4 Tips for Taking Your Money Back Through Software Optimization
October 04, 2023

Tim Flower
Nexthink

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When Marc Andreessen famously wrote in 2011, "software is eating the world" his prediction was that software companies would disrupt traditional ones, which they did; Amazon, Uber, Netflix, Airbnb are all great examples. But what comes next? As software adoption rises and continues to disrupt traditional businesses, software licenses start to "eat away" at enterprise budgets.

Why and how is this the case?


Source: Nexthink

The complexity of enterprise IT environments is often vast due to a combination of legacy systems, upgrades from digital transformation projects, and disparate departments creating complex application portfolios and duplicate contracts.

As an example, just looking at project management platforms. This problem could result in half a dozen or more different project management tools across the same or more departments and hundreds of employees — and that's just an estimate of the duplicates and complexity. As employees change jobs and roles, deployed software can also go unused, leaving that project management app in place but dormant. And swap out "project management tool" for any other type of function: application development; collaboration; photo and video editing, and the list goes on and on.

And if your company hasn't adopted standardization as a practice, or has disparate IT shops, the problem can be even worse. Looking across 6 million devices in a study conducted by Nexthink, we found unused software licenses that account for $44,743,651 lost per month, or $84 per device per year. That may not sound like a lot on its own, but it is equal to $840k per year for every 10,000 devices. And considering only 5% of IT leaders claim "complete visibility" into the total number of software licenses being used by their employees, it's safe to say many organizations are in dire need of a better strategy.

Thankfully, there is a way to provide the right software licenses where needed without impacting employee productivity or wasting much needed budget.

Simply put, Software License Optimization is a strategy focused on making a single procured software license, or group of licenses, as cost-efficient and effective as possible through the management of software license counts, usage and cost. The focus of the strategy should be centered around software standards and usage to avoid losing money on unused or redundant software.

So how can it be done?

1. Start with a Software Usage Audit

Data is always key. Having the right data when entering into software negotiations gives IT leaders the upper hand. Often times, organizations end up buying more licenses than necessary (a "buffer") at the suggestion of the software vendor. In fact, a recent study uncovered that IT decision makers are roughly aware employees use between 11-50 applications every day but were unsure how many of those were actively used and how many seats (licenses) were available.

By knowing exactly what employees are using and how many licenses you need, you avoid overspending. So, before you look into buying licenses, start with an audit to get insight into how many licenses are installed but not being used; which licenses aren't being used often; and which are staples in your employees' day-to-day jobs.

2. Create Digital Personas Based on IT Usage Traits

The balance between efficiency, cost-effectiveness, and a strategy that fits everyone's needs is tough. A one-size-fits all approach is easy to implement but it likely won't meet everyone's needs and therefore isn't an efficient way of creating a positive digital experience. It would be great to be able to give every employee a personalized experience, but that wouldn't be very cost-effective.

So, what's the answer? Smart persona building can help create the balance between a personalized experience within a reasonable budget and use of resources. To accomplish this, you'll want to start by organizing employees using binary and variable IT traits.

Binary IT traits are the most clear-cut and require yes/no or this/that qualifications. For example, the question might be whether an employee's application mix and performance will require the four core or eight core CPU device. Those who need four would get one persona and those who need eight would get another. Same questions for RAM, drive space, graphics, etc.

Variable IT traits require numerical calculations that measure an individual construct such as "how much time is an employee accessing Microsoft Teams throughout the day." It is more focused on how much an employee is exhibiting a behavior as opposed to the simple binary choice. Creating a persona should combine both binary and variable traits.

3. Monitor Costs of Employee Software Usage

While a software usage audit is important to start your optimization journey, a one-time audit won't be sufficient in providing an accurate picture of changing software costs. Since employee software usage evolves over time, continuous monitoring is vital to identify potential cost reduction opportunities. One way IT teams can do this is through dashboards which allow teams to visualize what software is being used and what software is not. From there they can make an informed decision around software licenses.

4. Focus on Data-Driven Decisions

It is important to remember that even if software is being used on an occasional basis, it doesn't mean it isn't extremely important to certain employees. By combining usage data with employee sentiment data, you can corroborate employee feedback with employee software habits. This way IT leaders can make changes that reduce cost without it adversely effecting employee productivity.

These four steps will kickstart your software optimization strategy, but to be successful it should be an ongoing process with each step performed on a regular basis. Software usage audits should be a recurring initiative to ensure the software being offered is still the most–cost-effective and used solution. Employee turnover and company re-organization means employee personas should be re-examined on a regular basis and updated as needed. By paying closer attention to when, who and why employees are using software, IT teams can make the best decisions on value vs cost for the business — ensuring your budget isn't being "eaten up" by unnecessary or unused software licenses.

Tim Flower is VP of DEX Strategy at Nexthink
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