A HEALTH CHECK-UP OF YOUR IT SOFTWARE: TIPS AND TRICKS FOR LICENSE OPTIMIZATION
Contract Analyst
The summer heat is finally giving us a reprieve and the kids are back in school. We now have time for a collective deep sigh of relief.
The new season gives us time to focus on things we have been putting off. How about that annual health physical that has long since passed the definition of “annual”? Just as our personal health is an important element to not put off – a health check on our software licenses is worth bringing to the forefront before we head into year-end budgeting and software renewals.
Too often competing business demands pull our attention away from necessary planning and we resort to renewing our software licenses based on what has worked in the past. I don’t need to tell you, that can lead to unnecessary expenses (read: MONEY).
A few steps can assure you are optimizing your software spend by buying what you need:
1. We often rely on the software supplier or reseller to tally up what is needed and either pay the asking price or negotiate savings based on that count. But what if that count isn’t right? Most organizations are victims of software count creep at one time or another. Do you have a handle on the number of licenses that go unused (or underutilized)? A simple survey of your user-base can help you to determine whether a reduction of licenses is in order at renewal. One Client was able to reduce their license count by nearly 10% by simply asking their user base to respond. It surprised them to find some of the unused licenses they were paying for were for employees no longer with the organization!
2. How about redundancy in similar products’ functionality? Most organizations continue to look for ways to do more with less and technology is often one of the first places hit. But the savvy IT professional knows that organizations typically have some level of software redundancy. Business partners within your company often are keen to demand functionally specific software solutions, when an enterprise solution most likely will meet the mark just as well.
Another area where redundancy is prevalent is in merging companies where software solutions across companies can overlap. Appropriately, the initial focus of the merger/acquisition is on a smooth transition of the business but setting the next renewal date of a particular software solution as a marker to “fold in” outliers will allow time upfront to focus on the business while still not forgetting about the savings potential on the back end from an enterprise-wide software rationalization effort. One Client was able to realize six-digit savings, just by moving an acquired company’s errant software over to enterprise solutions at the time of next year’s renewal.
3. Don’t forget about shelfware. Is your organization guilty of buying additional software modules as part of a first-time “package-deal” purchase, because the price is so good? Often this is done with the best of intentions that you will rollout this additional functionality at some point soon. But not everything goes as planned. The very best alternative to this is to not buy these modules to just sit on the shelf but, rather, negotiate an option for a future purchase at the bargain-basement price you were initially quoted. This can be aspirational and is not always well received by the software supplier that is trying to boost its revenue on the initial purchase. If your organization has leverage based on overall total spend, this may be accepted easier; but you can also build leverage through swap-outs, future pilot product engagement, or other things of value to the supplier.
Still, your financial analysis may support your purchase of additional modules/products that will be shelved until they are implemented in a future development cycle. Just don’t allow time to get away from you before you reexamine whether the time you are paying for it sitting on the shelf becomes more than your financial model predicted. I know of a Client that started to roll out a suite of five products and had paid for the first three but, the initial implementation never ended up living up to their expectations so further module rollout was scrapped. In these cases, the quicker a decision can be made, the quicker you unburden yourself from the dusty stuff on the shelf.
4. Is there a better licensing or support model that optimizes how your organization uses its software? As in many things in life, we are sold on the deluxe model when the base model will be just fine. Know your needs and don’t buy for your wants. Even if it’s just a little bit more. (This can be particularly true when looking at software support.)
In all these examples, don’t forget that timing is key. There is no substitute for developing and planning a strategy that gives you time to execute and respond well before the renewal date (or renewal notification date) arrives and forces your hand.
The time for your software health check is now! Your budgeting folks will thank you for it. (And, get your personal health check scheduled, too, while you’re thinking about it.)
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