{"id":15277,"date":"2023-06-07T14:00:51","date_gmt":"2023-06-07T14:00:51","guid":{"rendered":"https:\/\/www.walkme.com\/blog\/?p=15277"},"modified":"2023-06-07T14:00:51","modified_gmt":"2023-06-07T14:00:51","slug":"software-cost-reduction","status":"publish","type":"post","link":"https:\/\/www.walkme.com\/blog\/software-cost-reduction\/","title":{"rendered":"How to use software cost reduction strategies to free up budget"},"content":{"rendered":"\n

Looking for ways to reduce the cost of your tech stack? <\/span><\/p>\n\n\n\n

There are many reasons why software costs can begin to creep up, from <\/span>shadow IT<\/span><\/a> to organizational siloes.<\/span><\/p>\n\n\n\n

If you don\u2019t already have a process in place to manage and reduce software costs, you could <\/span>save a decent chunk of your IT budget<\/b> by following the guidance in this article.<\/span><\/p>\n\n\n\n

Software cost reduction is an ongoing process, so we\u2019re also going to show you how to set yourself up to reduce your software costs and <\/span>keep<\/span><\/i> them low.<\/span><\/p>\n\n\n\n

Even if you don\u2019t feel a pressing need to reduce your software costs, you may want to seriously consider deploying these strategies anyway. <\/span><\/p>\n\n\n\n

It\u2019s no secret that businesses may soon be facing headwinds if they aren\u2019t already. <\/span><\/p>\n\n\n\n

\u201cIT sourcing, procurement, and vendor management (SPVM) leaders must take immediate action to alleviate financial pressure for a six- to 24-month period,\u201d<\/span><\/i> says Gartner Senior Director Analyst Stephen White late last year. <\/span>\u201cLeaders need to protect their organizations from financial disruption and build resilience for what may yet be to come.\u201d<\/span><\/i> <\/span><\/p>\n\n\n\n

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With the practical advice in this article, you\u2019ll be well-equipped to protect your business from potential financial disruption and learn how to keep the cost of your <\/span>tech stack<\/span><\/a> lean and low\u2014 directly benefitting your bottom line.<\/span><\/p>\n\n\n\n

Gartner\u2019s top strategy for software cost reduction? Vendor negotiation<\/b><\/h2>\n\n\n\n
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It pays to learn from the experts, and Gartner has written about their <\/span>top 3 strategies to cut software and cloud costs<\/span><\/a>.<\/span><\/p>\n\n\n\n

Gartner\u2019s approach centers on <\/span>negotiating better prices from your existing software vendors<\/b>.<\/span><\/p>\n\n\n\n

This is an excellent strategy because you can increase your profitability without necessarily increasing your customer base or cutting down your tech stack. There\u2019s not really a downside to doing this.<\/span><\/p>\n\n\n\n

Negotiating better terms and prices with your existing vendors can significantly improve your business’s bottom line and free up resources that can be better invested in other areas of the enterprise.<\/span><\/p>\n\n\n\n

The catch is it\u2019s not easy.<\/span><\/p>\n\n\n\n

Negotiating with vendors requires the right strategy, approach, and communication skills to achieve the desired outcome. <\/span><\/p>\n\n\n\n

In this regard, it’s essential to understand your business’s needs, establish a rapport with your vendors, and leverage your buying power to negotiate better deals. <\/span><\/p>\n\n\n\n

Let\u2019s drill down into some strategies to help you create a win-win situation with your vendors that improves your business’s financial health.<\/span><\/p>\n\n\n\n

Start by asking vendors to restructure contracts<\/b><\/h3>\n\n\n\n
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The first thing you should do is talk to your vendors. <\/span><\/p>\n\n\n\n

Tell them you\u2019re looking for ways to improve your financial health but that you value your relationship with them. <\/span><\/p>\n\n\n\n

Begin by asking them to restructure contract terms. <\/span><\/p>\n\n\n\n

For example, if you pay annually, ask to pay in 3 or 6-month installments.<\/span><\/p>\n\n\n\n

This opens the door to further conversations and sets the expectation for change. It helps you get off on the right foot and launch your negotiations.<\/span><\/p>\n\n\n\n

Make sure you understand your software usage<\/b><\/h3>\n\n\n\n

Take stock of IT assets, review contracts, and analyze usage data to understand what\u2019s being used\u2014or not. <\/span><\/p>\n\n\n\n

Once you know what\u2019s not being utilized, you can decide whether to terminate services or renegotiate contracts. <\/span><\/p>\n\n\n\n

This is a great way to free up resources that could be better invested in other business areas. <\/span><\/p>\n\n\n\n

Ensuring you have adequate visibility into all software assets and users will help ensure your organization is not paying for unnecessary services or applications. <\/span><\/p>\n\n\n\n

It will also give you valuable data for vendor negotiations\u2014 you\u2019ll know what you need and what to ask for. <\/span><\/p>\n\n\n\n

In any case, it\u2019s good practice to regularly carry out a <\/span>digital audit<\/span><\/a> of your software licenses and subscriptions for cost savings opportunities and to ensure compliance with industry regulations. <\/span><\/p>\n\n\n\n

