On July 29, 2016, the MEGABYTE Act of 2016 was signed into law.

Last Friday, Public Law No: 114-210 m, also known as the Making Electronic Government Accountable By Yielding Tangible Efficiencies Act of 2016 or the MEGABYTE Act of 2016, was officially signed into law.

This new legislation directly affects all U.S. government agencies and follows on earlier legislation that has gone into effect over the past two to three years.

Why the MEGABYTE Act Is Different

Although complementary, the MEGABYTE Act differs from previous legislations such as The Federal Information Technology Acquisition Reform Act (FITARA), the National Defense Authorization Act for Fiscal Year 2015 (NDAA FY 2015), and the Office of Management and Budget (OMB) Guidelines.

While FITARA and NDAA FY2 015 focus on IT issues related to staffing, coordinated purchasing, IT hardware inventory, and other areas, the MEGABYTE Act lays out what agencies are expected to document and report.

This documentation and reporting deals specifically with IT software license savings that can be achieved with better visibility and efficiencies.

The full MEGABYTE Act of 2016 text can be found here.

Sponsored by the Committee on Oversight and Government Reform and the U.S. Senate Committee on Homeland Security & Governmental Affairs, the MEGABYTE law requires that government CIOs “of each executive agency must report to the OMB, beginning in the first fiscal year after this Act’s enactment and in each of the following five fiscal years, on the savings from improved software license management.”

The specific requirements that are laid out for agency CIOs are great steps to getting a handle on what software is installed within the agency.

MEGABYTE Act Cost Savings

In my 21 years' experience as a Gartner Research Director advising public and private sector on IT and software asset management (SAM) programs, I’ve found that an organization without any best practices in place could yield savings of up to 30 percent in cost avoidance and savings in the first year.

Savings will decline in subsequent years as the environment is tightly managed, but the increased visibility will continue to reap savings in other IT domains.

However, OMB and GAO already have best practices in place. They have centrally negotiated contracts and pricing—not to mention a culture that adheres to policies—which will be a huge advantage as agencies begin to move into compliance with this law.

In my professional opinion, I would expect the government could save anywhere from three to five percent by monitoring the installation and usage of software, and up to 20 percent by implementing a complete ITAM/SAM program.

When you consider that OMB reported that government agencies spent $9 billion in 2015 on new software licenses, the savings from software usage monitoring and reallocation of software could be significantly more than $450 million in the first year of this five-year legislation.

LANDESK is no stranger to the importance of ITAM/SAM solutions. Learn why LANDESK was named ITAM Champion by Info-Tech this year!