Thursday, September 03, 2009

Practical Advice to Reduce the Cost of Your Software Spend

It is not uncommon for software licensing and maintenance to be the 1st or 2nd largest budget line item for a company, so for all those companies getting ready to go into their budgeting cycle during this tough economy...reducing that number is going to be key to getting budgets approved and getting other key IT projects into the budget.

Here are some practical steps to reducing the cost of your software spend:
  1. Get informed - What software contracts do you have, when do they renew, what soft costs are included in the price tag, who's using the software and why?
  2. Clean house - Get rid of items not being used or consolidate where two products cover the same functionality (particularly key in IT management software). Focus on products you're still paying for, not those that aren't costing you any licensing fees currently.
  3. Research - For your software contracts, when is the publisher's year end (and by default their quarter ends)? Same thing for your reseller. Can you modify any of your contracts to fit those time periods? What would you want in exchange for making these modifications? What new technology are you implementing this year? Does that tie into any of your publishers "hot new products"?
  4. Examine all software maintenance contracts - Is maintenance mandatory or optional, what value have you received from maintenance to date, what is the roadmap for that product for the future and does it fit the timeline of your maintenance fees, are you fully leveraging what you've already spent?
  5. Evaluate your software reseller - How many resellers are you using? (If multiple, consider consolidation - and ask for increased savings in return.) How are they performing? What value are they bringing to the table for you? How dialed in are they to the publishers, their product use rights, incentives, licensing programs, roadmaps?
  6. Ask for help - Throw a challenge to your resellers and the publishers, have a clear picture of what you want as the outcome and ask for their help in reaching that outcome. Do this early in the game, it doesn't matter if your contract isn't up until next August - is there a significant financial benefit to renewing in December, May, June?
  7. Negotiate, Negotiate, Negotiate - Everyone is hurting in this market which means deals will be made. Play fair, recognize that everyone needs to make a profit to survive but make sure that profit includes your company.

This takes some leg work, it takes some investment of time and it takes some creativity but the payoffs are there. Alternatively, ask for help.

1 comment:

Kylie said...

This is great advice... I might print it out and paste it to my wall!

I particularly like the idea of finding out when the publisher year end / quarter end is - if you time it well, there will be great deals to be had.

I would also add that companies should strive to co-terminate all maintenance for a particular publisher - that also significantly increases your negotiating power.