The Hidden Cost of Software Licensing

The Hidden Cost of Software Licensing

Software purchasing is not always straightforward. Starting from the initial procurement, there are licensing fees and usage models, contract negotiation fees, and implementation. Even after the purchase, the software developers will continue to develop it and offer upgrades, expanded features, bug fixes, maintenance, etc. Other things to consider are shelfware, software support, and user training, which also incur additional fees that could take a portion out of the IT budget as they accumulate over time.

In addition, software licensing issues, if left unmitigated, could potentially result in more unnecessary costs. Software vendors may conduct random audits and charge hefty fines if they find non-compliance on the limitations under the software agreements. However, software ownership is not just about license compliance, but also the proper management of those purchased licenses to avoid the typical over- and under-licensing issues that could cost the company millions of dollars. Various pay-per-use licensing models could also stack up additional overhead costs if poorly planned and improperly managed. As the company’s software portfolio grows, the more complicated its software license management will be. Metering and analyzing software usage could initially uncover unnecessary software costs. However, a robust software asset management program could not only effectively manage software licenses and optimize license usage, but also help in providing a more accurate prediction of software needs in the near future and mitigate excessive software costs within the organization.

To effectively avoid the pitfalls of hidden software license costs, these 4 steps to effective license usage optimization could help:

1. Get the Right Tool

The first step towards a successful software asset management and optimization journey is finding the right tool that would address current specific challenges and go beyond initial expectations. An insight to the organization’s true software usage is just the beginning, not the end result, of an effective optimization initiative. And using the right tool should lead to the end goal.

2. Deploy and Set Up Solution to Fit Requirements

With the right tool installed and configured based on the specific requirements and goals of the initiative, not only should it run smoothly and collect the correct and accurate usage data from the environment, it should also be able to provide the needed information when it is needed.

3. Analyze Usage Data

The right report analyses should be able to show which features or applications need more licenses, and which ones can withstand some reduction. Simulate the perfect mix of licensing methods that would fit current needs and maximize license usage while reducing overall licensing costs. Predict future licensing needs based on current usage trends and growth projections, thus allowing proper planning for future budgets.

4. Implement Value Optimization Initiatives

Value optimization means being able to maximize the usage of each software asset and improve user productivity at the optimum cost for the company. It means allocating more budget for new technology, upgrades, personnel improvement, business expansion, etc., while keeping productivity at optimum levels.

To kickstart your software optimization journey, Open iT offers a host of software usage metering, analysis, and optimization solutions and services that would guide you through every step of your technical software management and optimization journey.