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Software providers have benefited from the high, crisis-driven demand for IT products. For customers, this means inflated prices, an often excessive dependency on software companies and limited options when it comes to terms and conditions. So how can a company remain competitive without its IT budget ballooning? 

Options include reassessing software procurement, critically analysing delivery and licensing models or looking into new procurement methods such as ‘second-hand’ software licenses. We have put together a list of five tips to help businesses cut their IT costs and reduce their dependency on certain providers.

Almost every company has too many licenses under unfavourable terms, as well as excessively expensive, long-ago expired, not renewed but also simply unnecessary contracts. This inflates costs without generating any added value.

Decision-makers must first and foremost ask themselves: what is the purpose of our business? And what software do I need to that end? It is also worth considering why it is ‘Office’ that features on most calls for tender and not simply ‘office productivity software’. Those who do opt for the market leader – for whatever reason – would be well advised to check how many licenses they really need and over what time frame, and which licensing model is most cost-effective for them.

The major dealers offer little assistance to those making such decisions, as they are often too closely linked to the software companies. It is a wiser choice to call upon an independent advisor and carry out subsequent monitoring. Even the most commonly used license management tools are of little help in this regard. They may help with inventory taking but lack the capability to assess the value of a software license in a business context.

Many businesses are afraid of being subject to an audit by the software company. It should be noted that the legal basis for requesting an audit without due suspicion of an infringement remains dubious. Quite apart from that, most customers are not actually under-licensed; if anything they are over-licensed. They have purchased more licenses than they need out of fear of being audited.

In addition, many businesses are not sufficiently familiar with the contractual terms and conditions. This means they do not know exactly what they are and are not allowed to do with the licenses. This uncertainty can also lead to over-licensing.

What does an optimally equipped workplace actually look like? There is no simple answer to this question – the needs of employees are too varied. One needs two monitors, another wants high-end graphics features and yet another really only uses their computer as a typewriter. So why should they all have a full software package updated to the latest version?

In actual fact, these users would be able to significantly save on software costs by using ‘second-hand’ licenses whenever they can. All they need to do is have usage rights for software products that are no longer needed transferred over to them – either from another company or another department in their own company. Very often, these rights are for current releases of the application software or at the very least for versions that the software company is still maintaining and patching. Since software does not depreciate, longer life cycles do not necessarily result in a drop in value.

Reselling software also has a positive impact on a company’s carbon footprint. Software may be immaterial, but it still costs energy to produce. This means that using ‘second-hand’ licenses is a more sustainable alternative to the usual digital throwaway mentality. In addition, they make it possible to continue using older computers that newer versions cannot be run on.

Even the commonly raised argument that older software versions are more susceptible to cyberattacks does not hold water. Quite the opposite – not as much experience has been gathered when it comes to the newer versions, and the fact they have more features may also mean there are more points of entry. One thing is sure: more patches are usually required at the start of a product’s life cycle than at the end.

Many companies do not want to have to think about what software version they use: with a cloud provider, they know they will always get the latest update. Software as a Service (SaaS) also saves them from having to purchase new hardware and upscale during peak business periods. However, a proper risk management strategy also entails considering what a software subscription actually means for a business’s balance sheet.

Cloud services require a lot of energy – both for running the necessary server farms and for the constant transfer of data over long distances. There are also a number of key questions regarding data protection and data sovereignty that remain unanswered. Above all, though, software outsourcing increases dependency on a particular provider. The usage conditions are often so opaque that the customer can barely understand them. As a result, they usually just buy everything the supplier is offering and accept any restrictions more or less without complaint. 

In addition, cloud services are not necessarily cheaper than on-premises licenses. If they were, software companies would not need to advertise them so aggressively. The cloud provider needs to turn a profit, too. It is therefore wise to carefully evaluate whether and where on-premises licenses might be a better solution. In any case, users should develop exit and fallback scenarios for the cloud, for reasons of data governance if nothing else. 

The use of cloud-based services is often associated with erosion of in-house IT expertise. According to a recent Gartner study, two thirds of people involved in decisions about buying technology are not actually IT employees. It is often the individual departments themselves that decide what to buy and pay for it out of their own IT budget. That is why it is common for cloud services, for example, to be ordered on a whim.

Companies like this would be well advised to rebuild their own IT expertise. They need a plan for how IT can bolster their core processes, and they need an overview of the total costs. Otherwise, their IT landscape will become unnecessarily complicated and costly. This is probably why every other participant in the Gartner study was dissatisfied with their IT procurement. Having central decision-makers responsible for company-wide IT procurement would instead lead to greater efficiency, sustainability and satisfaction. Find out more here.

Over the past 10 years, a growing number of companies, public bodies and organisations have been taking the opportunity to significantly reduce their IT costs by using a mixture of new and pre-owned software.

You could save up to 70%!