Top tips for cutting software costs

To thoroughly and effectively cut software costs, an IT strategy that provides both commonality and direction is essential. From start to finish, the strategy should lay out the change journey. This will range from pinpointing the main areas of software expenditure to exploring licence options. Doing so will enable a full digital transformation in an agile and undisruptive manner.

The largest areas of software spending will vary from business to business. What may be expensive for a smaller business may not have the same financial impact on a larger company. This is down to the number of employees and overall software usage. For example, HR or finance software may cost the same for both a small and large business. Although it will be comparatively less of an expense for the larger company due to economies of scale. Being aware of these costs can help decision makers pinpoint where effective cuts can be made without compromising functionality.

A thorough audit should be carried out before cancelling, upgrading or removing software applications. This will help identify overlapping uses, rogue subscriptions and test how many users are accessing the software. It is not uncommon for larger businesses to have a variety of subscriptions to different applications that all do the same thing. By identifying these crossover areas, decision makers can align usage across departments and encourage staff to adopt the same applications already in use throughout the business.

Many businesses also fail to make full use of the applications available to them through an Enterprise Agreement or the suite of applications they are licensed to. Rationalising an application estate and reducing / removing expensive software that isn’t being utilised can help to cut down on costs.

Having conducted a thorough audit, it is time to look inwards at the digital needs of the workforce. Aligning the needs of employees with what applications can provide is an effective way of choosing which ones will bring the most value to the business.

With proper research, it might be found that a handful of applications provide the same features as the large portfolio of existing ones. By reducing the number of subscriptions being paid for, software expenditure should naturally decrease.

It is important to continually monitor the needs of the business, as well as whether the software is being used and how often. This way, should employees deviate from using business standard software, it can be easily rectified and subscriptions changed if necessary.

The licensing of applications should be under continual review. This will ensure the number of licences available is appropriate for business use. Based on the shape and size of a business, there can be a number of licensing options available, such as True-Up / True-Down licensing. These can be adopted for larger businesses which have more users. Alternatively, pay-as-you-go models can be effective depending on frequency of use. However these need to be carefully monitored as this could be an expensive alternative should the application be left running for a long period of time.

Whilst longer fixed-rate contracts may offer better rates, this could leave less room in the long run for finding new software that fits the business’ needs. It is also worth considering whether one upfront cost is a more effective alternative to a monthly fee. Again, this will depend on the needs of the business.

For businesses looking to make internal changes to IT systems, there are a number of effective and immediate changes that can be made. To thoroughly reap the benefits of this change for good, constant monitoring and a carefully considered IT strategy is essential.