Innovation: step back to leap forward

The most innovative companies don't always have bigger IT budgets. But they do often have smarter IT Portfolio Management practices that help them move forward faster.

That’s one of the eye-opening conclusions from SoftwareOne’s recent research report: Driving business outcomes through cost-optimized innovation.

Our study examined 600 businesses across 12 countries, identifying a select group of outliers we classified as "Optimized Innovators."

One of the most significant things that distinguishes these high-performers?

They often focus on eliminating waste, not cost.

They recognize that every dollar lost on unused licenses or duplicated systems is money that can't fund innovation. This value-driven clarity lets them invest confidently in new initiatives, knowing they're building on efficient foundations.

Here's how they do it—and some lessons your business might learn to leap ahead too.

Great answers start with good questions

The journey to becoming an Optimized Innovator begins with a set of four fundamental questions. Let's examine each of these questions—and some of the answers that set our high-performers apart.

Question 1: "What’s really going on in our IT estate?"

Visibility and control are essential steps in any optimization effort.

Our research found that Optimized Innovators excel at gaining comprehensive visibility and control across their IT estate: 51% have made significant progress in monitoring costs (vs. 31% of peers), 51% in software licensing management (vs. 37%), 48% in IT infrastructure costs (vs. 37%), and 48% in procurement and vendor management (vs. 32%).

This advantage translates directly into better decision-making. As one Australian CFO  in our study explained: “With data analytics tools, we can make informed decisions about our IT investments by analyzing actual usage and performance metrics, rather than relying on assumptions or outdated data.” A simple change like this can save time, increase efficiency, and free up resources to fund new projects.

At SoftwareOne, we help clients achieve similar results by focusing on their highest-value challenges. Some organizations benefit most from our Publisher Advisory services, which protect against costly software audits by clarifying complex licensing requirements. Others prioritize ITAM to gain complete visibility or FinOps to manage cloud costs. We can mix our IT Portfolio Management capabilities to match their specific situations, delivering the right services at the right time.

Question 2: "How can we improve value and efficiency?"

With visibility and control established, the focus can shift to identifying specific improvement opportunities.

Our research reveals Optimized Innovators aren't just focused on immediate gains either—they're building foundations for long-term advantages. Over the next two years, they expect significant benefits that extend far beyond cost savings: enhanced transparency across the organization (50%), reduced operational silos (68%), lower risks and compliance costs (45%), and expanded market reach (45%).

These future-focused outcomes show how mature optimization transcends simple cost management. While others might view efficiency purely through a financial lens, Optimized Innovators see it as a catalyst for broader business transformation—creating the organizational clarity and operational resilience needed to compete effectively in rapidly changing markets.

Question 3: "How can we make better use of the cloud?"

Cloud cost management reveals an interesting pattern. Unlike other optimization areas, Optimized Innovators show identical progress rates (41%) to their peers. This suggests this remains challenging for all organizations.

Leading companies are addressing this through FinOps: a practice that brings together technology, finance and business stakeholders to establish sustainable cloud economics. Their focus extends beyond simple cost reduction to encompass value optimization, governance, and long-term sustainability.

This scalable approach not only delivers financial benefits but often supports environmental goals through more efficient resource utilization and reduced physical infrastructure—helping organizations make progress toward sustainability targets while simultaneously optimizing cloud investments.

Question 4: "What’s the best way to maintain innovation in the long term?”

Creating a one-time cost reduction is always valuable, but establishing a systematic process for ongoing optimization is what truly powers innovation.

This is where the "flywheel effect" comes into play—a self-reinforcing cycle where cost savings are reinvested into innovation, driving further cost savings and innovation

Few organizations demonstrate the power of this approach better than Ascot Group.

This specialty insurance business was growing rapidly and needed a way to drive innovation efficiently and profitably.

With SoftwareOne's help, the company realized significant savings through strategic licensing negotiations and cloud optimization. Rather than returning these savings to general funds, they reinvested directly into innovation initiatives—creating a self-sustaining cycle of improvement.

This disciplined approach has transformed their IT spending profile.

While the insurance industry typically allocates 60% of IT budgets to non-discretionary spending (maintaining existing systems) and 40% to discretionary spending (innovation), Ascot has pushed beyond this limitation. "You need to drive cost savings from that 60% of your budget, so that you can free up even more money for the discretionary piece," Zweier explains.

The results speak for themselves: accelerated underwriting performance, enhanced customer experience, and sustainable growth.

It's a powerful example of how a methodical approach to cost optimization can fuel continuous innovation—a pattern we've seen consistently in our research, where the most successful organizations follow a structured path to optimization.

The right approach to get started?

This structured approach to optimization isn't unique to Ascot. In fact, we identified a consistent pattern among Optimized Innovators—a six-step action plan that creates a foundation for sustainable innovation in almost any organization

1. Unite behind a vision: Establish a unified leadership vision and culture of continuous improvement. This alignment ensures everyone understands the connection between cost optimization and innovation capacity.
2. Know what you have: Discover optimization opportunities by analyzing your software licenses, cloud environments, and custom applications. This foundation of accurate data is essential for all subsequent optimization efforts.
3. Know where you're going: Prioritize investments that will maximize innovation returns. Identify high-value, unbudgeted technology opportunities that support your business goals.
4. Develop the master plan: Define and document your rationalization and optimization targets with clear objectives and measurable KPIs. Plan for key vendor agreement milestones and strategic negotiations.
5. Press ahead with transformation: Execute your investment projects, focusing on initiatives that align with your strategic plan. Document benefits to showcase ROI and plan regular reviews.
6. Maintain momentum: Make continuous optimization and reinvestment "business as usual." Leverage IT Asset Management tools and best practices to identify new opportunities for savings and reinvestment.

Perhaps this approach could help you too find the answers you need for cost-optimized innovation?