What is rightsizing and why it’s important for your business

In the previous articles in this series, we discussed why insight should be the basis for every decision related to your IT investment and how to gain that insight. Now we’ll focus on the next step: optimization. Every company wants to make the best use of their software estate, but often they struggle to understand how to do that. Because some software programs have been used for years or even decades, it’s hard to keep track of what licenses you own, what you need and how to optimize them. Add to that the software programs deployed in the Cloud, and the complexity is skyrocketing. Let’s have a look at a way to optimize your licensing estate: rightsizing.

What is rightsizing?

Simply put, rightsizing means to eliminate what is not needed anymore. Think of the licenses you purchased when you had to work on a specific project – you formed a team who needed to deploy certain programs, but when the project ended, no one considered terminating those specific licenses. Unknowingly, you continued paying for them. Or think of Cloud. This is not a new topic anymore, so you likely may have migrated some systems to the Cloud or purchased new programs in the Cloud in an attempt to save costs. However, especially in the beginning, many companies didn’t have a good understanding of how the Cloud really worked. It’s rather common that businesses that migrated their workloads to the Cloud ended up with the same or even higher costs, instead of achieving the savings they were expecting. The main reason is that many workloads in the cloud are over-provisioned. Companies don’t understand what they have and what they need. This translates in direct-match migration which means that excess computing and storage capacity as well as excess licenses are transferred to the Cloud. In other words: whatever was not right on premise is transferred as-is to Cloud, meaning that issues remain unresolved.

Why is rightsizing important for your business?

Making sure that you have the right number of licenses to cover your needs might sound easy, but in reality, it isn’t. Having a “wrongly sized” licensing estate can result in increased financial risks. The main risk many companies face is related to non-compliance which leads to financial risk. Being audited is never a pleasant experience but being audited and found non-compliant is even less pleasant. If you’re not prepared for an audit, you may be faced with (high) unexpected costs, in addition to frustrations and time that you need to invest in fixing the non-compliance. When you know what you have, what you need and what you actually use, you can decide if a certain level of risk is acceptable or if you want to take precautions.

In addition to the financial exposure during an audit, there may be some hidden cost as well. As mentioned before, you might have purchased specific licenses or subscriptions that you needed at the time but are no longer using them, while you continue to pay for them. Understanding if you can get rid of this shelfware and under what conditions can lead to significant savings. Similarly, you can have licenses that cover more functionalities than your employees need or user types that provide more rights than needed. For example, everyone in the organization has editor rights, but only few or some employees really need that particular full functionality. This means that you are overpaying for the editor rights license for everyone, instead of adjusting your licenses to pay less for those that only need viewing rights.

Lastly, software vendors allow you to have both Cloud and on-premises licenses that cover the same usage. It’s your responsibility to ensure that you have the right licenses for your programs, but also that you don’t have duplicates. It can be very challenging to know when and what to terminate, if you don’t have a good overview of your estate.

You are not alone

To sum up, rightsizing can help you avoid unnecessary software spend and risks related to your software licenses, by making sure that you are compliant and paying only for what you are really using. Because software licensing can be very complex and difficult to understand, even more so since the introduction of Cloud, it’s recommended that you work with experts to help you understand your situation and the options you have to optimize. Keep an eye out for our next blog to find out some of the ways you can right size.