How do you right-size your software environment?

Every organization wants to make sure it pays only for what it uses, and it uses only what is needed when it comes to software programs – or any other asset, for that matter. Reality shows that this is not always the case, and many companies struggle to achieve this. There are many ways in which a company comes to be wrong-sized, and it’s important to evaluate and look into correcting this. In this article we’ll show what you need to consider when you suspect your software licensing is wrong-sized.

Understand the licensing terms and what you are paying for

It all starts with your contracts. When you purchased the programs you’re using today, you signed an agreement with the software vendor. It might be that you understood everything perfectly when you signed the initial contract, but things have change over time. That’s why the first critical step to rightsizing is to understand what is included in your license agreements. You need to go through all contractual documents – and we really mean ALL documents. Read the terms and conditions included in your agreements and understand what their impact is on your current situation. Going through all the relevant online documents might feel like a daunting task, but it has to be done if you want to get that right sized environment. Once you have this insight, you can determine what you are paying for exactly. You may find that you are separately licensed for components or functionality usage that is covered by other licenses resulting in paying too much.

While performing this exercise, you might also discover that you’re paying for programs that aren’t being used. It often happens that organizations purchase more than they need, thinking that either it will be needed in the future or because of a substantial discount that you were being offered. However, these programs end up on the shelf (shelfware) and you continue to pay for them. Similarly, you might have deployed more functionalities of certain programs than you do need. You must determine what you need, to understand what you’re paying for and decide if you can switch to a different licensing type for those specific programs.

Currently, many companies use a hybrid model (combining cloud and on-premises) or cloud only, so keep an eye on your cloud spend. It is easier for spending to get out of control when employees can buy and install programs on their own. This could lead to large expenditures if left unmonitored. The good news is that this overspending is avoidable when you have visibility into your cloud spend and can identify optimization opportunities.

What other options do you have to right size?

Once you understand the terms and conditions of your licensing agreements and have identified opportunities to right-size; you will need to look at software usage at the employee level. For example, you can check when someone has last logged to a specific product. If they haven’t for some time, this could be another opportunity to right size. Like most companies, you also probably use a SAM tool to monitor your licenses and you have a dashboard that shows what is included. Check it to get insight into each license, or at a minimum the top 10 most costly programs/applications. By doing this, you can identify users who no longer need a license – for example the license(s) was only needed for a specific project, or the employee changed roles and doesn’t need access to it any longer.

Another opportunity to right size is to remove premium features from some licenses. Let’s say someone in your marketing department needed a premium license for a conference program/platform to organize webinars, but you decided to switch to in-person events. In this example, you don’t need the premium feature any longer, so you shouldn’t be paying for it. It might sound like an insignificant cost but consider how many of these you might be paying for and how quickly the cost can add up. It may be more than you were thinking.

And what about renewals? Do you keep track of when your contracts are up for renewal? Some contracts renew automatically and whilst that might seem like a good idea, it may lead to unnecessary costs. What you needed three years ago might differ from what you need now or will need next year. Always check before the deadline comes and make sure to consciously decide if you want to renew the same amounts as initially purchased or if changes are required.

To sum it up

Rightsizing your software licenses is time-consuming and requires insight and preparation. Start by understanding what you have and what you need, dig deeper into how the employees use their licenses, check notification periods for renewals, plan time for negotiations and leverage upgrades or lower prices.