Software services can be a major expense for businesses and organizations. However, there are many effective strategies to reduce software costs without compromising productivity or capabilities. This article outlines key techniques to save money on software services.
Table of Contents
Conduct Audits to Eliminate Waste
The first step is to thoroughly audit your current software services usage. An audit reveals areas of waste and underutilization that lead to unnecessary expenses. Specific areas to analyze include:
- Identify unused or rarely-used software services: Cancel or downgrade services that provide little value.
- Consolidate duplicate services: Eliminate redundancy by standardizing on fewer tools.
- Analyze usage trends: Downgrade or renegotiate licenses based on actual usage.
- Find idle cloud resources: Remove unattached storage, databases, and VMs.
Regular audits ensure you only pay for software and cloud resources that deliver value.
Renegotiate Contracts
Armed with usage data from software audits, request discounts or reduced pricing from vendors. Highlight opportunities to:
- Remove unused product features or services
- Shorten contract length to yearly terms
- Lower costs for reduced usage or smaller user counts
- Bundle multiple products for volume discounts
Even small discounts can yield considerable savings over time on high-value contracts.
Leverage Open Source Alternatives
In many cases, open source software provides capable alternatives to expensive proprietary solutions:
- Office productivity – OpenOffice, LibreOffice
- CRM and Marketing – SuiteCRM, OrangeHRM, Mautic
- Project Management – OpenProject, OrangeScrum
- Content Management – WordPress, Drupal
- Business Intelligence – Metabase, Redash
While open source software involves some IT effort for configuration, maintenance and support, the total cost of ownership over time is often much lower compared to proprietary solutions.
Optimize Cloud Costs
For cloud-hosted services, optimize costs by:
- Analyzing billing data to identify cost drivers
- Setting budgets with alerts to control “bill shock”
- Scaling resources to closely match usage needs
- Using discounted pricing models like reserved instances
- Architecting to minimize data transfer fees
Well-architected cloud applications allow businesses to control costs even as workloads scale up.
Centralize Software License Management
Centralize software license management under IT or a procurement team to:
- Maintain a catalog of approved software
- Standardize on preferred vendors
- Eliminate departmental shadow IT spending
- Consolidate licenses for stronger purchasing power
- Enforce compliance to minimize audit penalties
Consolidating software spend allows organizations to gain visibility and control expenses across business units.
Right-size Service Plans
As your needs change over time, right-size software services by adjusting:
- Number of user licenses
- Available product features
- Storage capacity
- Support plan levels
Choosing leaner plans as requirements decrease ensures you aren’t overspending for unused capacity.
Embrace SaaS Management Platforms
SaaS management platforms provide analytics into software costs and utilization across cloud applications. Leverage these tools to:
- Get organization-wide visibility
- Identify waste and optimize spending
- Automate cost optimizations
- Block shadow IT purchases
- Enforce security policies
Integrating SaaS management ensures continuous oversight of cloud expenses.
Maintain Visibility Over Time
The key to lowering ongoing software costs is maintaining clear visibility into spending and usage via audits, centralized oversight, and continued optimization. Establish governance practices that enable insight into one of your largest overhead expenses.
The techniques outlined above demonstrate there are always opportunities to reduce software service costs without negatively impacting productivity. Savvy management of software spend allows IT leaders to free up budget to fuel innovation and business growth.
