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Preparing for Unpredictable IT Expenses

Why is it so hard to predict IT expenses?  Many obstacles arise from the rapid pace of software evolution we’re seeing these days, and the need to respond to changing requirements in your organization.  Companies invested in traditional, perpetual license enterprise software may be less prepared to address some of the issues that crop up, for example:

  • You might unexpectedly have to acquire or upgrade servers or other hardware, call in outside tech support to perform repairs to infrastructure or implement expensive software—one analyst reported a client’s upgrade costs at 75 times the software license cost. 1
  • Your new software implementation might not perform as planned—or the rollout of upgrades may not end up matching the business unit’s timing or budget.
  • The ROI used to support the initial business case may not be realized or slow to materialize.  Most new software takes longer to deploy than the client originally estimated.  The result?  Shelfware.

Can a move to SaaS help manage unpredictable expenses?

The more exact your budgeting, the more predictable your cash flow.   But, how can you reliably budget for the unexpected?  To minimize unplanned hits to your IT budget, are consumption-based software solutions the answer?

 Yes, but only with sound planning.  SaaS and cloud-based software are becoming popular options, replacing perpetual licenses—it’s expected that 80% of software vendors will adopt subscription as a primary licensing model by 2020. SaaS reduces some of the obstacles to predictable expense management, by improving business agility, simplifying maintenance and automatically delivering upgrades and new functionality—all top reasons that business and technology decision-makers switched to SaaS, according to a recent survey.3

“Furthermore, organizations embracing dynamic, cloud-based operating models position themselves better for cost optimization and increased competitiveness,” said Gartner research vice president Ed Anderson.  His company predicts a steady shift in IT spending toward cloud solutions through 2020. CIOs agree: 70% of respondents to a recent Morgan Stanley survey said they expect SaaS spending to increase in 2017.5

Flexible subscription solutions make budgeting easier

The right partner can help you overcome unforeseen obstacles and expenses by guaranteeing uninterrupted, up-to-date IT solutions at a predictable cost through subscription software solutions.  With the right solution, you’ll be able to:

Get the lowest possible price up front

Work with a partner that can help you combine multiple budgets or technology solutions into one transaction to maximize your volume discount.

Pay for licenses only as you deploy them

Negotiate your software purchase now—and perhaps take advantage of end-of-quarter incentives—but pay only when the licenses are deployed.  This lets you match your expenses to your available budget.

Customize a deployment schedule to your budget

Look for a partner that can help you tailor your deployment schedule to your needs.  You’ll be able to spread expenses to meet your budget requirements and free up cash flow.

Pay maintenance only on deployed licenses

Rolling out software as required guarantees you only pay maintenance on the licenses you are using—an important consideration, since on-premise software maintenance and support can cost 18% to 29% of the license fee annually.6

Transition from one vendor to another without paying double

When you only pay for deployed licenses, you can roll out new software and decommission older technology over several quarters without paying for both at the same time.

Work with a partner that can make your expenses predictable

Having a good business partner, who understands your budget pressures, will help make your IT expenditure more predictable and reduce your overall IT spend at the same time.  Central Technology Services, the software industry’s leading financial services partner, specializes in assisting Fortune 1000 companies and their vendors to manage the financial, operational and budgetary issues associated with acquiring enterprise software and related technology assets.

 Understand that you have options. Contact Central Technology Services today to find out how we can help you.

 

[1] Richardson, Bruce, Beware upgrading enterprise software: total cost can be many times the license fee, ComputerWeekly.com,

[2] Gartner, Market Trends: Prepare Now to Smooth the Inevitable Transition to a Subscription-Based Business Model, April 19, 2017.

[3] Hamerman, Paul D., Vendor Landscape: SaaS ERP Applications, 2017, Forrester Research Inc., January 23, 2017.

[4] Gartner Says by 2020 “Cloud Shift” Will Affect More Than $1 Trillion in IT Spending, July 20, 2016

[5] Morgan Stanley Research, IT Budget Growth Poised for Acceleration in 2017, June 2017.

[6] Gartner, Reduce Your Software Maintenance and Support Costs by Up to 50%, May 2017.

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