SoftwareONE says now is the time to rethink software spending to ensure technical budgets are optimized to avoid large non-compliance fines and ensure new ways of working are properly supported.
At the start of the pandemic, organizations rushed to allow remote working, and many companies hastily purchased software without being fully informed of their longer-term needs. In 2020, Gartner estimated that unused software could account for over 20% of software spend for an average business.
SoftwareONE, an end-to-end software and cloud technology company, says this has potentially resulted in rigid multi-year contracts, overspending on licenses, limited processes in place to manage and control usage and therefore spend, resulting in serious implications for future budgets.
“As the local business world moves into a hybrid of remote and office-based employees, the software requirements will change again,” the company said.
Staff numbers may have changed, requiring more or less software licenses. Certain site-licensed on-premises applications will be used again and may require additional licenses. In addition, to ensure the safety of remote workers, different license references – such as E5 Microsoft 365 with additional security features – will be required. However, not all employees will need this level of security, and an E1 or E3 license may be a more cost-effective solution for them.
The culprits of overspending
Unused software accounts for perhaps more than 20% of the average company’s software spend, Gartner says. The waste is often attributed to specialized programs such as design software deployed across the company, even if only a handful of employees have the knowledge to use them to their full advantage.
It can also leave a business at the mercy of the supplier if a non-compliance is declared as a result of an audit, potentially opening the business to thousands, if not millions, of non-compliance invoices. Having visibility into suspected instances of non-compliance, applying required patches, and most importantly having a trusted partner to negotiate with the software vendor can make all the difference.
On the flip side, according to SoftwareONE, companies can reduce their software costs by 30% by implementing IT asset management. He says it helps reduce the risk of non-compliance and associated costs, and find areas to improve ROI on technology spend.
An internal audit is crucial to fully understand the software position of a company. According to SoftwareONE, this should not be a one-time event but reviewed annually as needs change over time, especially during and after the pandemic.
Such an audit should include an initial inventory of on-premises and cloud-based software assets, as well as the number and type of licenses (entitlement) purchased. This data will allow the company to assess any new or old software or applications that have been deployed and validate compliance against the vendor’s contract.
Having a clear picture of the software fleet allows a business to look for ways to cut costs, such as removing unused software or switching to consumption-based contracts.
As the digital transformation accelerates, it becomes even more essential to get the most out of the IT investment. SoftwareONE says making smart software decisions isn’t just about getting the best price, but also about securing the best solution for every single business.