3 Best Practices Can Slash Software Spending By 30% - InformationWeek

InformationWeek is part of the Informa Tech Division of Informa PLC

This site is operated by a business or businesses owned by Informa PLC and all copyright resides with them.Informa PLC's registered office is 5 Howick Place, London SW1P 1WG. Registered in England and Wales. Number 8860726.


3 Best Practices Can Slash Software Spending By 30%

With software spending predicted to hit $332 billion in 2016, the time is right for organizations to look at some best practices to reduce costs in that area, according to a recent Gartner report.

8 Hot Software Skills To Keep Your Career On Track
8 Hot Software Skills To Keep Your Career On Track
(Click image for larger view and slideshow.)

Companies holding a wide array of software licenses have the potential to cut software spending by as much as 30%, but their infrastructure and operations (I&O) leaders often don't realize it only takes implementing three best practices for software license optimization to get there, according to a report from Gartner.

Global software spending is predicted to hit $332 billion this year and the keys to reducing costs in this area are application configuration optimization, recycling software licenses, and the use of software asset management (SAM) tools, according to Gartner.

The paradigm shift in the way software licenses are sold in the past few years has helped. Software vendors have largely gone from selling license keys per device to charging for software licenses based on a wide range of entitlements that cover a multitude of circumstances, such as the type of device, the platform, or the use that the software will run on.

"Software entitlements say if you run this type of computer, you pay this much. And if you run the software at a certain speed, you pay a different amount. Some entitlements will charge a different price based on whether you are running the software for testing vs. production," Hank Marquis, a Gartner research director, told InformationWeek.

(Image: PonyWang/iStockphoto)

(Image: PonyWang/iStockphoto)

As a result, I&O leaders have the opportunity to take a deep dive into examining how they are using the software to optimize potential savings. Roughly 90% of organizations have this potential for cost savings because their organizations' software policies and practices are immature and not yet set up to search for cost savings.

Instead, most companies' software asset management (SAM) tools are used for tactical purposes, including ensuring compliance with software audits, Marquis said.

"Default settings on the software usually are the most beneficial to the publisher, and the complex entitlements are not always as transparent as they should be," said Marquis, noting companies often pay more for the software than needed.

While the task for combing through all of the software entitlements and considering the way the software is actually used may seem an arduous task, Marquis noted there are SAM tools that can help the process.

Three best practices for reducing the cost of software spending, Marquis noted are:

  • Optimize software configurations to leverage savings on licenses.

Data center software is particularly ripe for cost savings, when taking this approach, Marquis noted. For example, data centers have virtual machines running everywhere, and some entitlements will charge more if the software is running on a fast processor.

"Most IT people think the faster it is, then that's good. But what they should be asking is whether the task that needs to be done can run on a slower one and, if it can, then it should be shifted to a slower one. Then, that's found money," said Marquis.

  • Recycle software licenses.

When an employee leaves, companies will often take the computer and wipe the hard drive clean and buy a new license for the new employee. Instead, what I&O leaders should be doing is looking at the entitlements to see if the old license can be reallocated to the new employee, Marquis said.

  • Use SAM tools to optimize software licenses.

Companies that have mature operational processes for managing software, and that use SAM tools to focus on optimizing software licenses, generally report saving up to 30% on software spending within one year, according to the Gartner report.

The report surveyed 800 clients on SAM tools between May 2015 and March 2016. SAM tools handle such tasks as determining that software use is in compliance with the vendor's terms. They figure out ways to cut software spending costs by automatically culling through software use and comparing it against the entitlements.

[Read Gartner Sees $1 Trillion Shift in IT Spending to Cloud.]

In deciding which of three best practices to deploy first, Marquis noted I&O leaders should use their SAM tools to first look at the way the software is configured.

"The first thing is software configuration. I would start with the data center," said Marquis, noting there are many areas within a virtualized environment where cost savings can be found. "Next, or underneath that, I would look to recover or reuse licenses."

Despite the potential savings, how likely is it that some, most, or all of the 90% of companies that have immature software management practices will take action to shave off nearly a third of software spending through these three best practices?

"Who knows?" Marquis quipped. "But I think about this a lot. The game is changing and it's costing you a lot of money."

Dawn Kawamoto is an Associate Editor for Dark Reading, where she covers cybersecurity news and trends. She is an award-winning journalist who has written and edited technology, management, leadership, career, finance, and innovation stories for such publications as CNET's ... View Full Bio

We welcome your comments on this topic on our social media channels, or [contact us directly] with questions about the site.
Comment  | 
Print  | 
More Insights
Newest First  |  Oldest First  |  Threaded View
Catherine Hudson
Catherine Hudson,
User Rank: Apprentice
4/5/2017 | 5:05:12 AM
Other ways to cut costs
There are other ways to optimize software procurement. The first is to discover unused purchased software with the help of SAM tools, such as Binadox, and cut software expenses by simply reducing the number of licenses in the future or revoking redundant license agreements. Additional savings can be achieved by detecting software products with similar functions to consolidate onto one vendor and negotiate more favourable terms, or by switching to less expensive products.
The State of Chatbots: Pandemic Edition
Jessica Davis, Senior Editor, Enterprise Apps,  9/10/2020
Deloitte on Cloud, the Edge, and Enterprise Expectations
Joao-Pierre S. Ruth, Senior Writer,  9/14/2020
Data Science: How the Pandemic Has Affected 10 Popular Jobs
Cynthia Harvey, Freelance Journalist, InformationWeek,  9/9/2020
White Papers
Register for InformationWeek Newsletters
2020 State of DevOps Report
2020 State of DevOps Report
Download this report today to learn more about the key tools and technologies being utilized, and how organizations deal with the cultural and process changes that DevOps brings. The report also examines the barriers organizations face, as well as the rewards from DevOps including faster application delivery, higher quality products, and quicker recovery from errors in production.
Current Issue
IT Automation Transforms Network Management
In this special report we will examine the layers of automation and orchestration in IT operations, and how they can provide high availability and greater scale for modern applications and business demands.
Flash Poll