Lifting lockdown: How cutting software cost can help businesses stay afloat in the new normal

Most companies have moved through the first phase of surviving the lockdown in the UK and are now onto phase two - finding ways to preserve cash flows; a great place to start is with SAM.

This is a contributed article by Antony Attfield, Services Manager, SoftwareONE UK.

With lockdown restrictions in the UK easing slightly, businesses are now re-opening, or planning to re-open their doors. Having navigated the first stage of the COVID-19 crisis, many are now looking to preserve cash flow and reduce costs wherever possible in the face of a rapidly changing and ambiguous future - and are turning to IT to help. Of course, not everything organisations were using before or during COVID-19 will still be needed in the ‘new normal'. It is this change of circumstance that has led organisations to turn their attention towards software asset management (SAM) - assessing what is critical to keeping the lights on, and what is not. Many deadlines for costly, annual enterprise agreements are also approaching or have even now passed (Microsoft's year end is June and Oracle's was May), meaning the time to rethink software spend is now.

 

Where to begin when cutting costs?

SAM is a great place to start when it comes to cutting costs. It's likely that businesses are paying for software that, in the current circumstances due to homeworking, may be in greater use than usual, requiring more licenses. Or conversely, there is software not being used at all, so can be downsized or cancelled entirely. For instance, certain applications have been pivotal in maintaining business continuity, with Microsoft Teams users jumping 70 percent to 75 million and Zoom having added 2.22 million monthly active users by the end of February. However, other existing services, such as on-premise ERP solutions, could either be scaled down or scrapped.

To assess which software companies may no longer need to pay for, business leaders need to ask themselves the following questions:

  • What software is deployed in our estate?
  • What cloud services have we subscribed to?
  • How much are we paying for these cloud services?

Equipped with this information, organisations can make data-driven decisions based on what software has been paid for and how it is actually being used. This may seem like a daunting task, but by breaking down software spend into manageable sections, organisations can put the wheels in motion to streamline their software assets and reduce costs.

 

The four pillars of spend control

When it comes to curbing unnecessary spend, there are four key areas organisations should focus on:

  • Renewal management: Businesses must take steps to understand what software they are using, who the product owners are and when software renewals are due. By having this visibility over their entire renewal lifecycle, organisations can discern what contracts they should keep the same, what can be cut and what can be optimised.
  • Re-harvesting: One of the simplest ways of cutting costs is re-harvesting and using spare licences; this requires knowing what has been bought, what has been installed, and an effective comparison of the two. Organisations can do this manually or can use a specifically designed SAM tool to reduce spend on unnecessary renewals and new purchase requests.
  • Optimising high-spend contracts: For expensive but necessary licenses, organisations must seek to get the most out of their spend by finding out how flexible their contract can be. For example, some software providers such as Microsoft have already transitioned customers to more flexible monthly payments under a Cloud Service Provider (CSP) agreement. This can free up much needed cash flow over the coming months, rather than paying for the year upfront, and is also in some cases a lower cost per unit, but not always, so ensure you understand the full implications of change. These flexible agreements also often come with a variety of levels of support to help set-up and control where governance is required to prevent overpaying in the future.
  • Cloud consumption: When it comes to cloud, over-usage is charged retrospectively, which can mean an unaccounted-for chokehold around already squeezed budgets. Fortunately, this is an area where most organisations can make an immediate difference to spend. By harnessing control and predictive spend analytics, IT teams can provide more accurate estimations on future spend as well as see spikes in usage, in turn allowing organisations to put immediate corrective action into place.  Visibility into actual cloud usage and more importantly cloud requirements should lead to significant spend reduction.

For almost all organisations, the IT strategy they were working to only three months ago will have changed. Businesses cannot continue to spend as they have always done; they need to make changes to stay profitable and to navigate the uncertain months ahead. This shift could also be long-term - and potentially even permanent - so it is vital that businesses lay the groundwork for the future now. By identifying the key areas where software spend can be pulled back, and by taking steps to understand their contracts and the degree to which they can be flexible, organisations will be able to future proof themselves and identify a new strategic direction for their IT. 


Currently Services Manager at SoftwareONE UK, Antony Attfield has more than 17 years' experience under his belt helping customers manage their software assets and licensing. He is well-versed in optimising procurement and Software Asset Management for companies across the public and private sector. Attfield is an experienced operator at Senior Corporate level and his specialities include Software Asset Management, Contractual negotiations and Software licensing.