As technology budgets continue to remain stagnant (IDC expects only a 2.6 percent increase in spending this year), companies need to find – and eliminate – the hidden software costs that can drain IT funds.
What are some of the best ways to reduce hidden software costs?
Eliminate Extra Licenses
Gartner believes that US businesses overbuy licenses for 60 percent of their software portfolio. This creates hidden software costs in the form of excess vendor fees, as well as unnecessary property taxes. By using a software asset management system to better organize software licenses and IT contracts, companies can more precisely identify and discard extra licenses, saving as much as two percent of their annual operating budget.
Remove Unused Application Modules
During the software sales cycle, many vendors have a way of talking buyers into purchasing modules they don’t need, or bundles that include components that really aren’t necessary. Additionally, many companies continue to maintain software that, although valuable at one time, is no longer required by end users.
With an IT asset management solution in place, organizations can readily identify which applications are being used, and more importantly, which ones aren’t. By getting rid of those that are sitting idle, companies can avoid paying for maintenance – or even for the solution itself – by canceling in advance of an invoice. Gartner estimates that, by doing so, firms can reduce their annual technology operating budgets by as much as one percent.
Improve the Accuracy of Software Depreciation
Incorrect depreciation processes are a leading cause of hidden software costs. When organizations overvalue their software, they lose valuable tax write-offs. With a software asset management solution in place, businesses can improve the accuracy of software valuation, which – according to Gartner – can yield a one-time reduction of up to 10 to 20 percent of depreciable software assets.
Stop Unnecessary Software Acquisition
Companies often waste money on software they simply don’t need. A request comes in from an end user, and a new package is purchased – even though there is already a similar solution, perhaps with available licenses, in house. By using an automated tool to maintain an up-to-date inventory of all software assets, companies can stay fully aware of what they already own at all times. This can reduce hidden software costs by avoiding unnecessary software acquisitions.
Minimize “Renegade” Purchasing
By helping companies create, define, and enforce formal IT purchasing procedures, IT asset management solutions can put the proper controls in place to prevent unauthorized buyers from acquiring software without adherence to corporate policies and budgets.