Every company in the 21st century absolutely must invest in quality software and then use them to their fullest potential.
Unfortunately, a lot of organizations learn the hard way that paying for software that goes unused or doesn’t get used enough is a serious problem.
The hard numbers
A study recently conducted by a software lifecycle automation company called 1E, sheds light on the fact that many businesses spend insane amounts of money on software they never or rarely use.
To come up with the numbers, 1E spoke to 300 IT decision-makers from both the United States and United Kingdom. They also analyzed some 1.8 million desktops across 74 companies.
According to the study, in the United Kingdom alone, a full 25% of purchased platforms are unused, resulting in a loss of roughly £3.5 million per company, on average. In the United States, this problem costs companies $5.4 million, on average.
Industries with the lowest usage rate
The study also analyzed specific industries and found that the following top the list with the most percentage of unused software:
- Pharmaceutical, 56%
- Federal, 50%
- Education, 47%
- Manufacturing, 46%
- Communications, 41%
- Technology, 40%
- Engineering, 38%
1E also studied which software titles go unused the most:
- Crystal Reports, 52%
- Visual Studio, 44%
- Visual Studio .Net, 42%
- AutoCAD, 38%
- Project, 32%
- Visio, 23%
To ensure that companies squeeze the most out of their software investments, CIOs must put better software tracking and asset management mechanisms in place or you run the risk of “shelling out millions of dollars unnecessarily,” says Sumir Karayi, 1E’s CEO.
Looking at user costs
After running the numbers, 1E established that the total cost of unused software per PC was $414.50.
80% of the respondents concurred that the wastage was indeed more than $100, and more respondents (92% from the UK and 83% from the US) disclosed they have undeployed software licenses, also referred to as shelfware, a nod to the fact they’re sitting around collecting dust.
Now, let’s look at some of the ways you’re hurting your business because of unused software or shelfware.
- Licensing charges
Licenses are a cost almost exclusive to software.
If your company pays for a piece of hardware, there’s generally just a one-time cost:
- You may need a forklift, for example. Even if you pay it off in monthly installments for, say, five years, you’re still looking at cost that won’t change.
- The same goes for the majority of things you’ll purchase for the business, no matter what industry you’re in.
When you buy software, however, you may end up paying a monthly or annual fee for the license. If you stop making payments, the software quits working.
When you consider licensing fees, you’ll probably spend more than $100 in a single year. Keep in mind that depending on the type of software you deploy, you may need to obtain multiple licenses to support all your employees.
- Unnecessary features
Another way businesses waste money on software has to do with the features they pay for.
Very few platforms come with a single plan. With most, you have two or three to choose from. Generally, there’s one for small businesses, another for medium-sized companies, and then an enterprise version.
The more features there are, the more money you spend.
One common reason people pay for features they don’t really need is because they don’t know any better.
Like all business professionals, they want to succeed, so they figure, “better safe than sorry” and pay for a program that offers more than they need.
Unfortunately:
Not enough companies run audits on their software usage.
Their cautious strategy may be understandable, even commendable, at the beginning, but after a year or so of the same approach, they’re simply throwing money out the window.
- You don’t know what you have
On the other side of the spectrum, there’s the problem of having all the features you need yet still unused because no one knows they’re there.
The problem here is the same as the above: You’re paying for something you’re not using.
If you’re lucky, that is.
What some companies do is buy more software because they have needs but are not cognizant of the fact that the platforms they already own can address those needs just fine.
In the end, they’re paying about twice as much for the one feature they want.
Final word
By now, you probably already appreciate the importance of using your software to the fullest, something you can achieve through diligent asset tracking and management.
Here at Cloudswave, we help you purchase business tools that are worth every cent while we strive to ensure you know what you can do with them.
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The post Why You Need to Squeeze the Most Out of Your Software Investment appeared first on Cloudswave Blog.