Are your software licenses costing you more than 2 million euros? – EconomyMorning


The economic uncertainty resulting from the coronavirus pandemic is putting enormous pressure on companies to curb spending and optimize their operations. Reducing costs by downsizing or overexploiting IT resources could appear to be an easy solution.

However, these measures can be counterproductive if they have the effect of slowing down growth, preventing the company from adapting to new work environments, new market conditions, or even increasing costs. on the long term. Software licensing is an area where IT departments can find the savings they need without downsizing, research shows. Why ? Because many companies today do not fully optimize their software investments.

Wasted investments

Investments in software licenses and SaaS services ( Software as a Service) skyrocketed as companies introduced telecommuting. These spend on average more than 11 million euros per year on licenses, to which is added 8.45 million euros in SaaS. However, 22% of spending on licenses in France relates to software that ultimately remains unused.. This represents more than € 2.3 million in wasted investments each year, an amount that would pay the salaries of 45 IT specialists.

There are several explanations for this situation, relating to systemic issues around cost management. For example, many IT teams are already on the defensive when it comes to negotiating with publishers. Although they have experience dealing with the most important of them, they still face the difficulty of keeping up with the evolution of license conditions and commercial agreements, especially when the choice between on-premise or on-site applications. cloud complicates matters further. While studies show that a company deals on average with 16 publishers, it is perhaps not surprising that 81% in France believe that they would be in a more favorable position to negotiate if they improved their knowledge and skills. subject matter skills. Ultimately, many of them prefer to spend too much to avoid lending themselves to future audits on their licenses.

At the same time, the main source of overspending is that businesses do not know what resources they have or need. The technological expenses decided by the operational managers are expected to exceed those financed by the IT departments by 2022, and this without any guarantee for the latter to have visibility on these purchases. On average, companies already use nearly a hundred different applications from various vendors, with a high probability of redundant functions between them, and this number can even go beyond 700 for some. In the absence of supervision, this results in a heterogeneous pool of licenses where it is difficult to track and identify waste..

These factors have been exacerbated as companies seeking greater agility have adopted more decentralized operating models, in which each division or region decides on its own IT purchases. While this allows companies to better adapt to changing demand, it also increases the risk that each buyer does not have the necessary licensing knowledge to be able to negotiate well or that they may not be able to benefit from licenses. ” a favorable price thanks to grouped orders. In addition, this further complicates the entire IT landscape and therefore increases the difficulty of spotting waste.

Save money by optimizing your software costs

Companies are aware of the need to reduce the cost of their licenses: over the next 12 months, each of them aims on average to save around 1.6 M € on its SaaS and software expenses. Optimizing the cost of licenses would allow them to do so without having to cut into potentially valuable technologies. However, the difficulty is knowing where to start: for example, 60% of French companies think they are spending too much on licenses but do not have the necessary data to confirm and remedy it.

Even if it were strategically justified, companies cannot reverse decentralization overnight. Acquiring the experience and knowledge to be able to negotiate with publishers will require extensive training or the recruitment of the right skills. The number one priority must therefore be to make it easier to identify waste, whether it is unused software or duplicative applications.

This is where an effective software asset management solution comes in handy. This is traditionally seen as a simple means of ensuring software compliance even if, while 87% of IT decision-makers in France expect to see an increase in license audits driven by publishers wishing to protect themselves during the pandemic, this could be sufficient reason to invest in it. Yet, over the past decade, it has become clear that software asset governance allows IT teams to know exactly what resources they have, where they are being used, and in what cases they might be removed or consolidated into the business. aim to reduce costs, without disrupting or harming the business. The problem is convincing management to invest in new technologies and skills when the company has many other more immediate priorities.

Conquer companies

It is essential that IT deploys the appropriate level of software asset governance in the enterprise. There is no one-size-fits-all strategy because each company or department is faced with its own issues. We mentioned earlier the software purchases made by operational managers: any strategy must therefore take into account the challenges facing all stakeholders and integrate them into the debate. This means going beyond IT and understanding the needs of HR, Finance, Legal and – in a decentralized company – different regions.

In order to then gain the support of the management, it is important to define the objectives for the strategy around the optimization of software assets and to be able to demonstrate the benefits. For example, these objectives may consist of strengthening the company’s bargaining power with publishers, standardizing and streamlining the application portfolio, or even optimizing the purchasing process so that it does not constitute an obstacle to the company. companies needing reactivity.

To illustrate the advantages of optimizing software purchases, it is sometimes sufficient to highlight the savings it can generate and which largely outweigh the costs. For example, eliminating a company’s average spend on unused software would be more than enough to help it meet its software and SaaS spend reduction goals. In addition, according to Gartner , companies able to standardize and rationalize their application base can achieve savings ranging from 15 to 25% of their budget on this item. Equally important here is to present the risks of doing nothing, whether it be continued waste or the cost of an unannounced license audit.

The deployment of this governance enterprise-wide has taken on a new urgency in 2020 because it can help companies reduce costs, optimize their return on investment and become compliant. with regard to audits carried out by software publishers. Whether companies deploy a software asset management solution in-house or outsource it to an expert, it will help make license optimization a crucial aspect of any post-2020 IT strategy. , potentially reducing the need to apply cuts in other sectors that could cause long-term strategic damage.