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SMART SOFTWARE COSTS

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IT spending is constantly growing worldwide, the main driver for that are software costs increasing year-to-year by nearly 10%. We in Smart Cost strongly believe that controlling and optimizing your software costs is now a must-have skill to run a sustainable IT department. We will provide you guidance through a roadmap to become cost effective.

Our specialization is to reduce software costs by applying best practices in four key areas – software portfolio standardization, infrastructure and license optimization, controlled usage and re-harvesting, and supplier negotiation. We can identify quick wins to decrease software costs in less than 12 months as well as build strategy for long-term cost reduction. We will help you to gain clarity of current software spend and predictability through software budget (both CapEx and OpEx) as this is the foundation for cost optimization.

EXECUTION PLAN

  1. Collect license entitlements from the customer and vendors to get software spend visibility for both on-premise and cloud, looking up to 3 years backward. Gather software usage data if available using internal discovery tools or SaaS dashboards.

  2. Design budgeting and forecasting process from SAM perspective to improve clarity of predicted software spend, consisting of two streams – operation costs (recurring) and projects (investments).

  3. Review recurring software costs for key vendors, propose and develop an action plan to achieve savings. Typical strategies are over-licensing decrease, infrastructure optimization (e.g. dedicated cluster for a specific vendor) and software portfolio standardization.

  4. Challenge planned (project) deals and identify possible savings by optimizing license scope & timing (e.g. partial scope for implementation and full scope for go-live), licensing metrics or bench-marking unit price.

  5. Execute action plan to reduce actual and future software spend, including license agreements re-negotiation to both optimize costs and mitigate gaps (e.g. limit year-to-year maintenance uplift).

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ASK YOURSELVES...

  • How long prior license expiration do you initiate your maintenance renewal process?

  • How do you measure and minimize over-licensing of your on-premise and SaaS products?

  • Do you have software usage metering and license re-harvesting process in place?

  • What processes you have in place to standardize your software portfolio?

  • How do you evaluate and manage your leverage to negotiate commercial conditions for software?

BUSINESS CASE STUDY

Customer did not have an IT Asset Management role in place, therefore understanding of software and hardware costs was completely missing. As a result, IT department was having issues to comply with budget requirements and deliver value to the organization.
After reviewing entitlements and contracts we introduced software costs clarity and created time plan for maintenance and subscriptions renewals. At the same time, IT budget details helped us to understand new projects and investments and prepare for upcoming deals. The customer was spending € 600k for recurring software and € 200k for new projects.

More detailed research and following renegotiation allowed to accomplish savings of € 70k on recurring costs and € 30k from new projects (that represents over 10% of SW budget):

  • Microsoft licensing model was transformed – MPSA contract was added to existing Enterprise Agreement. It allows to purchase licenses without Software Assurance. Based on calculation, 3Y savings will exceed € 70k.

  • ServiceNow users were cleaned-up and partially changed to lower user rights or removed completely. Annual maintenance can be decreased by € 20k a year.

  • Oracle Database Standard was reinstalled to Oracle Database Enterprise and migrated to already licensed cluster. As result, Oracle DB Standard licenses can be terminated and maintenance decreased by € 15k a year.

  • Planned purchase of Trend Micro was reviewed and proposed to purchase lower amount of user licenses, while adding a clause to reactively purchase missing licenses once per quarter. Savings during the first year should be around € 30k.

  • Two software solutions were planned for decommission in 3-year period. Based on the analysis customer decided to not renew maintenance in amount of € 12k a year.

WHAT IS NEEDED FROM YOU?

  • Introduction meeting to clarify the scope and goals.

  • License entitlement data (incl. contracts and invoices).

  • Software budget & forecast data.

  • Software usage data for selected vendors.

  • SteerCo meetings to provide findings and propose solutions.

  • Bilateral NDA.

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