Enterprises waste a significant amount of money on software and services they don’t use, according to a survey conducted by Oomnitza, a technology management company that regularly fields surveys about enterprise practices. Their latest survey, the “2023 Snapshot Survey: SaaS and Cloud Spend Optimization &Automation” which was conducted by survey firm YouGov, revealed that over 10 percent of IT budgets were wasted on software licenses in excess of what were required. In addition, this waste went even higher for unused cloud resources with over 20 percent reported by 19 percent of respondents.
The news gets worse as the size of the organization gets bigger. Large enterprises with over 5000 employees reported that they were twice as likely as smaller organizations to experience significant software and SaaS issues. And the experience depends on the industry sector with 43 percent of utilities and infrastructure firms and 32 percent of professional services firms wasting between 10 and 20 percent of their annual software expenditures. 63 percent of those respondents said that they experienced unplanned cloud and SaaS expenditures or had issues with workflow automation maturity.
The reasons for this waste and inefficiency boil down to a dependence on manual processes. Other reasons include inaccurate forecasts when buying licenses and a failure to remove licenses when they’re not needed. In addition, the lack of a formal procurement process when adding those licenses was a key issue, such as when someone spins up a cloud service, then forgets to shut it down, resulting in charges for infrastructure and services that aren’t being used.
Arthur Lozinski, CEO and co-founder of Oomnitza provided an example of how this waste happens, using a layoff. “We have taken away the licenses of our 100 employees that may have been laid off and they’re not getting reallocated,” he explained. “Instead, we’re buying new licenses as an example. Another example is that we have licenses that we didn’t even know are in the field, and so, when we’re laying off an employee, those are still being charged because those licenses never went through the proper process of being procured.”
“If you look at a relatively large organization of 5,000 employees and above, it’s a major expense,” Lozinski said, “and a lot of it has to do and ties back to this idea of manual effort, because the amount of technology that is in these companies, just the sheer amount of licenses, different software, has become so inflated and so convoluted that trying to manage them with tickets, trying to manage them with manual effort, which those two things are synonymous, has become impossible.”
Lozinski said that many companies try to keep track of software and SaaS implementation and licensing by using manual processes, such as spreadsheets. In addition, the process of adding users, making changes and removing users was often relegated to service tickets which may or may not get acted upon.
While Oomnitza does sell software for enterprise management, the issue really goes farther than that. The research presented in their survey quantified just how bad the problem is, and how much money is wasted by companies clinging to outmoded and outdated processes in an environment that is growing more complex by the day.
“Every IT organization, every company in the world is being asked to do more with less,” said Oomnitza co-founder Ramin Ettehad, “and the solutions, systems and general motivations that worked for the past 10 years will not work going forward. We need to create more efficiency, we need to manage security, and we need to do it with less resources available, so it has to be automated.”
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