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The job of IT is no longer just about keeping systems up and running. Cutting costs, saving money, demonstrating ROI have become everyday issues for CIOs in every industry and at enterprises of every size. More often than not, IT is called upon to answer questions about software expenses. The refrain is simple, “Where can we cut costs?”



The answer is not simply negotiating a better deal with vendors or buying fewer seats as compliance concerns are becoming an increasingly “expensive” issue for many CIOs. Enterprises often are more likely to overspend on unused software rather than risk strict vendor penalties in the case of an audit.

Smart CIOs are taking a tougher approach to tracking and managing software license usage across the enterprise. Following are the ten practical tips for reducing software costs – ideas you just might want to take to your CFO.

10: Establish/enforce software standards

Key to software savings is establishing an overarching software management plan. This plan has to set the tone for how software is procured, approved, and brought into the organization.

It is important that this plan get buy-in from key decision makers, and then be communicated to appropriate personnel. The plan should specifically address who should approve software purchases, how that process should work, and provide clear disincentives for departments to go out and just buy whatever they think they need.

There also must be a rigorous process in place that forces the users to establish a clear need for the software that fits into the appropriate job and responsibilities. It’s important to be smart about justifying each piece of software that is acquired.

9: Justify product substitution

Product substitution must be based on a user or a business unit determining need for a specific application, and answering two questions:

  1. 1. Is the application really required for business?
  2. 2. Can we substitute a comparable application that fits into our existing volume licensing agreements?

Most organizations are using volume licensing to try to get the lowest price for their software. With volume licensing established, usually with large vendors with multiple product offerings like Adobe, Microsoft, and Symantec, it becomes much more cost effective to drive as much purchasing through those volume licensing programs as possible.

Once you have your volume licensing agreement in place, you might want to swap in or substitute a comparable product when it makes sense. Instead of buying FrontPage from Microsoft, for example, you might have a volume licensing agreement with Adobe that would make it much more cost-effective for your web development or web design application to be Dreamweaver. And even if your web development team pushes back and makes the case for retaining HomeSite, thresholds have been set, standards are established, and licensing decisions are justified rather than simply occurring by default.

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