Delivering software asset management value without the price tag

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In today's dynamic business landscape, turning a software investment into a win-win situation for every function of the business – from vendors to various departments across the organization and its external partners – has become a significant challenge. After all, software solutions come with a price tag, and this can soon ladder up to high costs for an organization trying to strike the right balance between technological advancement and financial stability.

This challenge is further driven by differing priorities across every team and the ever-present pressure to cut costs in an uncertain economic environment. For businesses, the goal here is to optimize their software investment in a way that benefits every facet and function of the company. But this can only be achieved through a strategic approach that maximizes value without compromising the organization's bottom line.

The cost-to-value ratio

Software solutions can carry a hefty price tag. The collective expenses across different teams can quickly add up and impose a financial burden on the business. With increasingly tightened budgets due to the ongoing economic downturn, organizations must analyze and reassess their investment priorities and financial strategies in tandem.

The key to a successful financial strategy involves looking at the cost-to-value ratio, a metric that is increasingly gaining prominence in the decision-making process for business leaders. At the same time, by aligning software assets with overarching business outcomes and objectives, leaders can better understand how they can value infrastructure investments in a complex, modern IT environment where there are a multitude of solutions available to them.

One cost-effective method is to reframe and repurpose how existing solutions are used. As an example, the strategic migration to cloud computing has helped organizations convert capital expenditure to operational expenditure. By leveraging an existing solution, organizations have not only become more agile and reduced costs, but they’ve also aligned the priorities of the IT and finance functions of the business in the process. This alignment of cost management and value enhancement is key to driving organizational resilience and growth.

Krati Laad

Knowledge and technical expertise

Budgeting for software investment is a near-impossible task in the ‘start-stop’ macro-economic environment we are currently in. Therefore, in the pursuit of technological transformation, an organization's strategy cannot solely center around chasing the shiniest and newest software solutions. It demands a lot more than just financial investment.

Instead, business leaders must focus on leveraging internal and external knowledge to help determine the best route forward regarding investment. By establishing and nurturing a support system with strong technical domain expertise, organizations can prepare themselves with a repository of knowledge and insights that become a guiding light for software asset management.

Having the right processes and a software asset management function with technical expertise can help with selecting the right license models and alternative technologies, re-harvesting software, and software consolidation, which ultimately help to reduce costs.

In this way, businesses can sidestep the pitfalls of ill-informed investment decisions and achieve higher returns on their software assets.

A collaborative ecosystem

We already know that transformation does not unfold in isolation, but instead requires a collective effort that unites all functions of the business – and this remains true for software asset management. There is a growing realization among business leaders that operational and financial success hinges on an interconnected ecosystem that consists of software vendors, IT departments and business partners.

By collaborating and bringing together these diverse perspectives – which include valuable insights from software vendors, the strategic vision of IT leaders, and the domain knowledge of business partners – organizations can resolve the cost vs value challenge and see a return on investment from their software solutions, ensuring that the benefits are felt across the company.

Only through a collaborative ecosystem will businesses achieve the best results. The software asset management team essentially need to be the centerpiece of all the data across an organization's IT infrastructure, including software usage, software licenses and asset details.

For the program to work effectively, each business function also needs to have defined roles and responsibilities across IT, procurement, finance, business and legal to get the best value. Examples of this include procurement who are responsible for ensuring renewals are done on time with the right negotiation and price points, or IT teams who must ensure the right tools are in place to get software consumption information.

Delivering software asset management value that transcends the conventional cost-centric approach therefore requires a multi-faceted strategy for businesses. This involves aligning software assets with tangible business outcomes to measure the cost-to-value ratio; determining the best route forward and making investment decisions based on technical domain expertise; and fostering a culture of collaboration that brings together internal and external stakeholders that can mutually benefit.

For businesses, this is the road to optimizing their software asset management value without inflating the price tag. Those that embark on the journey will not only withstand the financial and operational challenges of today, but they’ll also thrive and become resilient in driving organizational growth for the future.

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Krati Laad, Partner, Business Consulting at EY.