Shunit Kainy

Head of Global IT Procurement

Produced By:

Battling the Tech Vendors: Optimising Licence Spend and Avoiding Audit Risk Market View Report

How can businesses reduce wasted software spend?

Reducing wasted software spend is not hard, it just takes some time and patience. The approach required will differ based on the age and structure of the company. For companies that are considered legacy companies and have been trading for a long time, most of their software is still likely to be installed on-premise on hardware that is owned by the company. This could be laptops, desktops or servers. There is very rarely a centralised view of the software usage and management, meaning that even though an employee may have left the company, they could still be paying for their software. Similarly, employees in the company may also no longer be using software that the company continues to pay for. Companies in this situation need to take a full review of their current software licences and usage, and the opportunities for cost saving will quickly become apparent.

For businesses who are considered ‘cloud born’ and have never had on-premise installations, it’s much easier to run reports to see which software is still being utilised appropriately. Where they could be missing out though is the cost savings that can be made through centralised purchasing. As they empower their employees to choose and purchase the software that they personally prefer, the business loses the opportunity to negotiate bulk purchase deals.

Reducing wasted software spend is not hard, it just takes some time and patience.

How does the procurement of cloud-based software differ from on-premise options?

The procurement of cloud-based software and tools is very different to the way that on-premise procurement takes place. Because of this, comparing the value of a cloud option to an on-premise option is not an accurate way of forecasting. With cloud options, you have a level of agility, flexibility and convenience that you just don’t get with on-premise options, meaning the value proposition is very different between the two options. Alongside this, the other challenge in forecasting cloud options is that because users have access to quickly scale up their functionality or usage, the costs can quickly rise. This is why for any new cloud solution, usage needs to be monitored closely every quarter for at least the first year. That way any increase in spend can be quickly identified and a plan put in place to manage the extra costs.

For any new cloud solution, usage needs to be monitored closely every quarter for at least the first year.

What can businesses do to stay updated with the latest technology and avoid unnecessary spend at the same time?

Businesses that want to stay on top of the latest technology whilst at the same time optimising costs need to create an efficient cloud centre of excellence. This centre of excellence should be a collaboration between finance, IT and procurement. One of the challenges that businesses may face when building such a centre is that departments become protective over certain data or processes, making it tricky to establish an overall picture of technology state and spend. The sooner that the departments work cooperatively, the sooner the business will see positive results.

One thing that the cloud centre of excellence should always do is look at software usage from a birds eye view. It could be that one piece of software is used frequently in many different departments, but procurement did not know this due to siloed ways of working. Armed with this insight, the procurement department can negotiate a much better deal with the software vendor when due for renewal.