PHASE 1: Getting started with cost cutting

Find areas where you can do without

PHASE
ONE

Put simply, cost cutting is where you can physically eliminate costs from the current IT spend. This might be through stopping spend completely, renegotiating with vendors or looking to rationalize duplicate or similar spends into one.

When it comes to cutting software costs, there are several areas that are worth investigating such as:

Stopping support & maintenance payments on unused, end-of-life or retired software
Identifying multiple applications that do the same thing – and consolidate to a single vendor
Highlighting ‘premium’ products that could be exchanged for cheaper or free versions
Searching for alternate suppliers for excessively expensive applications

There can be a temptation with cost cutting to prioritize the low-hanging fruit, such as retiring niche products or cancelling contracts with smaller vendors. While this approach has a place, it might not provide the scale of savings being sought.

Instead, we recommend focusing on your largest spends first and exhausting cost cutting measures there.

COST CUTTING IN ACTION

SHI’s 365 Insights helped a large
multi-national organization undergoing significant
M&A activity find an immediate savings of $380K from redundant 365 and on-premises licenses.

Leveraging usage data and insights from SHI’s SAM experts, they were able to further reduce their user counts and ultimately lower the price of their Microsoft EA by over $1.5M.

Explore 3 cost-cutting strategies you can implement today >>>

Evaluate options to eliminate software licenses and subscriptions

In a world where there is more shelfware than ever, accurately licensing your software according to actual usage is vital to controlling costs. Armed with good SAM data that not only reports the existence of apps, but also provides visibility of usage, you can start to identify where licenses and subscriptions can be retired.

For instance, if you have high staff turnover in your organization, significant cost savings can be achieved by proactively reclaiming leavers’ licenses and allocating them to new joiners.

RATIONALIZE YOUR APPLICATION PORTFOLIO

With the rush to support remote workers and increased freedoms afforded to lines of business to self-select applications, application rationalization is now a must-do for all.

Application rationalization can yield substantial cost savings as subscriptions can be cancelled on redundant or duplicate apps. There are also indirect cost savings in the form of lower support overheads and improved employee productivity using common apps and tools.

You might also use rationalization to move away from legacy apps that require expensive on-premises infrastructure towards cloud-hosted alternatives (beware, however, the opposite scenario can also be true!).

Scrutinize Support Contracts

All too often, support contract invoices are processed and paid with little or no scrutiny. It’s not even unusual to pay support and maintenance on software that’s no longer in use across the organization.

So, our third cost cutting measure is to really check what support bills are being paid and whether they should be cancelled outright or amended to reflect a lower level of usage than was originally intended. You might even consider whether the support contract has actively been used; if you’ve had a support agreement for many years yet never needed it, is the peace of mind worth the continued investment?

Read on for one note of caution >>>

Beware of cutting too deep

While cost cutting should be a major facet of your overall cost management plans, beware of making cuts that limit your organization’s ability to innovate or alter direction quickly to meet changing market demands.

It’s important that you cut costs having evaluated the risks and rewards.

A good Software Asset Management partner can help you make the right decisions based on a thorough understanding of both software usage rights and your business needs.