I recently saw a small booth in a mall advertising “100% Accurate” taxes completed. A first impression of a service that offers to be “100% Accurate” is that it must be good service. Yet, after some critical thinking, is the “100% Accurate” tax service really what it appears to be? Will they be able to find 100% of the available tax deductions?
Third party tax services are very similar to third party Software Asset Management (SAM) services. Although over 25 years ago I developed a software that would calculate “100% accurate” federal and local taxes, I am not a tax attorney so it would not find all the possible deductions available. The complexities of taxes require most people to utilize a third party (accountant or software) to assist them. The third party source isn’t just to be “100% Accurate” but to find all the deductions available and understand the intricacies and nuances of the tax code. That level of expertise requires experience across hundreds of clients of every size, industry, and geography.
Although every American must file a tax return annually, in spite of all this experience, I’ve never met someone who isn’t a professional tax accountant or tax attorney claim to be as knowledgeable as the tax accountant or attorney. Yet, when I come across someone who has gone through 10 audits or 10 major software contract negotiations, they feel as knowledgeable as the third party source that has been doing audits and negotiations on behalf of hundreds of clients for 20 years.
The question that every SAM individual needs to ask themselves is if they were “100% Accurate” in their SAM work, is that good SAM? Is the goal to be 100% accurate or to find 100% of the deductions? Even though a tax return may be “100% Accurate,” it can still miss receiving significant amounts of possible tax return money. The same is true with a negotiated software ELA or software audit results. With over 20 years of practice with software audits and software ELA negotiations across over 500 data centers globally, my experience is that 99% of data centers sacrifice savings for accuracy. Most data centers strive toward “100% Accurate” SAM processes, tools, and data while paying significantly more than necessary. Some of them will eventually get to “100% Accurate” and yet they will all continue to overpay in software.
So, the next time you’re facing a software audit, renewal, true-up, or ELA negotiation, don’t focus on being 100% accurate but on getting 100% of the possible cost reductions. As with taxes, recognizing the ability of the professional to understand and identify all the possible software cost reductions available, will get you the lowest possible software costs. Focusing on “100% Accurate” SAM may end up costing you significantly more in software costs.