Every Penny Counts: Helping Your Business Remove Software Cost During Turbulent Times

Recently, business leaders have been rightly focused on urgent issues such as the safety of their employees and customers, and setting up a remote, productive workforce. I have been pleased to see our Technology Services teams help a large number of our customers with this. The critical next step is to keep cash flowing by managing spend. SoftwareONE has a LOT of experience with helping our customers reduce spend. We have saved companies millions, every day of the year, all around the world. This document will provide you with a few tips on how to do this.

This is not a normal situation. Your workforce is either working remotely, or not at all, and who knows when this will get back to normal. Do you even know what the new normal will be? The world has rapidly changed, almost overnight, and we all have to adapt and change with it. Be prepared to do something differently now!

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:

 

1. Re-harvesting

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.

 

4. Cloud

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.

1. 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.
2. 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.
3. 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.
4. 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.

The IT strategy that you are working to now is undoubtedly different than what you were working on three months ago. What is a permanent versus a non-permanent solution? Different types of agreements will offer you the flexibility for the changes you will likely experience over the next few months, such as vastly growing your remote needs, or requiring less licenses due to your users not being able to work effectively.

Please do not carry on buying how you have always purchased - this change needs flexibility, and some agreements give you that more than others. Know your options. June is Microsoft’s year end, and there will be many anniversary payments, or renewals due. An Enterprise Agreement, for example, has an annual bill (over typically a three-year term). SoftwareONE has transitioned a number of customers to more flexible monthly payments under the CSP agreement. Not only does this free up cash flow, rather than paying for the twelve months upfront, but it is also in most instances a lower cost per unit, and includes a variety of levels of support to help set-up and control where governance is required to avoid overpaying in the future and some support levels include a Service Success Manager to ensure you are getting the most from investments.

Just be aware of what you are signing up for in the long run. If you have to sign a multi-year agreement, and by doing so you will likely save cost in the long run, negotiate smaller payment cycles (i.e. monthly, quarterly or annual rather than all the years up front), or consider financing options. Some vendors are offering very competitive rates, and we have even seen zero percent finance options given to help customers during this time.

Your IT budget could also be impacted by vendor activity in another way, since the threat of audits is still a real risk. We are seeing in-flight audits still being pushed through, and where these have been dragging, they are now pushing for a close – which would indicate a push for revenue. With software vendors’ share prices dropping, maybe public perception is not so high on their agenda, whereas the share price is!

We are seeing a rise in Shadow IT and a huge increase of spread of technology (with collaboration and video conferencing tools surging). Not all will have been paid for, and definitely not all budgeted for. Do you know what is out there? And do you know how to buy only for the short term, assuming this goes back to some sort of normality? What will be the new normal? This is where real flexibility is needed.

SoftwareONE works with our clients to identify short, medium and long-term cost take-out opportunities. This visibility provides an action plan with an estimation of savings available. This definitely provides the focus that is required, and also the strategic direction.

We work with clients to literally take millions out of their budgeted software spend, across the world, on a daily basis. You need to understand where you are now, where you are going in the future, and ALL the options open to you.

Some vendors are offering free trials. Speak to SoftwareONE, we can assist you in understanding these offerings, and how to maximize ROI in a short amount of time.

A great example of this is the Office 365 E1 trial from Microsoft that will provide six months of free use for up to 3,000 users, available through the flexible CSP agreement. Along with Microsoft, several other key vendors such as Oracle, IBM, Adobe, etc. have also responded to the changing business landscape with their own offers.

SAP is another example where the software vendor is encouraging users to adopt the Digital Access indirect pricing structure using the Digital Access Adoption Program. There is a deadline in May of this year, but cost savings can be achieved, and these can be significant.

Since these offers contain a lot of information, we recommend contacting your SoftwareONE account manager for any support needed with these suppliers.

There are very quick and identifiable actions that can be taken to remove significant cost from the business, impacting cash flow immediately.

• Cloud usage – both SaaS and IaaS – will change dramatically for the next few months, and you should make sure you know your options to provide flexibility.
• Some publishers have immediate cost take-out options:
• Microsoft – many companies have June renewals or anniversary payments – think of moving to a much more flexible agreement with governance and support for your business as you change your cloud offerings.
• Oracle – End of May is the Oracle end of year, so similar to Microsoft, only sooner. Be conscious of what you are signing up for, especially with the Java licensing changes. Look to eliminate requirements for this, alongside savings from indexation.
• SAP – Digital access indirect pricing structure with a May deadline for opt in.
• Some vendors are currently offering free licenses or trials including AWS, Adobe, Barracuda, Citrix, Commvault, IBM, McAfee, Microsoft, Tenable, Trend Micro and VMware. Be aware of what these are, and also the agreements that allow you flexibility in cash flow options, including finance options.
• Have access to trustworthy data to make the right decisions.

In the meantime, during these times of uncertainty, reach out to your contacts at SoftwareONE. Rely on our experience. Rely on our knowledge. Rely on us, we are here to help.