Relevance Of IT & SAM In Corporate Governance

Corporate governance is about principles, processes, systems and accountabilities that influence how business corporations take decisions, allocate resources/ returns, execute responsibilities and undertake risk management, whether financial or otherwise, with an objective of protecting and promoting the interest of the shareholders, management, board of directors and the employees.

When we talk of accountabilities, risk management and allocation of resources from a corporate governance point of view, management of software as an asset and having a control on other IT and security-related issues within an organisation becomes relevant. As the need for software is all pervasive to any organisation using computers to run its operations and that software distribution and usage is licenced (open or proprietary) and protected under IPR laws, IT governance becomes one of the integral parts of corporate governance.

Therefore, we can say that IT Governance is a framework for the organisational management to adopt industry standards and ethical practices to ensure a healthy, secure, productive and compliant IT infrastructure (both hardware and software), which enables an organisation to achieve its business goals and objectives.

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Businesses of all sizes benefit financially from IT governance. Research shows that:

* Businesses are 20 percent more profitable than similar firms with poorer governance.
* Investors pay 14 to 22 percent more for well-run, well-governed companies.
* Top-rated corporate governance companies consistently return more than triple the profits to investors than that of lower-rated companies over three, five, and 10 years.

Software Asset Management (SAM): A part of IT Governance

SAM is an ISO Standard, titled ISO/ IEC 19770:1-2006 published by the British Standards Institution (BSI) in May 2006 and relates to the processes and procedures of software asset management. SAM standard has been formulated to provide an internationally-recognised standard against which organisations can measure policies and procedures to ensure ongoing compliance in regard to IT asset management. SAM also assists in providing effective support for IT departments in continuing compliance with legal and contractual requirements and to demonstrate good corporate governance. Besides, SAM enables companies to attain a high level of IT maturity, efficiency and competitiveness.

On an average, software can represent approximately 25 percent of an organisation’s information technology budget. Logically, effective management of software can lead to significant cost savings. Yet, surprisingly, many corporations of all sizes do little or nothing to manage their software, missing out on the benefits of SAM.

However, India is gradually seeing a rise in adoption of SAM framework by organisations to manage their software assets and achieve a high level of IT competitiveness. As Indian corporates become more diversified and global in nature, it is only logical for them to adopt best practices in IT usage and its management. In fact, companies like UST Global that have adopted SAM have reduced software and operational costs as SAM enabled the company to take control of its software assets and manage them more efficiently.

Software Asset Management enables enterprises to adopt good corporate governance practice and helps them to maximise return from their software investments, while at the same time protects them from exposure to legal and financial costs that may come about through non-compliance.

A good SAM program can help give you financial security from unexpected licencing costs. SAM can also help to provide tax benefits associated with software depreciation and in turn SAM enables management to understand its software assets and to gain control over licencing. SAM helps prevent inadvertent breach of privacy or theft of confidential information by securing database integrity and enhancing network security. Lastly, SAM helps regulate application change management and plan inventory purchases, which saves money. These are all hallmarks of well-governed, well-run organisations.

Good corporate governance also entails adhering to compliance regulations:

* Well-governed IT departments recognise that the adoption of formal policies and procedures enables them to help their corporation meet specific regulations such as Sarbanes-Oxley (SOX) requirements.
* SAM streamlines your IT and purchasing departments by helping them to better plan inventory purchases, upgrades, and new releases.
* It establishes and maintains a thorough and secure library of your software assets and licences and can mitigate situations where significant deficiencies attributable to IT have been cited.

Security: A subset of IT Governance

IT has become an integral part of everyday business and private life. Though new technologies give unprecedented functionality, they also introduce new risks and an environment which becomes harder to control. Increased dependency of most organisations on IT and related systems means higher impact or damage when things go wrong, such as a security breach, theft of data, attacks of viruses/ trojans, disruption by malicious code, denial of service etc.

It is true that information security governance is on top-of-mind for organisations around the globe today. Information security is not just another technology problem, but it is a business issue and is rightly a subset of IT governance dealing with the policies and internal controls related to information resources and their security.

Genuine software for an enterprise

Piracy is one of the most significant problems facing the software industry globally, causing a worldwide loss of $48 billion with 38 percent of the world’s computers running on pirated/ unlicenced software (2007 figures).

For any enterprise, the benefits of using genuine software under a SAM model are not only apparent but are also critical and imperative. The few key advantages can be outlined as follows:

* Clarity on software information for enhanced decision making, better operational efficiencies and increased employee productivity.
* Clear software requirement forecast and a defined procurement plan leading to reduced cost of licence acquisition and lead time.
* Enhanced customer and business partner reliability and trust on the systems and IT infrastructure for quality services and safe and secure product delivery.
* Respect and appreciation for third-party IP rights and compliance with the laws of the land. Avoidance of financial and legal liabilities.

Dhakad is chair of the BSA India Committee.