Johannesburg, 12 Jul 2023
Inflation is a challenge faced by many businesses, particularly for those organisations that need to purchase internationally based IT solutions. The prospect of having to buy IT software in dollars, pounds or euros in an inflationary environment can quickly make things very expensive.
This also talks to the age-old adage of ‘doing more with less’, explains Leon Steyn, CEO of Dante Deo. In any inflationary environment, businesses seek to contain or reduce their IT services costs, increase employees’ efficiencies and improve productivity by ensuring they get what they pay for.
“When it comes to IT, especially with the speed of its evolution in the 21st century, it is vital you get the right solution or service at the right time for your business; if you don't, everything else is meaningless,” he says.
“One key challenge is that when it comes to organisational software licences, these tend to be bundled under ‘contract management’. The issue here is that most contract renewals are focused on the agreement's expiry date. However, when it comes to software licence renewals, there are additional triggers to consider.”
For one, explains Steyn, these licences may not have a specific expiry date. This, he says, is usually because the parties don’t want to change the terms unnecessarily, due to the rights such a licence confers, and the fact that the business practice is often built around these rights.
“However, with the speed of technology development today, it is wise to regularly check whether your business requirements have changed, if increased functionality is required or a new software bundle needs to be acquired. Consolidating multiple corporate software bundles is another reason IT licensing needs more careful consideration. Effective licence management remains crucial to reducing costs and improving efficiencies.”
“All of the above are good reasons to partner with a specialised renewals management service, something that will enable you to focus on your core business. A good partner will undertake a full 360-degree review of your organisation, to understand where you stand regarding the use, deployment, duplication and renewal of your IT software. In addition, eliminating duplication via consolidation helps to reduce complexity, and we have witnessed companies that undertake this obtain savings of around 15% to 20%.”
Steyn notes that something as simple in a large enterprise as buying your software licences on an ad hoc, piecemeal basis can end up costing far more than expected. He notes that one Dante Deo client that had done this for a long time – purchasing licences as and when they were needed – eventually adopted a consolidation approach that ended up saving them around $90 per licence, for thousands of licences.
“Lots of businesses in SA still view software as an enabling tool, but it is much more than that today. Just looking at the huge proliferation of IT – for example, the rise of mobile devices and wearable technologies – you can see it is now embedded into virtually every aspect of our daily lives and into every critical business process,” he states.
“The challenge with ongoing digital transformation and the increasing pervasiveness of technology is that if it is not also properly understood and managed, and this certainly includes the licensing, it can very rapidly destroy your business.”
Steyn points to an example of a client that had a three-year, fixed-term software licence, but which had a built-in automatic renewal for another year, unless notification was given 30 days prior. The simple fact of not being aware of this rider, and choosing to end the subscription too late, meant they were contractually bound to pay an extra year’s costs running into tens of thousands of dollars, for software they no longer required.
“The long and the short of it is that such contracts are owned by your business, so it is your job to look after it. Therefore, if you are to focus on your own core business and yet still reduce costs and improve efficiencies, you need to have a specialist partner keeping an eye on this sort of thing instead.
“As the IT space grows increasingly complex, and technology evolves radically and far faster than it did in the past, it is absolutely vital to choose the right partner. Ultimately, you want a company that understands how to properly manage licence renewals in a way that will improve your productivity, reduce your business costs, decrease the complexity of your IT and eliminate all the administration around it,” he concludes.