Balancing Long-Term Value and Cost in Software Asset Management

Between software licensing and ongoing maintenance for those business solutions, software asset management has become a necessary line expense for any enterprise invested in building and supporting an efficient, optimized IT infrastructure.

Whether you’re still getting by with a legacy framework or have upgraded to modern cloud and hybrid infrastructures, your relationship with third-party service management providers is one you should be eager to protect. Third-party support and maintenance (TPSM) companies play an integral role in managing those software assets so that your enterprise can fully leverage the capabilities of those business solutions.

Unfortunately, the integral support these vendors offer your business can also become a liability that slowly depreciates the value of this business relationship. Because many enterprises are heavily dependent on the services offered by software asset management providers—and because these services and software bundles are so deeply embedded into your existing IT infrastructure—the prospect of migrating away from these relationships can become increasingly costly and complex over time.

The longer you’ve been with one of these third-party vendors, the greater your risk of being subjected to unfair price hikes, unfavorable bundling tactics, and other predatory business practices attempting to leverage your organization’s fear of IT disruption.

As your business navigates these relationships and signs or renews contracts with service providers, IT decision-makers must remain mindful of the balance they’re trying to strike between the cost of services, the long-term value offered by these relationships, and the short-term costs that may come with switching providers. 

Don’t let your business become trapped with a TPSM vendor whose primary focus is bleeding your organization of money. Read on for some actionable tips to maintain balance between your vendor costs and the long-term value those relationships offer.

Preserve Your Flexibility When Signing Contracts

When it comes to signing contracts for IT services, there’s stability in a long-term agreement. One of the benefits of a third-party vendor is the ability to fix the costs associated with the services and solutions they provide. And, by committing long-term, enterprise leaders believe they can lock in a lower price that will gain value over time.

In the world of enterprise software, though, these long-term commitments can pose a significant risk. The biggest potential obstacle is that the services you commit to today may not sustain their value over the life of your contract. New services and solutions—which won’t be accounted for in your package—could be released by the service provider, and may only be accessible by overpaying to add that new solution to your existing base package.

There’s also risk in signing too short a contract and then facing a significant markup on those services. That’s why contracts around three years in length are a good fit: they can help you stabilize costs while also giving you options—and leverage—to adapt your services as your needs evolve.

Perform a Long-Term Cost Analysis of Your Software Agreement

The upfront cost of software asset management isn’t going to put a smile on the faces of any enterprise IT or finance leader. But those costs need to be put in context by understanding the long-term ROI opportunity created by this third-party approach.

Assuming your proposed vendor will provide you an itemized breakdown of bundled service costs, you can conduct a long-term cost analysis to forecast how these costs will compare to the value they create over time. Calculate projections for potential ROI outcomes over the duration of your contract, and compare that value to the costs associated with this agreement to understand the true value and benefit of the proposed relationship.

Negotiate Bundles and Pricing Structure

Unhappy with the value of your bundled service package? Concerned about pricing escalators and premium charges added on top of your base contract agreement? Evaluate your full scope of service for opportunities to cut costs and maximize the value of your software asset management services.

While some providers may be resistant to customizing your package to suit your needs, other vendors will be happy to negotiate a scope that eliminates unnecessary waste in the form of services you don’t need. Through this back-and-forth, you can strengthen the value of the services proposal

Don’t Let Migration Costs Lock You Into One Provider

Once you choose a software asset management provider, one of the ways that vendor may flex their leverage in pricing negotiations is by daring organizations to undertake the cost of migrating those services to a new TPSM.

While it’s true that any vendor switch creates transition costs that enterprise brands are eager to avoid, the reality of these costs may be far less than what some business leaders are anticipating. At Origina, for example, we streamline and optimize any migration project by identifying ways to scale back costs and free up budgets to be reallocated to the migration itself—minimizing any overage expenses your business might incur.

If you’re unsatisfied with your vendor or wary of the cost of switching providers, it’s worth your time to solicit quotes and learn more about the migration methods that could make a switch more affordable in the short term—while also providing greater value over the life of that relationship.

Find out how Origina can help you manage costs and break free from constrictive vendors that aren’t supporting your enterprise needs. Contact us today to schedule a consultation.