Times are tough for IT departments. Talk of recession is widespread, and the fear of an economic downturn is already having an effect on organisational spending, with predicted job cuts and budget tightening. When crisis threatens, CEOs are faced with the tough task of maximising revenue while reducing their outgoings, and often the IT department is the first port of call when it comes to cutbacks, despite its ability to increase efficiency and provide significant cost savings.

But unfortunately for CIOs, just as their own organisation is looking to make savings, so many of the suppliers and vendors they work with are increasingly seeking out ways to minimise revenue losses. For software vendors, this means getting tougher on software licenses - and particularly identifying when organisations are using more software than they are legally entitled to. As such, a growing number of software developers are exercising their legal right to audit customers’ software usage to uncover potential under-licensing, and dealing severely with firms found to be in breach of licensing conditions.

As a result, the current economic climate makes it more crucial than ever to ensure the organisation is correctly licensed, as a non-compliance fine could be devastating, crippling the IT department and potentially incapacitating the whole business. But how can the CIO juggle the need to control expenditure against protecting the organisation against the risks of fines and unwelcome negative publicity?

In simple terms, the trick is to avoid two common mistakes - under-licensing or over-licensing. Said like that, it sounds very simple, but in truth managing licenses is somewhat more demanding. While there will always be a small minority of CIOs who turn a blind eye to licensing laws, in the hope that the savings made will outweigh the potential risk of an audit, it is more likely that mis-management of software is done through ignorance rather than complicity.

It is easy for those responsible for the organisation’s compliance to lose sight of how software is being deployed and used across the IT estate. The ease with which software can be downloaded, installed and shared across multiple PCs means that even if the IT department thinks it has software procurement under control, actual usage can quickly outpace planned deployment.

But while this shortcoming is unintentional, it can still be seen as illegal activity and can leave businesses perilously at risk from vendor audits and subsequent fines. Alternatively, they may be so aware of the potential legal proceedings they over-invest on licences, just to be on the safe side. As such, what is needed is a solution that gives the IT department complete governance of their networks.

Software asset management (SAM) offers the key to both minimizing the risks associated with under-licensing as well as eliminating wasted purchases of software or renewal of unfavourable maintenance contracts. SAM is based on having both technology in place to understand what’s happening on the network as well as adopting best practices to manage IT operations, thus forming the foundation for effective software licence compliance.

Adopting best-of-breed SAM technology can quickly provide CIOs with a clear understanding the IT assets deployed across their IT infrastructure - which in its own right can lead to a significant ROI as redundant purchases are avoided and under-used assets are re-deployed.

The right SAM tools then make it far easier for CIOs and senior IT staff to record license entitlements and compare these against actual usage, giving an at-a-glance view of whether money is being wasted through unused software or whether the firm is at risk through over-usage. In reality, it is likely that both under and over-licensing will be found - meaning that while some new licenses will need to be purchased, the cost of this can be offset by savings in surrendering unnecessary software or renegotiating support contracts.

Tracking software usage (as opposed to simply detecting whether an application is installed) is critical to spotting opportunities to save costs. For example, removing unused software will eradicate potential over-licensing or re-deploying the application elsewhere in the organisation will avoid duplicate procurement.

The main thing, however, is that armed with this information, CIOs can rapidly take steps to put the situation right - simultaneously avoiding risks and driving savings.

One organisation that has seen the benefits of SAM first hand is the Telegraph Media Group, publishers of the Daily Telegraph. The Group saved £100,000 on over-licensing through implementation of SAM. With 1,000 employees and even more desktops, laptops and servers at five sites across the UK, the Telegraph Group implemented an automated software solution, which allowed the IT department to more accurately determine how much software was on the network and therefore what their licensing position was. In this case, they were immediately able to see that they were significantly over-licensed, allowing them to renegotiate their license contracts and redistribute any licenses which weren’t being used.

In the past, there has been a perception that it is hugely complicated and unwieldy to deploy a SAM project. However, recent developments which combine technology and best practices in an integrated ‘package’ have dramatically simplified SAM adoption and speeded up the time to see a return on investment.

Not only can businesses save money, but knowledge of IT assets can also improve productivity by increasing visibility across the company and ensuring that everyone is using the appropriate software efficiently. Since IT networks are prone to regular change, it is not enough to carry out a solitary audit and assume that the findings will remain the same. SAM recognises the need for constant awareness and enables businesses to alter their licensing status as and when necessary, helping companies to make the most of their assets.

In a time of uncertainty and instability, organisations cannot afford to take a gamble on software licensing, and with effective Software Asset Management in place, not only can this situation be easily resolved, but the CIO can actually prove their worth to the business by demonstrating tangible ROI.