Cherwell IT Service Management Blog
Resources, Best Practices, and Solutions for ITSM Pros

The IT Budget and the Bottom Line: Tactics to Avoid Software Budget Surprises

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Getting to the root of unplanned software-related expenditures can be harder than herding cats because of constantly shifting variables; the changing size of your user base, evolving workforce needs, and annual adjustments to renewal costs and support agreements are just a few of the things that can cause software budgets to spiral out of control. There are, however, a few surefire ways to prune and keep costs in check.

1. Use It or Lose It


On average, companies overspend on software by 20%—a steep penalty most aren’t even aware they are paying. You can save substantial amounts of money by implementing technology and processes that enable you to monitor, identify, and eliminate waste in your license spend. By understanding software utilization, you can:

  • Ensure that licensed applications are installed only on the machines of users who truly need them and are actively using them. If certain applications aren’t being used, you can either re-allocate them to other users instead of purchasing additional licenses, or terminate support on those licenses altogether.
  • Pay special attention to the most expensive applications and product suites—do all your users need Microsoft Office Professional when most are only using the components found within the Standard edition?
  • Evaluate whether you can standardize on fewer packages in larger volumes. This will likely translate to lower licensing costs and boost IT productivity by reducing the overall number of support issues.

2. Negotiate Knowledgeably

Purchasing software is not as straightforward as buying a piece of equipment. You are buying the entitlement—that is, the right to use the software according to the terms of a licensing agreement, which is often complex and hard to understand. In this area, it really pays to do your homework.

  • Don’t rely on software providers to educate you: learn the meaning of the various licensing terms, so you determine what type of agreement applies best to your own situation. Be aware that license types and the terminology vendors use to describe them are not necessarily standard across the industry, so it is important to seek clarification on a vendor-by-vendor basis.
  • Explore whether you can lock in lower maintenance or subscription pricing and hedge against cost increases by committing, for example, to a three-year agreement instead of just one.
  • Be sure to consider license terms that restrict your “right” to move copies of software from one machine or user to another; you may be able to limit and/or delay such provisions.
  • Try to build in some room for change and flexibility in your agreement. As employees transition out of the company, don’t assume their successors’ role, and therefore software needs, will stay the same.

3. Use the Right Tool for the Job

If tracking and monitoring software usage manually sounds painful…well, it is. The prescription is a specialized software asset management tool. However, not all such products are created equal. Pick wisely—a program will not fulfill your needs if it doesn’t include the following features:

  • The ability to accurately identify all the software titles installed on your network, along with their corresponding versions, suites and editions. Look for a product that takes advantage of a software catalog to perform application recognition rather than relying on less reliable methods such as add/remove programs or file header analysis. (Read more about the various software identification techniques.)
  • The ability to track and analyze software usage patterns over time. This should include an easy way to determine which software titles have unused or underutilized copies.
  • The capability to reconcile both the inventory and usage of installed applications with their actual license counts. This allows you to quickly determine where you are over- or under-licensed.
  • Purchasing functionality that allows you to keep central records of software and other IT purchases, track and report on spending at a departmental level, and budget for the future.
  • An intuitive and easy-to-use interface that requires minimal training for you and your team to deploy effectively. If your asset management tool is too cumbersome, it will drain resources rather than improve productivity.

Using the right tools to track software usage and licensing allows you to take action on wasted resources and negotiate more effectively with software vendors. Above all, make sure that purchasing and IT are regularly documenting and exchanging information about software usage and licensing strategies so that everyone can make informed decisions. You’ll likely notice a sizable reduction in software costs and improvements in IT productivity—not a bad remedy for a runaway software budget, and a whole lot better than herding cats.