Maximising software subscription value: 4 strategies for ITAM professionals
Maximising software subscription value: 4 strategies for ITAM professionals
With software pricing becoming increasingly fluid, what are some of the strategies that can be used to adapt to these ever changing landscapes?
Published on 1st October 2024
The world of software pricing is notoriously dynamic. With frequent shifts in monetization models and evolving vendor strategies, IT asset management professionals are constantly adapting to new pricing landscapes.
Effectively managing subscription-based software can unlock significant cost savings and deliver more value. Below are four essential strategies that will help ITAM teams get the most from their software investments.
Embrace flexible capacity planning
One of the most common pitfalls in software procurement is purchasing based on peak usage, which often leads to unnecessary overspending. Instead, a more strategic approach is to start with a smaller subscription tier and scale up as needed. This way, you’re only paying for what you use, which is a key advantage of the pay-per-use model over traditional perpetual licenses.
In scenarios like staff reductions, project completions, or broader economic shifts, scaling down subscription levels can generate immediate savings—something not possible with fixed licenses. Emerging models like elastic licensing further enhance flexibility, offering a base level of capacity that can expand when needed.
Coupled with entitlement management, ITAM can take strategic capacity planning to the next level. Entitlement management allows organizations to control access to software resources, issuing or revoking permissions as needed to prevent unnecessary over subscription. This ensures that your software usage stays aligned with your business requirements, reducing waste and avoiding excessive costs.
Optimize costs through ITAM data insights
Leveraging ITAM data in tandem with FinOps data provides a comprehensive view of how software is being utilized. This level of insight can help uncover underutilized licenses or redundant applications, empowering you to negotiate better terms with vendors or consolidate solutions for cost efficiency.
For example, if usage data reveals that certain software is primarily used during specific seasons, flexible licensing terms can be negotiated to reduce costs during off-peak periods. With a mix of pay-per-use and subscription-based plans, or reserved instances, you can select pricing structures that better suit your organization’s specific needs.
While monthly subscriptions may come with a higher price tag compared to annual agreements, a detailed cost analysis can help you identify scenarios where monthly plans provide better value, especially if usage varies throughout the year. ITAM tools can automate reporting, streamline license re-harvesting, and eliminate the need for manual tracking, further contributing to cost savings.
In addition, evaluating usage across platforms—like Zoom or Microsoft Teams—can highlight opportunities to streamline tools, consolidate platforms, or downgrade pricing tiers.
Hone your negotiation skills
Negotiation plays a pivotal role when it comes to renewing software contracts. By sharpening your negotiation tactics, you can secure optimal terms that suit your organization’s needs.
Bundles may seem attractive, but they can lead to overspending if your usage projections fall short. When negotiating, it’s crucial to stay realistic about your current and future needs. Opting for lower-tier packages when you’re uncertain about future use can prevent waste. Instead of attempting to forecast long-term usage, a more dynamic strategy—where you add or remove software as needed—can avoid unnecessary expenditures.
Don’t hesitate to think creatively in procurement negotiations. Vendors are often willing to customize terms or offer unconventional solutions. Using AI-powered tools to research vendor pricing trends can give you a competitive edge and ensure you enter negotiations well-prepared.
Exploring competing vendor offers can also be valuable. Even if you plan to stay with your current provider, a competitor’s offer gives you leverage in negotiations. Always negotiate list prices, and aim for terms that reflect your organization’s unique needs.
Lastly, weigh the benefits of short-term versus long-term contracts. While monthly flexibility can be ideal in times of change, long-term commitments often unlock significant discounts. Strong vendor relationships can also lead to better pricing and personalized support, but maintaining flexibility may be more beneficial if your software needs are likely to evolve.
Stay informed about emerging trends
As software increasingly incorporates artificial intelligence (AI) capabilities, pricing complexity continues to rise. While AI features can provide substantial value, they often come with added costs. It’s important to assess whether these features align with your operational needs and deliver a measurable return on investment (ROI).
Other evolving factors, such as data egress costs, should also be carefully monitored. Transferring data between systems or migrating to new vendors can result in hidden expenses. Being aware of these trends helps you anticipate and avoid unexpected charges when making decisions about software vendors or pricing models.
Final thoughts
While software subscription models remain a dominant force, ITAM professionals can stay ahead by adopting a proactive, informed approach. With the right strategies, it’s possible to navigate the complexities of software procurement, optimize costs, and maintain flexibility in an ever-evolving market.
