As many software vendors continue to move towards a Software-as-a-Service model, the cost of software licenses is accounting for a significant portion of the typical IT budget, up to 30%. These costs are a substantial expenditure for today’s enterprise.
As these costs continue to rise and take a larger percentage of the IT budget, it’s vital that IT procurement teams look for ways to manage these costs. Software procurement, sourcing and vendor management have always presented a challenge for businesses.
Complex software license agreements and license models make buying and managing software difficult. Software audits have been a growing trend that is highly disruptive to the business and often results in large, unbudgeted expenses.
How to Avoid Overspending on Software
The Rise of SaaS
Software publishers are continuing to move customers towards products delivered via Software-as-a-Service (SaaS), such as Microsoft® Office 365™ – the cloud version of Microsoft’s office suite.
However, this move is not limited to just consumer-facing products, well known enterprise application building blocks such as Oracle Database, Microsoft SQL Server and IBM WebSphere are also available in cloud versions – and the list is growing quickly.
Subscription-based cloud services do provide a raft of benefits for businesses, including a shift from up-front capital to pay-as-you-go operating models, reduced to no vendor lock-in, and easier maintenance for hardware and software updates. These combined with complex hybrid environments have resulted in a complicated mix of vendors, purchase agreements and licensing rules that procurement teams have to navigate.
While many believe that the cloud has eliminated the need for solid organisational control of software licenses, in reality it has placed the onus even more squarely on enterprises to carefully manage the software lifecycle.
With cloud and subscription licenses, the pendulum swings from a state where enterprises are at risk of underbuying software to a state where they are at a much higher risk of overbuying software. Overbuying is all but a certainty if the software supply chain is not well managed…
How to combat the issue of Overbuying Software
IT and procurement teams can optimise software spend by tackling the challenges that SaaS has created, using the following as a good starting point:
- Optimise license purchasing for physical and virtual infrastructure by determining where software is running and what physical and virtual processing resources the software consume. This includes VMs, hosts and other supporting infrastructure
- Manage cloud services usage and spend by aggregating data from multiple accounts for enhanced visibility and control of costs. Comparing usage of the different types and levels of the software available with the business’ needs gives insight into where costs can be optimized and utilisation enhanced
- Utilise an enterprise app store to provide self-service access to authorized applications, streamlining service delivery to improve software governance and eliminate shadow IT
The already difficult task of optimizing software and services procurement becomes even more challenging as enterprises move into virtualisation and cloud services.
To optimise software and cloud services spend in this increasingly complex environment, procurement teams need broad and deep visibility into their enterprise software environment, including vendors and users.
The right Software License Optimization solution can provide the visibility to maximize the value of enterprise software and cloud services to a business. By lowering software and cloud services costs, the benefits go straight to the bottom line and keep IT budgets in check.