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SOFTWARE
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Savings too big to ignore
Gartner says organisations can cut software
costs by 30 per cent using three best practices
The analyst’s latest global IT spending forecast update
predicts that organisations will spend $332 billion on
software in 2016.
By implementing three software licence optimisation best
practices - application configuration optimisation, recycling
software licences and by using software asset management
(SAM) tools, Gartner says many organisations can cut spending
on software by as much as 30 per cent.
IT leaders must look for savings in the configuration of
software, especially data centre software. “Such changes appear
simple in hindsight, but they are not obvious, and savings could
be in the millions of dollars,” said Gartner Research Director
Hank Marquis.
Gartner also advocates licence recycling as a means to
reduce software spending as well as support and maintenance
costs, warning that recycling requires strong process control.
However, with many IT organisations at low maturity levels,
most could cut their software spending by maturing their
recycling and licence optimisation processes and building them
into their daily IT operational activities, the analyst stated.
The use of SAM tools is the third best practice Garner
suggests organisations adopt. The report ‘Cut Software
Spending Safely with SAM’ points to the fact that it is hard
to optimise software spending because licences are so
complex. Optimising complex licences manually is labour-
intensive; requires specialist knowledge and does not scale.
Larger enterprises will need a SAM tool, which can automate,
accelerate and improve manual processes, this according to the
analyst can pay dividends over manual alternatives, and can
often pay for itself.
In more than 800 Gartner client enquiries regarding SAM
tools between May 2015 and March 2016, organisations
with mature software licence optimisation processes that
were automated using SAM tools reported reducing software
expenses, on average, by 30 per cent within the tools' first year
of operation.
Marquis said achieving software savings is a complex
exercise, but the potential savings are too large to ignore.
“Automated software licence optimisation is a relatively new
discipline and most organisations are at lower levels of maturity,
he said. “The variety of licence entitlements also makes it tough
for IT leaders to spot savings, especially in environments with
many software publishers and titles. But it's worth pursuing, as
spending reductions contribute directly to the bottom line as
gross profit.”
A new study published by software
monetisation expert, Flexera
Software states that some software
application vendors are poised
to reap windfall profits from the
new software pricing and licensing
models emerging, fuelled by shifts
in customer demand and by rapidly
changing technology, while others
risk being left behind.
“The report illustrates the fluidity of
the software market place and the rapidly
changing customer preferences dictating
how software is bought and sold,” said
Steve Schmidt, Vice President of Corporate
Development at Flexera Software.
Key findings include:
n
Only 43 per cent of software vendors
say perpetual software licenses contribute
to half or more of their revenues.
Historically, the perpetual license was the
dominant licensing model used by most
software vendors.
n
70 per cent of software vendors will
change their pricing and licensing models
within the next two years; to generate
more revenues, be more competitive and
improve customer relations.
n
36 per cent of software vendors say
that less than half of their applications are
delivered as traditional installed software.
n
Within the next two years software
vendors plan on changing their licensing
policies to accommodate new technologies
including cloud (49 per cent), SaaS (46
per cent), virtualisation (47 per cent) and
mobile platforms (55 per cent).
n
73 per cent of vendors boast their
pricing and licensing policies are effective.
Yet despite this confidence, 51 per cent of
those surveyed admitted they don’t track
customer usage, 45 per cent don’t audit
customer usage, 55 per cent don’t have
technology in place to track customer
usage of their products and 42 per cent
say their customers have challenges
determining which software products
they’re entitled to use.
“To thrive in this environment software
vendors must adopt an agile software
monetisation strategy and implement
automation that flexibly supports multiple
software pricing and licensing models. As
the data suggests, many vendors are not
yet ‘change-ready,’ and therefore are at
risk,” Schmidt added.
Study reveals software
market shake up possible
The enterprise software marketplace is undergoing a massive transformation as the pricing
and licensing models dictating how software is bought and sold evolve
