How to regain control of your software and cloud procurement

Software procurement and lifecycle management doesn’t come without challenges. In our work with customers, we’ve identified three main issues when it comes to these topics.

The first is an evergreen problem: software keeps getting more expensive and complex to manage and staying in control of those costs keeps getting harder. Organizations now have more software and cloud providers than they have ever had before, each with its own business model whether that is on-premises, pay-per-use or cloud-based; each with their own licensing and contract terms, pricing and negotiation nuances.

While many organizations focus on their strategic vendors, the rapidly growing long tail of smaller suppliers represents a huge challenge for the business to manage. It is difficult to get an accurate picture of such a complex, and changing, software landscape. Each asset provided by the myriad of software and cloud vendors needs to be managed in terms of request, purchase, allocation and renewal and retirement.

The second issue is transparency. While 80% of software expenditure is spent on strategic vendors like Microsoft, SAP, Oracle, Salesforce, and they are easier to manage because there are systems, and account managers, in place. It is the management of the many smaller vendors in a typical software estate that is now a real challenge. They may represent relatively small amounts of expenditure when viewed individually, but the processes are the same and the risks posed can be significantly higher if you do not know what software is in use.

The third issue is more of a problem for bigger organizations. When companies merge, acquire new business or divest parts of the business then suddenly the IT asset management and procurement teams are faced with new challenges and complexity.

Where are the savings?

Implementing a robust Digital Supply Chain (DSC) can help resolve all three issues. It won’t produce a massive discount on your Microsoft license, but it will help reduce IT and procurement teams workload, as well as the costs and risk associated with these smaller software publishers and cloud service providers.

Automating software and cloud procurement and management processes can make a real impact. DSC can check you only pay for what you use, that duplicate products are removed, that the portfolio is rationalized, that cheaper substitutes are identified, cloud services are fully utilized, and licenses are re-used where possible. These small, incremental savings can add up to a big impact across the whole business.

The issue is that even where companies have quite advanced systems in place, they may not be fully integrated. There may be an e-ticket system for software requests, but it may not integrate with e-procurement systems. There may be another hard break between procurement and IT Asset Management (ITAM) systems. This challenge can be made more difficult because the different systems may also represent different departments. Building an effective DSC means bringing together people, processes and technology.

A well-implemented DSC will help you analyze your actual software and cloud usage, cut audit risks, and simplify purchase request procedures, saving time, money, and resources. By rationalizing products already in use and right-size contracts through empowered negotiation with your long-tail of vendors you can achieve significant savings and avoid unplanned expenditure.

An example of the savings that can be achieved

The advantage of DSC is a better user experience and faster delivery of software and services that support productivity and innovation. But it also provides gains in visibility and security.

We work with a mid-sized, UK-based chemicals company. Before working with us, staff were waiting 25 days for software requests to be fulfilled, resulting in lost productivity and growing issues with shadow IT. The company was struggling to manage – or even understand – a tail spend of £6m.

Now its employees get the software they need in just five days, meaning happier, more productive teams and less risk from shadow IT. The company has full visibility of its long-tail spend and is in a strong position to negotiate new contracts and renew licenses. It is saving money on licenses and has cut its audit bills by more than 98%.

How to do it right

A key part of a successful DSC project is to get buy-in from every part of the business. One way to achieve this is to start small – a quick win is to provide a proof-of-concept project. It is also important to understand what resources you have internally and what you need to bring in from a partner or provider.

Before starting on a DSC project, you also need to set clear goals and understand your maturity as an organization or you can end up paying more for services than you are saving. Think about how much automation and data analysis is required to have a beneficial impact.

A step-by-step approach means that you can both see your maturity increase and demonstrate the possible improvements and savings to the rest of the organization and senior management.

Be aware that, depending on your maturity level, this is a non-trivial undertaking. You will need to define a realistic schedule to define your maturity and ensure that your optimal operating model is reasonable and achievable. Implementation and ongoing onboarding of publishers can take time and partnering with an experienced, knowledgeable, and certified service provider like SoftwareONE can ensure the process is swiftly and efficiently delivered, with quick results and removed complexity.

But once you are getting that data you can realistically expect double-digit savings in costs for SaaS, and similar savings from on-premises assets and cloud licensing. Simply put, a well-implemented DSC puts you back in control of your software. Instead of spending time on renewals and operations, you can look forward and think about the future.