Businesses must ask themselves several questions about their business software; do you have a full inventory of the application portfolio, do you know the total cost of the portfolio and, most importantly, how much value is the business getting from it?

During a recent analysis of an IT budget, I was shocked to discover that nobody could provide me with a full catalogue of their software estate, while software maintenance costs amounted to 45% of the total OPEX budget.

Additionally, 50% of the that was for applications that were costing no more than $50,000 per year each but had a total cost of $2 million.

Having established the total spend, we began looking at the high-cost items, which led to an intriguing discovery – maintenance contracts were in place, but several of the applications had been de-supported by the vendor.

Therefore, there was no material benefit to maintaining the software support element of the contract, although the contracts do secure the right to upgrade to newer versions.

Next, an analysis was completed to review the use of the software and whether it was fit for purpose or would require an upgrade within the next three to five years.

A conclusion was quickly reached that the organisation had no intention of upgrading, and in some cases, were actively looking to decommission. There was no benefit from the upgrade rights within the support contract.

The bottom line was that contracts were in place that offered no value whatsoever but were costing several hundreds of thousands of dollars per year.

It was believed that the contracts needed to be in place to retain the rights to use the software. This is true for SaaS applications, but not the traditional perpetual model.

Next is to ‘right size’ the agreements, which is especially applicable to SaaS solutions. The organisation employed approximately 800 staff and a large number of contractors, tripling the overall number to around 2,400.

Enterprise Agreements were in place for some applications of around 3,000 users. That’s 600 licences that were not being used.

Using this date to negotiate contract renewals resulted in a saving of nearly $500k per annum.

That was the easy part; the greater challenge was to research the applications that cost no more than $50k per annum, but that amounted to almost 25% of the total IT budget when consolidated.

Such applications had gone under the radar of formal governance due to the low costs. They had been deployed with good intention and business cases being put in place, but no-one had ever circled back to check if the objectives of the business case had been met, but more shockingly, there was no evidence of the usage of the applications.