4 Ways to Lessen the Impact of Software Price Hikes

We’ve seen a steady stream of announcements from prominent software vendors responding to current economic conditions with price increases.

A new study by Vertice found SaaS price increases in the United States over the last five years were 3.5x greater than the general inflation rate. A report by Gartner® predicts SaaS costs will grow by 15-20% over the next two years. Lately, the news has been filled with announcements from prominent software vendors notifying customers and prospects about price increases. Many of these increases are taking effect January 1, 2023.

Earlier this year, organizations also saw price increases from vendors such as Microsoft and Adobe which were justified by improved and new features. Adobe Creative Cloud increased prices by 4-7%, while Microsoft increased prices on Microsoft® 365 by 9-25%, depending on the offering.

Crises can reveal opportunities for better cost management

With the Covid-19 crisis, we experienced a lot of rapid technology innovation. Much of the spend for this innovation happened outside of traditional IT budgets, leading to application sprawl, waste and security concerns. According to the Snow 2021 IT Priorities Report, leaders said SaaS sprawl was their biggest concern around SaaS. In our most recent survey on SaaS management priorities, we found identifying all SaaS usage in the organization was the second highest priority behind managing SaaS security.

A large portion of technology investments over the last two years have hit operating expenses. If your organization is looking for ways to save cash now, SaaS and IaaS costs are good places to start looking. You may also have upcoming maintenance renewals where you can see some savings by performing application rationalization if those products are rarely used. Here are some ideas where you can start identifying cost-savings opportunities.

1. Analyze application subscription data to understand the value you are receiving from contracts.

While it might be difficult to significantly reduce spend on an application your organization is heavily dependent on, you can prevent over-buying and have a better argument for reductions if you know the value you are or are not receiving from the software. Likewise, you can decide to not renew  subscriptions with little-to-no use.

To start, take a look at your contract end-dates and filter by “subscription terms” with contract end-dates coming in the next six months. Sort contracts by highest to lowest cost.

agreements

Next, look at the agreement in closer detail. The renewal for this one is in October although it expires in December.

adobe-creative-cloud-subscription

Let’s take a look to see which of these licenses are allocated and what is actually being used to assess potential savings for the next contract period. Right away, we can see 278 licenses assigned to users, but are not being used, resulting in savings of €9403 per month. Additional, potential savings can be found in downgrading users assigned to all app licenses but only needing one app license.

adobe-creative-cloud-chart

2. Look at alternatives and application redundancies.

Because SaaS applications are so easy to buy, it is very likely you have redundant applications used across your organization, or you may even have multiple agreements in place for the same applications across various business units. This scenario is extremely likely if your organization has multiple business units. To check for application redundancies, discover and inventory your installed and cloud-based applications. Then, run a report of all the applications in use by application type, and filter for applications requiring licenses. From there, you can see where there may be applications you can remove from your environment. In the example below, there are multiple applications used for instant messaging – should the organization decline to renew some of these subscriptions to save cash?

application-rationalization-instant-messaging

3. Find unused resources across your cloud infrastructure.

Cloud infrastructure can be used by various teams within your organization. Without tagging resources, and allocating costs, your organization won’t have visibility to determine if they are getting the value from these investments.

By obtaining detailed usage metrics on cloud instances, your cloud infrastructure team can take action to right-size or eliminate cloud workloads, as seen in the image below.

recommendations-dashboard

Learn more about the hidden costs of the cloud.

4. Assess license configurations for datacenter applications.

For organizations with on-premises datacenters, software costs for applications in these environments can be significant.

For instance, Microsoft offers a huge choice of products and associated licenses for the datacenter. Due to the high license cost for these products, it is possible to create multiple configurations that achieve the same results from a technical perspective but are vastly different in price. Small changes can make big differences to compliance and financial exposure. Getting the structure optimized and maintained from a licensing perspective ensures significant cost savings.

Some software asset management tools give you visibility to how your licenses are currently configured, and provide recommendations to reduce your license costs and improve your compliance position, as in the image shown below.

windows-server-assessment

As organizations are going through budget crises leading into 2023, now is an opportunity for IT leaders to re-think how technology is managed for their organizations to enable ongoing technology cost management and improve the organizations’ risk posture.

Learn more about Snow Software solutions for optimizing technology spend.