Companies today are doing everything they can to cut costs. From layoffs to forced furloughs and salary reductions, large and small firms alike are scrambling to find a way to wring out just a few more pounds in savings. For IT departments, that often translates into delayed projects and purchasing freezes. But while many companies are embarking on what they believe to be cost cutting initiatives, they are actually missing a big chunk of what they could save, writes Richard Muirhead, CEO at Tideway.
Figures from the Office of National Statistics show that UK unemployment rose by 281,000 to 2.38 million in the three months to May 2009. While that represents a cost savings in terms of headcount - what about the cost savings in terms of IT assets? The truth is that many companies that were forced to make employees redundant to meet cost cutting mandates probably don't realise they have a serious mismatch between IT assets they previously purchased and staff that are still around to use them.
Typically about 5% of hardware is orphaned in corporate datacentres. Each of those servers has associated administration, software licence, facilities, power and cooling costs. Perhaps more startling, Forrester Research estimates that more than one in five businesses that have had software audits are holding on to unused software, and the average company spends 10% of its software maintenance payments on shelfware. Add these up and we're talking real money.
Most businesses historically rely on tribal knowledge and ad hoc IT record-keeping to track hardware assets and software licences. But with this crucial information in the hands of a few individuals, orphaned machines and unused licences can slowly pile up and security can be jeopardised. When redundancies hit, that ad hoc tribal knowledge may even walk out the door.
Any IT cost cutting programme should include software licence management to identify and eliminate unused licences in the datacentre. In fact, most firms could quickly reduce software maintenance costs by around 5% simply by identifying over-licensing and eliminating extraneous product instances. Not surprisingly, licence management and optimisation are now becoming attractive to IT executives as a means to lower overall software spend and reduce compliance risks.
Before a company can embark on a software licence management programme, they first need to understand what is actually being used in the environment. That may seem difficult in these challenging times. Fortunately, leveraging tools that provide deep visibility into where and how software products are deployed will let firms easily and quickly run a single, high-value internal software audit. Armed with that information, they can optimise their hardware assets and software licences and structure an end-of-life programme to improve efficiency and identify additional cost savings opportunities.
As an example, a major European power utility used Tideway to reduce its Oracle licence renewal exposure from £3.2m to £850,000 simply by getting a better understanding of their licence position.
Your licences are lonely. They're sitting out there taking up space and eating up money. Can you really afford to leave them there?
This was first published in July 2009