3 Ways That CIOs Can Reduce Their Software Costs

by drjim on January 15, 2014

Software is one of the biggest expenses of any IT department

Software is one of the biggest expenses of any IT department
Image Credit

As CIO one of your most important jobs is to manage the budget of the IT department. This means that despite the importance of information technology, you need to always be looking for ways to make your limited IT dollars go farther. One of your biggest expenses is always going to the cost of all of that software that the company is currently using to accomplish its work. That’s why taking the time to find ways to reduce the company’s software costs will always pay off for the person with the CIO job.

It’s Time For Some Asset Management

If your company is like most companies, you use a lot of different types of software. This means that you have a significant organizational and tracking challenge just to keep track of what you should be paying for. This has to be your first step in getting software costs under control.

Studies of how companies make use of their software have revealed that up to 30% or even more of the software that they have purchased is either still sitting in a box or is underdeployed. What this means for you is that there is a very good chance that you are paying maintenance costs for software that the company is not even using.

Taking the time to create an effective asset management program may not seem to be as exciting as implementing a new cloud computing strategy. However, the benefits from taking this step will be immediate. Creating a system that allows you to track what you are using today and helps you to stay on top of what additional software you’ll be using tomorrow is the key to keeping your software maintenance costs in check.

Manage Your Software Vendors

The relationship that you have with your software vendors is not a one-way relationship. Yes, they do make a valuable product that you purchase in order to allow your company to run its business; however, the software vendor needs you just as much as you need them. This provides you with the opportunity to look for ways to manage this relationship.

What you are going to want to do is to hold your software vendors responsible for the promises that they have made about what their software will be able to do (and when it will be able to do it). There needs to be a system of assessments and penalties in place to cover the times where promises are made and are not kept.

With that being said, when you choose to use a piece of software from a given vendor, you are actually entering into a partnership with that vendor. You need them to succeed and to continue to support their software just as much as they need to retain you as a paying customer. Creating and maintaining this relationship is a key part of being CIO.

Always Be Looking For Alternatives

In order to keep your company’s software costs under control, you always need to be keeping your eyes open for alternatives. Almost every software product out there has competition – another company is making another software product that does the same or least a similar task. As the CIO, it’s your job to always be aware of what your options are.

One of the most important aspects of looking for alternatives is to make sure that your current software vendors know that you are looking. The goal here is to always be reminding them that their position as one of your software vendors is not a sure thing – things could change. If they are aware that you are looking for ways that they could be replaced, then they’ll be much more attentiative to trying to keep you as a happy and satisfied customer.

Your much larger question will be what to do if you do find an alternative to the software that the company is using. I would suggest that you start to do a trial and have a single team use the software and report back to you. Sometimes things are not all that they appear to be – and sometimes they are even better! This type of trial will also help to keep your current software vendors highly aware that they need to be taking care of your needs in order to remain vendors.

What All Of This Means For You

The bad news is that your IT budget is not going to be growing as fast as your software expenses are. That means that you need to sit down and start looking for ways to reign in what the company is spending on software. The good news is that there are a number of ways to successfully do this.

You can’t control your software costs until you know how much software and what types of software the company is currently using. Taking the time to set up an effective asset management system is the first step for the person in the CIO position. The cost of your software is controlled by your software vendors and so you’ll need to manage that relationship. Make sure that they understand that you’ll hold them accountable for the software that they provide you with. Finally, just because you are using one software package today does not mean that you’ll need to keep using it. Make sure that you are always exploring your alternatives.

Software is a key component in making your company successful. It’s also a major expense that the IT department needs to manage. As CIO the responsibility for doing this falls on your shoulders. Take the time to set up the systems and processes to make this happen and you will have solved one of a CIO’s biggest challenges.

– Dr. Jim Anderson
Blue Elephant Consulting –
Your Source For Real World IT Department Leadership Skills™

Question For You: What’s the best way to find alternatives to software packages that you are using?

Click here to get automatic updates when The Accidental Successful CIO Blog is updated.

P.S.: Free subscriptions to The Accidental Successful CIO Newsletter are now available. Learn what you need to know to do the job. Subscribe now: Click Here!

What We’ll Be Talking About Next Time

In order for your company to be successful, they need to sell their product or service to the right customer at the right price. It turns out that this may be more difficult than you think. Here in the 21st Century, determining what the right price for a product is requires a great deal of support from the IT department and is just one more example of the importance of information technology. Is your IT department ready to lend a helping hand when it comes to pricing?

Be Sociable, Share!

{ 0 comments… add one now }

Leave a Comment

Previous post:

Next post: