Chamber Member Service – Software Cost Optimisation
With the increasing trend towards digitalisation and online customer presence, software is an increasing proportion of business cost, or at the very least as a proportion of business IT costs.
When a business decides to invest into a software solution, it is usually (although not always) the case that the decision making process is well governed and the ‘new’ expenditure is scrutinised. There is typically some element of competitive tension in the selection or negotiation stage (although again, not always) and software suppliers are keen to reassure you of the good deal you are getting at the point of investment.
Assuming that you are negotiating a good software deal, or assuming that you had negotiated a good deal and the software is now in use for the foreseeable future, how sure are you that you are paying the optimum price for your software estate across your business?
In my experience, even if there was a robust commercial discussion at the point of investment, many businesses soon treat this as ‘business as usual’ cost and the renewal fees without much consideration. Whether this is for traditional on-premise software where the annual fees usually purport to cover support and maintenance, or whether it is a software as a service subscription, renewals are simply the next investment decision point and opportunity to ensure value for money.
I have found examples of software having been adopted and then paid for on a rolling basis for decades with no lasting evidence of licence terms, commercial agreement or documented relationship. Modular software tends to be bought and over time it lands and expands with additional modules and added extras increasing the costs. And yes, there are businesses that have simply bought something on a whim and not questioned the costs.
I have delivered cost reduction on software simply through taking proactive action and addressing the planned spend with a commercial mindset. This has ranged from the ridiculous (a software vendor reduced the renewal fee by five figures simply because ‘procurement’ was on the conference call) to the magnificent (a household name supplier worked with me over a protracted period and came to the table with a seven figure reduction and resource commitment) and every time has been based on an assessment of the right tactics to employ in each unique set of circumstances.
Whilst the importance of IT is ever increasing, IT budgets are still under pressure and under review by finance colleagues. Would professional procurement support, on a no-win-no-fee basis be interesting to you to support you in checking you are getting the best value from your software investments?
CJC Procurement Ltd has saved significant sums of money from software. This is underpinned by a genuine focus on supplier and customer relationships, ensuring the right value is obtained and the right relationship maintained and not simply on cost reduction at the expense of appropriate business relationships.
Chris Cliffe, Director of CJC Procurement Ltd, says: “On my first day with a local Housing Association, a midsized software vendor reduced a software renewal price by £10,000 simply because ‘procurement’ was in the room. More recently, a long-term engagement strategy with a large well-known software supplier resulted in a £1.6m cost saving on a 5-year ERP Platform deal. Whether it’s a small software vendor, or a large global corporate, there is a lot of value to be had based on well planned commercial discussions.”
CJC Procurement Ltd is happy to offer its ‘Software Cost Optimisation’ service to Norfolk Chamber of Commerce members. This is a no-win-no-fee service, and for Norfolk Chamber of Commerce members, the fee will be capped based on a percentage of the negotiated value achieved.
Please contact Chris Cliffe via CJC Procurement Ltd contact page to find out more and to arrange for an initial conversation to explore the potential. Whether you make use of this service or not, never renew your software without testing your commercial position and checking the right relationship is in place.