It can feel like the pressure on IT departments to reduce costs is unrelenting and, if you’re the manager tasked with reducing spending while increasing efficiency, you’ll know that it’s by no means a simple undertaking.
In recent years, software firms have shifted from a sales model (where software is owned outright) to a licensing model (where software is licensed on a long-term payment basis). Such licenses can become a costly and potentially permanent overhead – placing additional strain on your already stretched IT budget.
In addition to this, the IT industry is expanding and developing at a rapid pace; consider cloud computing, multicore processing and the use of mobile devices, all of which would barely have registered on spending forecasts a couple of decades ago. But, reducing costs and increasing productivity isn’t impossible – it just requires a little thought.
Take a look at these seven powerful ways to reduce your software licensing costs while enhancing the value and efficiency of your software system.
1. Carry out a thorough software audit
It should come as no surprise that the first step to reducing your software licensing costs is to carry out a thorough and detailed audit. As well as gaining an overview and detailed understanding of the software that your department or business currently has in use, you’ll also gain a deeper understanding of which pieces of software are business critical.
As a manager or director, you need to understand who is using which software and how it aligns with their role. It’s feasible, for example, that when personnel change roles or leave the company, their existing software is no longer required but payment continues to be taken from your budget pot. By having a clear overview of what you’re spending and where it’s going, your organisation will be able to make targeted procurement decisions without pointless expenditure.
2. Optimise your existing licenses
Now that you’ve carried out your audit, how are your existing software licenses looking? Are they all earning their keep? Or are there some that sit unused whilst rolling from one renewal to the next? Tackling these issues is undoubtedly a challenge, but with the right auditing and optimisation process, you can create a streamlined software portfolio that works for you.
To optimise your existing software licenses, you need to have a clear overview of all the services and applications that are currently in use across the organisation. Once you have this portfolio, compare it against existing contracts and licenses to identify unnecessary costs and assess where additional licenses are required.
This process enables organisations to transfer licenses within the organization, maximising the value of existing software assets.
3. Negotiate with existing suppliers
Once you’ve optimised your existing software licenses and identified unnecessary costs, you’re in a strong position to negotiate contracts with your existing suppliers and reduce ongoing maintenance costs for unused software (aka shelf-ware). When you have a clear picture of your company’s actual usage (as well as forecasts for future usage), you can negotiate accordingly.
Here are some helpful tips you can use at the negotiation table:
- Look carefully at the terms of your existing contracts and those offered by alternative suppliers before entering into discussions.
- Aim to negotiate new contracts well in advance of your next licensing renewal date to be in the best position to negotiate; if you leave it until the last minute, your negotiating position diminishes considerably.
- Ask about any available discounts and be willing to offer longer-term commitments for the right rates.
- Head into discussions armed with facts and data to ensure that you can leverage your buying power based upon how you actually use your software.
By negotiating effectively with your existing suppliers, you can ensure that your staff have the right tools they need to do their job, and that they’re procured at the lowest possible prices. As a company’s software needs change, the business must make commercially-targeted decisions to ensure those needs are met at a competitive and sustainable cost.
4. Consolidate your existing packages
Look into whether you may have multiple software licensing agreements across different project groups or various sites. Separate licenses often exist because there are different versions of the same software in use across the organisation.
Once you’ve assessed whether this is the case for your business, you can look to seek a consolidated license that suits all of them. To do this, you may look into implementing effective SAM (Software Asser Management) or consolidation software; this can have a dramatic effect on the number and types of licenses your business requires. The consolidation of existing packages can quickly lead to savings without compromising on functionality – a quick win.
5. Manage staff usage
Managing personnel effectively can have a positive impact on your software licensing costs. Best practice procedures include setting a system log-off after periods of inactivity to minimise the number of licenses in use at any one time. It’s also strongly advisable to adopt a practice whereby administrative rights are required for any new software installation. This will prevent users from accessing software when it’s not necessary for business operations.
Ensure that any returned computers from exiting members of staff have the software uninstalled and the license released. It could also be a good opportunity to confirm with your provider that re-installations after a computer refresh do not consume an extra license.
6. Consider cloud computing
By moving to cloud software, a business, whatever its size, can save substantial costs through reduction on equipment, infrastructure and software. By investing in cloud computing, you allow yourself to rent additional processing power over the web without using expensive servers. Rather than spending big on hardware, software and licensing renewal fees, cloud computing enables you to cut down both your capital and operating costs by using the resources of your cloud provider.
As the cloud platform is utility based, you only pay for what you need, when you use it, transferring you to a pay-as-you-go, subscription-based cost structure. The cloud requires lower initial investment and typically lower overall costs than an on-premise model. It could also lower your IT personnel spending and even save on energy consumption.
7. Prevent unwanted software from harming your system
It should go without saying but it’s worth confirming: closely monitoring all of the software on your system will help you to identify any applications that can prevent a significant security risk. This includes games, applications with internet access, network applications, and more. Each and every installation, no matter how seemingly small, provides potential attackers with backdoor access to your system. Sabotage and system attacks can prove costly to businesses that rely on software for daily operations, which in this day and age, is virtually all companies.
Cost containment is an ongoing challenge for any business, but by aligning with the suggestions listed above you can optimise your software costs and make substantial savings relatively easily.
For more IT tips and advice, head over to the CDL blog to read our latest features and guides. If you’re in the process of overhauling your IT systems, visit our homepage to find out about our IT disposals services or call us today on 0333 060 5203.