAITAM has strived to support the IT Asset Management industry through expert training and
advice as well as lead the profession down a path of best practice to enhance the business drivers of ROI, Efficiency,
Risk Avoidance and Professional Development for themselves and their organizations.

For more information, please visit: http://www.iaitam.org/

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 Software Efficiency Report 2011 - U.K.

References
1. £432.30 is the average amount of unused software on a user’s PC
Typically support and maintenance costs 20% of initial software licence cost12
£432.30 x 20% = £86.46 on-going software maintenance costs on unused software
£89.36 is the cost of new licences that become shelfware / user / year5
£89.36 x 20% = £17.87 on-going software maintenance costs on shelfware
£86.46 + £17.87 = £104.33 total maintenance cost on wasted software licences / year
17m regular business PC users in the UK15
17m x £104.33 = £1,773,631,818 spent on maintaining unused software and shelfware licences in the UK each
year

2. “In a survey of attendees at Gartner’s IT Asset Management, Procurement and IT Financial Management
Conference conducted in November 2010, 61% of the 144 respondents said they had been audited by at least
one software vendor in the past 12 months.” Gartner Survey Analysis:
Survey Shows Another Increase in Software Vendor Audits? IT Asset Managers Should Prepare Now.
Jane B. Disbrow, Alexa Bona, Stewart Buchanan, Frank DeSalvo, Frances O’Brien, Jo Ann Rosenberger, March
2, 2011

3. Duncan Jones, Principal Analyst at Forrester Research Inc., as quoted in Computing magazine, March 8, 2011
http://www.computing.co.uk/ctg/feature/2032105/cut-waste-licence-optimisation#ixzz1Im6d6zL7

4. Helpdesk Efficiency Report 2010, Vanson Bourne

http://www.1e.com/contenthub/doc_download.aspx?id=44674123

5. IT budget = $12,350 / user / year12

1 GBP = 1.63 USD13
IT budget in GBP ($12,350 / 1.63) = £7,576.69
21% IT budget spent on software12
21% of £7,576.99 = £1591.10 spent on software per user per year
26% of software spend is on new software14
26% of £1591.10 = £413.69 spent on new software per user per year
21.6% of new software becomes shelfware (this report)
21.6% of £413.69 = £89.36
This figure does not include on-going maintenance

6. Duncan Jones with Chris Andrews, Rory Stanton, Forrester Research Inc., as quoted in
Software Pricing And Licensing Trends 2011: Software Sourcing Leaders Should Create Sourcing Strategies
That Take Advantage Of Profound Changes In The Software Market, April 5, 2011

7. Reserved

8. Duncan Jones with Christine Ferrusi Ross and Rory Stanton, Forrester Research Inc., as quoted in
Updated Q4 2010: Check your Software License Agreement for These Common Flaws
Update Familiar Contract Clauses to Accommodate Technology Changes, December 23, 2010

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 Software Efficiency Report 2011 - U.K.

9. Reserved

10. George Lawrie, Forrester Research Inc., as quoted in

Defuse Software License Time Bombs With Software Asset Management, July 9, 2010

11. £432.30 is the average amount of unused software on a user’s PC

17m regular business PC users in the UK15
£432.30 x 17m = £7,349,100,000 historical total of unused software on PCs in the UK
This figure does not include on-going maintenance

12. IT Key Metrics Data 2011, Gartner, G00208190

13. Bloomberg Currency Conversion, April 7, 2011

14. Forrsights Software Survey, Forrester Research Inc., Q4 2010

15. Harris Interactive Survey for 1E, September 2008

16. Software waste per PC per year calculates as:

Unused software = £144 + £86 = £230
£432.30 is the average amount of unused software on a user’s PC
£432.30 / 3 years typical refresh cycle = £144.10 cost per year
£432.30 x 20% = £86.46 on-going software maintenance cost per year
Shelfware = £89 + £18 = £107
£89.36 new shelfware acquired each year5
Typical software maintenance fee = 20%12
£89.36 x 20% = £17.87

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