Are You Spending Too Much on Enterprise Software? Three Experts Weigh In

If you aren’t on the lookout for these common tripping points, you’re probably paying too much for software.

Providing internal stakeholders and customers the breakneck level of innovation they demand is expensive, but necessary. Staying operational in the business’s present state is expensive, but also necessary.

Sound familiar?

From the 90/10 spending model on down, it’s a procedural one-two punch stakeholders across the spectrum of internal IT services have willingly walked into for decades. However, the dominant mindset is slowly changing. CIOs and leaders in fields like SAM, ITAM, and procurement are turning toward third-party software maintenance (TPSM) models and partner competencies that allow for greater operational flexibility and choice by reducing or outright eliminating supposedly “lost” expenses.

Tech’s complex relationship with growth further guarantees there’s always a new angle to explore in terms of potential software savings. Consider the following hidden challenges, derived from our chats with multidisciplinary IT experts.

Hidden Software Cost 1: Swapping One Tech Debt for Another

The mass move to cloud has not come without cost and wins on the scale of Liberty Mutual’s advancement towards 100% digital core are not common. As Vice President and Senior Director of Technology Jesse Antosiewicz says, the company was recently able to reduce overall infrastructure technology costs by some 22% despite an exhaustive cloud migration that enabled major customer-facing innovation.

Nobody’s saying the move to cloud is a bad thing for businesses. Instead, Liberty Mutual’s multifaceted victory underscores what Antosiewicz says about achieving the right kind of measured, properly prioritized victory.

“What are you doing that isn’t as important as something else? […] Are you willing to stop it, or slow it down, or just pause it temporarily? That’s hard to do in a large organization.” – Jesse Antosiewicz, VP and Senior Director of Technology, Liberty Mutual

In Liberty Mutual’s case, eliminating tech debt of all types instead of trading one set of concerns for another has been an important part of the philosophical charge. The company’s insistence on composable, controlled migration instead of lifting and shifting wherever possible helps negate costs other multinational enterprises assume are gone before they sign the contract.

Whatever your roadmap looks like, make sure it mirrors that mindset in some way, searching for actual improvements instead of near-term tradeoffs that kick the effort and expense a little further down the road. Anything less and future you – or your predecessor – will be left to deal with an even bigger can of software uncertainty.

Cost 2: Playing Security Whack-A-Mole

Origina’s experts have a lot to say on the topic of software modernization and transformation as well. The advice Head of Security Services Ben Lipczynski offers is focused on keeping customer IBM estates secure, for instance, but every cybersecurity issue is a financial concern at heart.

It’s up to business and IT leaders to choose how that concern’s expenses materialize. As most security experts will tell you, the options are a slow, controlled cost or bursts of spending that make heads spin and put jobs at risk.

“Let’s operate in reality, not ideality. Let’s stop playing whack-a-mole with patch fixes [and other security issues]. Let’s increase the security of our customers and our environments.” – Ben Lipczynski, Head of Security Services, Origina

Solid on its own merits, the advice also has a lot of software-spend implications. Of all the money a company could begrudgingly burn through in retrospect, cash used to recover reputation, pay out compliance violations, and generally get back following a preventable adverse security outcome is among the most painful to let go of. Especially when an “it’ll never get me” ideology initially drove the company to that unenviable point.

Security is not the sieve-like game of diminishing returns certain stakeholders might think it is. Dismissing measures that appear to be “wasteful” because they didn’t end up being necessary – or were only indirectly utilized – is a reductive mindset that leads to greater cost in the end, because it all but guarantees the company will be cutting larger checks for more impactful, avoidable outcomes in the future.

The idea translates to contexts like software licensing and audits with worrying ease. Nobody wants to pay for overprovisioning, but the team pushing for smarter oversight is increasingly likely to draw heat when an audit’s costs rise. From a certain perspective, it’s no-win.

In basically every area of IT, holism costs more until it doesn’t, at which point the approach’s true financial benefits become painfully obvious. Avoid the costs of whacking moles like pop-up, software industry-shaking security events while you still can.

Cost 3: Over-Resolving Problems

The old DVD warnings claim you wouldn’t download a car, but you probably would if you had to replace the entire thing when it came time to repair the engine or struts.

Free ICT Europe Foundation Executive Director Jan Hoogstrate wants the same notion – sans the piracy overtones – to be commonplace in the corporate IT world. Even from a pure business/financial perspective, his drive makes sense.

“Why should I replace this? Why should I not repair this?” – Jan Hoogstrate, Executive Director, Free ICT Europe Foundation

We’ve all seen instances where software decisions rendered by OEMs force businesses to swap viable hardware, which may or may not be supplied by the OEM, before it’s fully necessary. In that regard, the pieces of hardware stuffing e-waste landfills don’t just represent senseless waste – many of the devices getting tossed ultimately end up being replaced by new hardware that didn’t need to be purchased yet, if at all.

It’s the same story for software. Call it a culture of over-resolution and a compelling case for the individual business’s Right to Repair. Megavendors have relatively few reasons to spend money supporting things you bought a long time ago. Upgrading software to fix a security flaw or flipping a long-serving piece of hardware just to add a useful, but secondary, new feature doesn’t make a lot of sense outside the cleverly constructed ecosystem they’ve built.

As an individual business (or stakeholder within), finding resolution to a basic fact of doing business can be difficult. But it isn’t an all-or-nothing approach. Simply looking at topics like relationship management, software upgrades and management, third-party vendor choices, and new hardware with a defensive-minded approach that values solving individual problems – instead of chucking whole systems or processes out – can yield discoveries that turn around to massive financial reclamations.

Know your options – inform your approach

Business-led IT decisions are the new normal. Continual inspection of the software lifecycle and its expenses – overt and hidden – is essential. If you find your business burning through software versions and moving to new apps before their predecessors have fully outgrown their value, there’s a good chance a simple change in mindset is the first step you need.

To hear more industry insights from experts like these, watch Origina’s Empower 2023 on demand.

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