It was 22 years ago in 1994 when, in my new job with IT Finance, I was told to build a data repository of all our company’s hardware and software assets. What made it challenging was to create a way to measure unit costs across hardware and software spend. Since there were no robust tools at the time to track IT inventory, they needed to be built.
Larry Shoup had just built Argis (Janus Technologies) which was the only tool that tracked software contracts. SoftAudit (Isogon) was getting started as the only tool to track mainframe software deployment. The load modules to build SoftAudit were provided by Alan Bain at BlueCross BlueShield of Minnesota. Karen Cone at Gartner had started its first Asset Management conference which came out of SWAMI. Ditka Reiner and Frank DeSalvo were helping to lead the charge in building an industry formal SAM practice. Meanwhile, in Canada Sherry Irwin started the first formal Asset Management user group anywhere. Pat Cicala, as the unofficial godmother of software asset management from negotiating the first ELA ever anywhere, had started a company providing SAM consulting. All the SAM leaders knew each other and collaborated in getting the message of SAM out to an industry that didn’t know the definition of SAM.
During the Spring of 1995, I approached both my manager and the CIO with a new concept: Software Enterprise License (ELA). I called Karen Cone and others in the hardware industry to ask of their concept of an ELA. We collaborated on what we thought an ELA should be, and then I negotiated the first ELA known in the Midwest. It was so successful, our team of Jim Jacoby, Alan Bain, Sam White, and I introduced the ELA to other software vendors. Our negotiating tool to get better software costs was through workload management. We would isolate software on certain hardware workloads to manage the costs. Software vendors from all over came to our office as we sat down with them and told them the concept and value of an ELA. Hardware manufacturers and leasing companies started telling their customers that they could manage their software costs by following our software ELA model.
By 1996 multi-national companies were calling, wanting to learn about what an ELA was and how to negotiate an ELA. They were also asking if I could build an asset management repository for them.
On October 28, 1996, ISAM was started to help companies manage their software costs. However, very quickly it became apparent that as companies were starting to negotiate their first ELAs ever, no one knew if their price was better than others. As ISAM started assisting companies negotiate their first ELAs, slowly a database (GreenBookSM) of companies’ cost formed. ELAs were predominantly mainframe based, but GreenBookSM has since evolved to a database across environments of over $15 billion in software spending from over 1000 companies globally.
Very quickly, the urgency of Y2K, IT modernization, and a general optimistic business climate was causing mainframe capacity to grow. With the growth in hardware capacity, Hitachi, Amdahl, and IBM were all competing to sell bigger hardware. The spike in hardware growth caused a need for SAM consulting services. Gartner expanded its SAM practice, with Pat Cicala as the lead and visionary. John Anderson started a one-man software licensing advisory service at IBM, and Frank DeSalvo led the charge of a formal SAM consulting practice at Isogon. Software costs started to outpace the cost of hardware, and there began a consolidation of the software industry. Hitachi hired ISAM to assist its customers in managing their software costs associated with their hardware purchases. The concept of managing software as a portfolio was introduced through the Software Portfolio Review & Analysis (SPRA) service.
IBM, seeing the rapidly increasing software costs, reacted in several ways: John Anderson started the first software licensing user group, workload licensing was introduced, and ISAM was hired by IBM to create the Portfolio Review Analysis (PRA) service. At that time, there was no database of products in the market, market share, industry pricing or competitive replacement alternatives. ISAM started categorizing over 30,000 mainframe products into 468 functional categories for the PRA service.
Education for SAM during the early years was predominantly available only through Gartner. Under Pat Cicala’s leadership, the Gartner SAM annual conference would have 600-800 attendees learning how to negotiate an ELA. The exhibition vendors were few, offering major gifts to anyone who stopped by. You would need an extra suitcase to carry all the free gifts the vendors gave away. Everything was still about the mainframe. As a large multi-national corporation said to me, “we don’t see any value or savings in distributed SAM.”
After Y2K, there began a slow shift in the SAM market. Pat Cicala left Gartner, Frank DeSalvo stepped in, CA bought Argis, Hitachi and Amdahl stopped selling mainframes, Isogon worked with SHARE to build an alternative SAM program at the SHARE Conference, and IBM introduced Sub-Capacity pricing. The next few years saw a consolidation in the SAM vendor community including the major acquisition of Isogon by IBM, which then turned SoftAudit into TADz.
There was also an increase about distributed software in the SAM conversation. By 2005, software audits had started popping up on companies’ radar. Software audit practices were so unstructured, after an external auditor spent over a year auditing one of IBM’s largest global customers, IBM asked ISAM to audit the auditors. The result was that instead of the customer owing IBM an eight-digit number, IBM owed the customer seven digits. Auditors continue to have errors in their audits to this day.
After IBM acquired Isogon, the SAM program at SHARE stopped which created a vacuum for additional SAM conferences. The result was the start of IAITAM, IBMSA, and several other SAM conferences. Attendees were shifting from technical SAM managers to dedicated SAM and procurement professionals. The first global SAM publication also provided additional SAM industry education, The ITAM Review from the U.K. By 2010, the ITAM Review was instrumental in turning SAM from an American conversation to a global conversation.
Since 2010, many SAM employees have ventured out into their own boutique SAM consulting companies. Software resellers and large consulting companies have decided to get into the SAM consulting service, which has grown into a managed SAM practice. Five to ten years of SAM experience is now sold as an “experienced” SAM professional.
Yet, in reflecting over 22 years in the SAM industry and having analyzed millions of software costs data points across hundreds of data centers, the SAM practice today has evolved. Ironically, SAM today is repeating history and is reminiscent of SAM in 1995. The focus is to know what you have. Distributed environment SAM still hasn’t reached the maturity levels of mainframe SAM. SAM consultants who got their start in the past 10 years haven’t learned from the SAM managers of 20 years ago, who learned how to reduce costs from workload management and unit cost management.
The industry still needs to learn that software cost reduction doesn’t come from hitting the vendor with a bigger stick. The best SAM comes from knowing the right product to buy, at the right time, purchased with the right metric, deployed on the right hardware, configured in the right architecture, and at the right price. It involves vision, experience, teamwork, and industry benchmark data.
Let’s all make that possible in the next 20 years of the evolution of SAM.