IT departments are asked to innovate more whilst having their budgets pared back, usually at the cost of the renowned “innovation budget.” One of the best areas from which to reclaim that budget is in your long-standing software licensing agreements. And an upcoming renewal offers the perfect opportunity to renegotiate your position.
To reclaim that budget, you need to know what software you actually plan to use over the next agreement term. Many companies have not mapped out a technology strategy in alignment with the software required to support it, and consequently find themselves over-paying for software they are not using and will never use.
The following is a loose collection of topic areas. But putting consideration into all of them before your next major renewal will yield an agreement that will better fit your unique purpose; i.e. an optimized model that can free up budget for more exciting activities.
1. Align Your Technology Strategy to Your Business Strategy
The advent of cloud technology and the ease with which cloud services are procured means that many areas of the business are increasingly acting independently of IT. Pretty quickly, companies can find themselves with an oversupply of under-supported technology, which increases the outlay on licensing and adds to the support burden on IT staff. Innovation suffers while fires are being put out.
Building a technology strategy hand-in-hand with the business strategy alleviates many of these costs. It also strengthens your negotiation position at renewal time – a clear technology plan puts you on the front foot and removes salesmanship from the process. Moreover, IT regains its relevance by becoming the business enabler.
2. Avoiding The “All You Can Eat” Agreement
Software bundling, unlimited product usage, enforced standardization, platform discounting. These are all tools that major publishers use to encourage you to adopt their premium agreement models, almost all of which will include a myriad of products you have no requirement for. These are sales tools and the hope of the publisher is that you will adopt those extras since you’re entitled to them anyway.
This isn’t necessarily a negative. The price breaks associated with these premium agreements can be hugely beneficial, and it is often worth carrying entitlements to a load of unused software. But for many companies, this model is overkill and a much more optimized agreement will prove the better financial option.
3. Usage Profiling
The cloud has added a new level of flexibility to license and agreement models, but even the traditional on-premises models may offer greater scope. When your workforce is made up of roles with limited requirement for computer usage, there’s potential to recognize significant savings. To realize those savings, you need to know who your users are, what software and services they use, and how you want them to use technology in the future.
4. Disconnect Between IT and Procurement Departments
As companies grow, so too does the gulf between those who implement technology and those responsible for procuring it. Throw in the fact that many cloud-based services effectively circumvent the traditional channels of technology deployment, and it becomes harder to effectively optimize your license position.
A clear technology roadmap that is closely aligned with your procurement processes will bring things back on track by limiting what software is approved for purchase and how it can be procured. This keeps the whole business on the same technology strategy, greatly enhancing the ability to optimize license agreements. It also gives procurement the tools and data needed to negotiate the best position with the publishers at renewal time.
5. Aligning When You Need the Software with When You Need to Pay for It
Understanding when and how you plan to deploy new technology can be important in navigating the minefield of license entitlements. In particular, understanding the gap between your current and future state can help uncover entitlements that will carry you across the gap without wearing the costs of unnecessary renewals. For example: if you’re consolidating your server deployments into the datacenter or into the cloud, do you know what your entitlements allow?
The same is true when moving from a traditional procurement model in which software assets are capitalized to more recent cloud-based consumption models. Having a clear roadmap can mean you’ll only pay when you actually begin to consume, rather than funding subscriptions sitting on stand-by.
6. Software Asset Management
A mature Software Asset Management (SAM) practice is the cornerstone of a technology strategy. Clear, up-to-date SAM data will often uncover unknown entitlements. In many cases this uncovers technology that’s already available to meet your roadmap needs, possibly in competition with other products, which can lead to further reductions in your software spend.
Renewal time is stressful and disruptive. Software publishers know and exploit this, an attitude that often results in their customers throwing money at an “all you can eat” style of licensing agreement to make the problem go away. Don’t fall into this trap! Click the banner below to contact a licensing specialist who can help you define your technology strategy and ultimately turn your complex software license agreements into genuine cost savings.