Sectors with high engineering demands, including automotive, energy, construction, manufacturing, aerospace, and defense, are anticipated to augment their budgets for engineering and specialized applications. However, this surge in investment is likely to be accompanied by a corresponding increase in software license inefficiencies and waste.
Engineering Software License Investments: Up
In 2024, global software expenditure exceeded the trillion-dollar mark, reaching $1.08 trillion—a substantial 11% increase from the previous year. Gartner forecasts a further 14% rise in 2025, with total investments projected to approach $1.24 trillion.
The growing demand for high-value applications critical to engineering and industrial design—such as CAD, BIM, simulation, and digital twin technologies—is a key factor behind this surge in software spending.
These advanced applications, essential for precision-driven operations, are seeing accelerated adoption across engineering-centric industries. This trend signifies a substantial shift towards expedited project execution, enhanced accuracy, and the transition to digital-first workflows.
Software License Waste: Nearly Half The Spend
For organizations with more than 200 employees, average software waste amounts to an estimated $235,000 annually, representing nearly half—48%—of their total software expenditure. This figure starkly contrasts with the general average software waste of $79,639 per year, or 33% of software spending, underscoring a significant inefficiency within larger organizations.
The discrepancy is especially acute among companies reliant on high-cost engineering software, where specialized applications such as CAD, CAE, BIM, PLM, and simulation tools often require intricate license management. These licenses, frequently deployed in complex arrangements (e.g., concurrent, or floating licenses), present unique challenges, from ensuring license availability for project-critical tasks to managing fluctuating demand across various departments.
Organizations with over 200 employees waste nearly half (48%) their software budget—$235,000 every year—due to inefficient software practices.
Common Causes of Software Waste
Software license waste primarily arises from insufficient visibility into license utilization across the organization. Without detailed, granular insights, many enterprises are unable to accurately monitor, optimize, and align software assets with actual usage, undermining their ability to achieve expected ROI and maximize operational efficiency.
Underutilized and Unused Licenses
Wasted spending often arises when organizations purchase excess licenses or assign them to employees who don’t fully use them. Without granular tracking, identifying idle licenses becomes challenging, making it hard to reallocate or cancel unneeded licenses and optimize costs.
Overlicensing and Underlicensing
Overlicensing occurs when organizations purchase extra licenses to anticipate peak demands, leading to unnecessary expenses. Conversely, underlicensing creates compliance risks and operational delays, often forcing rushed, costly purchases to meet actual demand or risking legal penalties for exceeding license limits.
Overconsumption of Software Licenses
Unchecked license consumption happens when users retain licenses beyond use or share them in ways that violate terms, resulting in unauthorized simultaneous use. Without proper monitoring, this unintentional misuse breaches licensing terms and drives up costs.
Software Purchase Regret
Software purchase regret arises when organizations find that purchased software no longer meets their needs due to poor adoption, unmet features, or a mismatch with business goals. Poor initial evaluation or evolving needs make the software an ongoing expense with limited returns.
Software Audits
Software audits reveal misalignment in licensing—either excess or shortfall—compared to usage. Organizations non-compliant to their vendor’s agreement risk hefty penalties or high retroactive fees when forced to buy additional licenses to meet audit requirements.
Prevent Engineering Software Waste with Open iT
Open iT, a pioneer in software license management, offers a comprehensive suite of solutions designed to provide organizations with strategic oversight and management of their engineering licenses, ensuring optimal utilization, cost efficiency, and compliance.
License Usage Monitoring
Granular tracking of software usage enables organizations to identify underutilized or unused licenses, thereby avoiding over- or under-licensing through data-driven insights.
License Optimization
Organizations can optimize their license allocation by ensuring the appropriate number of licenses are available to the right users at the right time. This reduces unnecessary license purchases and enhances license utilization.
Powerful Reporting Features
Advanced reporting capabilities deliver in-depth insights into software usage patterns, costs, and utilization rates. Detailed analyses through heat maps, data visualizations, user-level metrics, and other features allow organizations to monitor spending, identify optimization opportunities, and evaluate the ROI of each software asset.
License Harvesting
License harvesting capabilities automatically reclaim inactive licenses, making them available for other users. This ensures maximum utilization, reduces idle license time, and minimizes the need for additional license acquisitions.
Cost Allocation and Forecasting
Robust reporting facilitates accurate cost allocation and forecasting, providing insights into potential areas of software license waste and guiding budgetary decisions for more effective procurement.
License Simulation
Organizations can simulate various licensing scenarios and frameworks, allowing them to forecast costs and resource requirements under different conditions. This capability helps determine the most efficient licensing structure for their needs and supports long-term planning.
Cost Recovery through Chargeback
Chargeback mechanisms enable organizations to assign software costs to specific projects, departments, or users based on actual usage. This approach promotes accountability in software usage, aiding departments in managing budgets effectively and reducing wasteful spending.
Compliance and Audit Preparedness
Ensure software usage aligns with licensing agreements and mitigate and help organizations manage their software portfolio compliant and cost-effectively.
Expert Vendor Negotiation Consultancy
Vendor contracts often contain complex terms, conditions, and cost structures that, if not thoroughly reviewed, can result in significant software waste and inflated expenses. To mitigate these risks, a team of specialized software license management professionals conducts comprehensive contract analyses to assess an organization’s precise licensing needs.
These experts provide actionable insights into usage patterns, license entitlements, and optimization opportunities, empowering negotiation teams with a clear, data-driven understanding of their position. With this strategic insight, teams can negotiate from an informed, optimized standpoint, eliminating unnecessary expenses and maximizing return on investment.
As organizations prepare to increase their software spending, it’s crucial to ensure these investments yield substantial returns rather than wasted resources.
Contact Open iT for a free consultation and find out how you can reduce licensing spend, boost usage efficiency, and be fully prepared for audits in 2025.