Increase your leverage before going into negotiations<\/b><\/h3>\n\n\n\n
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By increasing your leverage before going into negotiations, you\u2019ll be in a much stronger position to get the best deal possible for your organization. <\/span><\/p>\n\n\n\n

One of the best ways to increase your negotiating leverage is to have options. <\/span><\/p>\n\n\n\n

If you\u2019re locked into a current vendor, shop for an alternative offering better terms or pricing. <\/span><\/p>\n\n\n\n

Creating a competitive bidding process is another great way to increase your leverage. <\/span><\/p>\n\n\n\n

Invite several vendors to compete for your business by submitting bids and then compare their rates and offerings side-by-side before deciding. <\/span><\/p>\n\n\n\n

This will help ensure that you get the best deal available in the market, and you can use it as leverage when renegotiating with your existing vendor. <\/span><\/p>\n\n\n\n

Finally, become an \u201ceducated buyer\u201d by researching pricing trends in the software industry\u2014 understanding what other companies are paying for various products and services can give you a competitive edge when negotiating rates. <\/span><\/p>\n\n\n\n

But remember to keep it realistic. A vendor won\u2019t agree to something unless there\u2019s also a benefit to them. It\u2019s on you to ensure they know what they\u2019re getting out of the deal.<\/span><\/p>\n\n\n\n

Four more software cost-reduction strategies<\/b><\/h2>\n\n\n\n
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Negotiating with vendors isn\u2019t the only way to reduce the cost of your tech stack.<\/span><\/p>\n\n\n\n

There are plenty of other ways to tackle this problem. Let\u2019s take a look at a few of the most versatile options:<\/span><\/p>\n\n\n\n

Consider open-source solutions as an alternative to expensive services <\/b><\/h3>\n\n\n\n

By taking advantage of the open-source community, you can access a wealth of resources ranging from software, documentation, and user communities. <\/span><\/p>\n\n\n\n

These solutions are often just as robust as proprietary software, if not more so. <\/span><\/p>\n\n\n\n

Furthermore, open-source solutions provide higher transparency, allowing for greater customization and optimization. <\/span><\/p>\n\n\n\n

In short, open-source solutions offer companies an affordable and flexible alternative to expensive services.<\/span><\/p>\n\n\n\n

The downside is that you don\u2019t get the same customer success support or technical help.<\/span><\/p>\n\n\n\n

Break down siloes and start sharing licenses between departments <\/b><\/h3>\n\n\n\n

One effective way to reduce organizational costs is to break down organizational siloes. <\/span><\/p>\n\n\n\n

Often different departments have similar software requirements but don\u2019t know it. The business ends up paying more just because they don\u2019t want to mix up budgets between different departments.<\/span><\/p>\n\n\n\n

By breaking down those organizational siloes, you encourage different departments to collaborate and pool resources instead of each team investing in separate licenses for the same software or application. <\/span><\/p>\n\n\n\n

By sharing licenses, you can reduce their overall expenses and streamline their operations, resulting in significant cost savings. <\/span><\/p>\n\n\n\n

Additionally, this approach encourages better communication between departments and promotes a culture of resourcefulness and efficiency. <\/span><\/p>\n\n\n\n

As a by-product, you\u2019ll also boost collaboration and allow different departments to learn from one another.<\/span><\/p>\n\n\n\n

Cut down on hardware costs with cloud computing services <\/b><\/h2>\n\n\n\n
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Cloud computing services have become increasingly popular in recent years because they allow you to cut down on hardware costs. <\/span><\/p>\n\n\n\n

By using cloud computing, you can reduce the need for expensive hardware installations and maintenance. <\/span><\/p>\n\n\n\n

In addition to saving money, cloud computing services offer increased flexibility, scalability, and security. <\/span><\/p>\n\n\n\n

With cloud computing services, you can easily scale your resources up or down as needed, reducing waste and maximizing efficiency. <\/span><\/p>\n\n\n\n

Furthermore, cloud computing services offer advanced security measures that can help protect against cyber threats and data breaches. <\/span><\/p>\n\n\n\n

They can be more expensive on paper, but cloud services can work out cheaper in the long run than on-premise solutions.<\/span><\/p>\n\n\n\n

Take advantage of free trials before committing to a purchase<\/b><\/h2>\n\n\n\n

As a savvy consumer, it’s important to make informed decisions when purchasing anything. <\/span><\/p>\n\n\n\n

The same advice holds true for a savvy business leader.<\/span><\/p>\n\n\n\n

Many companies offer free trials to allow you to test out their offerings before committing to a purchase. <\/span><\/p>\n\n\n\n

By taking advantage of these opportunities, you can get a firsthand look at the features and functionality of different software programs to determine which one best fits your needs. <\/span><\/p>\n\n\n\n

Not only does this save you money, but it also ensures you select the right software for your specific situation. <\/span><\/p>\n\n\n\n

So, next time you’re in the market for new software, explore free trial options to make the most informed decision possible.<\/span><\/p>\n\n\n\n

Four ways to model your software costs<\/b><\/h2>\n\n\n\n
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Before you can make any major decisions about your tech stack, you need to understand:<\/span><\/p>\n\n\n\n