ESM for CFOs: 7 Advantages that CFOs Gain from Engineering Software Management

Aside from overseeing the company’s financial operations, Chief Financial Officers (CFOs) have the unenviable task of making sure that every purchase coming from the enterprise budget provides an appropriate return. And with engineering software applications increasingly gobbling up a huge chunk of the enterprise budget, CFOs are faced with the challenge of understanding the value of technology and how it supports business initiatives.

Unfortunately, without the right tools that could provide the necessary metrics, returns on software investments are often considered intangible. The business value of software assets is also often difficult to prove. Without these metrics, CFOs are often ill-equipped to judge the success of these software investments. In addition, the company also risks overspending on new software purchases and upgrades if the decision to purchase is based on mere estimation without the support of actual usage data.

Here are a few benefits that CFOs can derive from an effective engineering software management (ESM) tool.

Measure and Demonstrate ROI of Engineering Software Investments

ESM tools with robust reporting capabilities not only meter the true active usage of software applications, they can also show who uses which applications, from which work group or unit, and for how long. Without this information, organizations run the risk of having expensive engineering software licenses that are being checked out but left idle on user workstations most of the time, or worse, not being used by the intended users at all. If this happens, it would be a huge waste of expensive resources. With this information, CFOs and CIOs can determine whether the software investments are being used efficiently and as intended, and whether they are getting the expected returns.

Forecast the Need for Additional Licenses

With predictive analytics, ESM tools can predict future needs for additional licenses depending on expected growth or expansion and based on historical usage trends. This functionality can also help in the timely detection of possible anomalies in the usage data, which would mitigate the risks of potential system failures or security threats.

Ensure a More Proactive Budget Planning and Resource Allocation

True active usage data and accurate forecasts lead to better budget planning and more efficient resource allocation. With the right ESM tool, there will be fewer uncertainties on software budget allocation and even fewer surprises from unplanned or unexpected software costs.

Ensure Compliance and Avoid Costly Penalties from Vendor Audits

A centralized engineering software usage monitoring across all sites within the organization allows for a detailed and more accurate usage statistics from any combination of local or global license servers. This centralized view would easily allow the comparison between what the licenses that the organization purchased and the licenses that are actually being used, both in real-time and historical usage data. This functionality will ensure that the company stays compliant with all vendor agreements, thus avoiding costly penalties in case of vendor audits.

Determine Best Agreement Type Based on Needs

Simulating various types of software license agreements – whether LAN, WAN, or Named-User, perpetual or subscription-based – using an advanced ESM tool functionality would allow CFOs to work with CIOs to determine which combination of license agreements would best fit the needs of the company.

Attain a Better Negotiating Position

Accurate metering and true active usage reports allow for better negotiations with software vendors so that contracts can be adjusted to match the documented usage of software licenses. Get discounts and tame maintenance costs by revisiting old software contracts. ESM tools help companies get more savings in negotiating Enterprise License Agreements by measuring and calculating true global concurrency of license usage, and producing accurate software reports across an entire organization.

Enable Chargeback Accounting

An effective chargeback process starts with the accurate metering of software usage to get an overview of how engineering software assets are being deployed within the organization. Using actual usage data, the CFO, together with the CIO, can plan for future purchases and maintenance costs, and justify appropriate allocation of costs to different departments. A powerful ESM tool can help them better understand the business, implement company technology strategies and best practices, and achieve cost efficiency.

With an effective ESM tool that could provide accurate usage reports, CFOs could easily collaborate with CIOs in delivering savings and maximizing ROI from their engineering software investments.

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