Right now you require visibility and control of the software within your organization.
Ask yourself these questions:
- Do you know what software is deployed in your estate?
- For software that is deployed, do you know whether it is used?
- Do you know what cloud services you have subscribed to?
- Are you sure you are paying for those cloud services optimally?
- Do you know when your software renewals are due and what the terms of those renewals are?
If the answer to ANY of these questions is “no” or “not sure”, then you are likely wasting money, and there is a significant spend reduction opportunity for your business.
You won’t be alone in not having trustworthy data at your fingertips. In fact, according to the 2017 SAMS Europe & USA Survey Report, 73% of organizations do not have automated license tracking and reporting. This means that decisions are often made without knowing all the facts, and with cloud being such a prevalent part of your IT strategy, this problem is immediate and costing you money now. With 30% of growing expenditure on cloud going unused and therefore overspen, this is likely happening in your business. You can – and need to – stop this unnecessary spend now to help your business during this expected downturn in the economy. It is one area of focus that will have immediate return on investment in the time you put into it.
Only 60% of software spend is under management of procurement, which means 40% is not. In our experience, the 40% is typically the tail spend of software – those smaller vendors, which with some diligence and process, can have cost taken out of that spend. With even the 60%, we see an average of 35% spend reduction in some Tier 1 vendor renewals through additional diligence and access to trustworthy data. Vendors will still be looking for renewals, so make sure you only pay for what you need by utilizing this data.
This requires not only an understanding of what software is deployed within your environment, but also how that software is actually used. Alongside this inventory and consumption data, you will also need to know your software contracts, upcoming renewals, and if possible, future requirements.
So where can you gain access to this data? Companies have not been investing enough in the area of asset data for too long, so you may not have the data you need. If you have a Software Asset Management (SAM) team, check with them. If not, you can check in other areas such as Security or CMDB, although these also may not be accurate, may not cover the whole estate, and may not give you the information you require. You may have discrete tools that are often used for another application and may not be perfect, but will give you an idea, such as IBM Big Fix or the IBM License Metric Tool (ILMT is renowned for being hard to use and our consultants often fix the setup), Microsoft SCCM, or free tools like Microsoft MAP. You can look at rolling out a specific SAM tool quickly without too much cost to get that much-needed visibility.
Once you have access to data you trust and are able to make informed decisions, the four key areas of focus to curb unnecessary spending are:
This is an easy way to cut out cost, and when Gartner talks about cutting costs by 30% in the first year of introducing SAM, this is one of the ways. You stop buying where you know you have spare licenses. It’s simple if you know what you have bought, know what’s installed, and have compared the two. This is made easier when you have that specifically-designed SAM tool to reduce spend on renewals and those new purchase requests.
2. Renewal management
This is a great way to start working on the 40% of vendors you know your procurement teams don’t have the time to work on. Know when the renewals are, know who the product owners are, and know what is used. There is plenty of opportunity to eliminate spend by co-terminating and consolidating these renewals and ensuring you only buy what you need. This is especially important due to your current change in IT strategy. Start to work proactively on them, today.
3. True optimization of any high-spend contracts
Utilize the data for usage, inventory, and future requirements. Understand all options open to you for licensing agreements, country of purchase, and flexibility in changing requirements. Speak to experts who can advise on this as well as alternative products – for example, the opportunity of switching to Open JDK to remove subscription cost changes for Oracle Java.
This should be an immediate area where you can make a difference from both SaaS and IaaS. Some companies are not used to cloud technologies, and due to necessity, may take short cuts or wrong cuts due to lack of governance and experience.
- SaaS technology. You may require less due to the current changes. Can you look to remove vendor subscriptions and therefore cost for the short term? Does your contract allow this? Do you even know what you are using? If you require more, then buy on a flexible agreement type that will allow you to use and buy less when “normality” returns. Use tools that monitor the consumption, and if you don’t have one, get one – these are very quick to install and show an almost immediate ROI.
- IaaS in a public cloud is a huge opportunity to reduce cost. Are you paying to leave the lights on when they are not needed? Do you know who is using the software, and therefore able to provide accountability through cross-charging mechanisms? We often see spend reduction when a part of the business realizes they have to pay for it. Do you know how to “Bring Your Own License” to this area? This can be both an opportunity but also a threat if this less expensive licensing model is being used, without knowing if you have licenses you can use.
- Over-usage is charged retrospectively, which bites budgets hard, as you can’t challenge that cost or optimize usage once the time has already passed. Proactive monitoring and control is the only way to avoid these unbudgeted surprises.
- Control & predictive spend analytics allows IT to provide the FD/CFO with more accurate estimations on future spend at a time when they will be wanting increased control of cash flows. With reporting governance, spikes can be immediately visible, and corrective action put into place.