By Randy Littleson
If you're like most companies, IT is struggling to keep up with the strategic initiatives required by the business. For far too many companies, IT investment is restricted while business demands continue to grow. Why? For one, IT is at the heart of business productivity, automation and agility today. Software no longer just aids the business, it runs the business. Yet, in most organizations, the combination of limited IT funds and a growing percentage of IT investment requirement to just keep the lights on means there are limited funds to support the strategic initiatives required by the business.
So, what to do?
Most organizations have a source of funding right under their noses, but don't realize it or can't tap into it. They are over-spending on software licenses but lack a Software License Optimization program to realize significant savings that could be used to fund these new business initiatives.
Let's look at an example to illustrate the potential new funding available to the business.
Research finds that the average company spends about 3.5% of revenues on IT (your mileage may vary and many companies will be higher). It's also estimated that about 30% of IT spend is on software.
So, for a company with $1 billion in revenues, those assumptions lead to $35 million in IT spend and $10.5 million in software spend.
In our experience, a mature Software License Optimization program can yield software savings ranging from 5-30% of software spend - or $525,000 to $3.15 million in savings for our example.
Savings are realized by avoiding unnecessary software purchases, reclaiming unused licenses, ensuring that the proper level of licenses are purchased for each user, etc. And, in addition to the savings, companies with a mature Software License Optimization program gain the added benefit of having continuous license compliance with their software license agreements so they further avoid the pain of unexpected software audit true-up fees.
As you can see, most companies have an additional source of IT funding available to them that they just aren't tapping into. And, it's material - enough to fund some of those critical business priorities that keep getting pushed out each year due to insufficient funds.