big on budget To cut software costs during the economic downturn, companies should trim overlaps in software deployments and unnecessary support subscriptions, advise experts.
Chong Yoke Sin, Group CIO of healthcare cluster, SingHealth, told ZDNet Asia in an interview, wastage commonly occurs when companies purchase software with overlapping capabilities. She offered an example of a company purchasing a business intelligence (BI) tool which comes with online analytical processing (OLAP) features, but purchases another standalone OLAP tool on top of it because the company believes the latter to have more features.
Chong said a lot of such overlaps happen in operational systems, and results from a lack of an overarching enterprise architecture plan mapping a company's software deployments.
Companies should first set out to detail which sets of users require what software functionality, and the levels of access required. This allows software purchases to be directed to the correct audience instead of overpaying for both features and extra access rights that go unused, she explained.
Chong added that hardware consolidation will also help trim down licensing costs on software that charge on a per-CPU-deployed basis. Companies may also take advantage of bulk purchase savings if software licenses and maintenance are managed centrally, she said.
Bok Hai Suan, director, corporate information system, NCS, too said companies should plan their deployments carefully to avoid overspending. "Integrating diverse software products can be a constant challenge and consume valuable resources. Having a clear technology direction and architecture help to reduce integration costs," he said.
CIOs should also undertake regular reviews of user accounts, to keep access rights up-to-date, because users may change job roles or leave the company, Bok said in an interview with ZDNet Asia.
"Be creative. Not everything needs to be done within an enterprise application," he added. Features that are needed for a "one-off" project may be more efficiently and easily carried out on a third-party system, said Bok.
Frequent software updates will also help companies cut back on support calls that may arise from unpatched bugs, he said.
Maintenance the first thing to get axed
Scott Halstead, partner, IT strategy and transformation, Asean region at Accenture, said in a phone interview the first thing to go when companies cut software costs is maintenance.
"During good times, companies sign up for gold level service whether they need it or not, but now that they're taking a hard look at spend, they're reconsidering this commitment," said Halstead.
"Gold level service", he said, referring to the highest tier of service subscription, has been "easy money" for vendors, but users are stepping down their subscription levels.
On top of that, Halstead said enterprise users have been registering displeasure with the maintenance model vendors are charging. "Clients complain mostly of the model of buying software, which is a maintenance plus license fee...[customers] don't feel like they're getting value from the maintenance spend, partly because they often don't need to call the vendor for support.
Clients are starting to demand more usage-based schemes like SaaS (software-as-a-service) to counter this traditional pricing model, said Halstead.
SaaS, besides lowering upfront cost, also allows companies to pilot projects that would otherwise present prohibitive investments, the technology consultant added.
"SaaS is a very powerful way to pilot something and decide if you want to go ahead and build it yourself... It provides the opportunity to try out a new capability, before making a massive multimillion-dollar, multi-year commitment," said Halstead.
Open source software equally costly
Gartner research director Stewart Buchanan, said in an e-mail interview, maintenance can cost "far more" than license fees stretched over a four- to five-year period. Even open source software, where no license fee is charged, can add up to the same in maintenance subscriptions over that timeframe, he said.
"Open source software has commercial advantages but it's not magic. You need to plan and manage cost liabilities just as carefully.
"Costs aren’t so much hidden as ignored by customers who obsess with license fees without understanding the value of intellectual property or how to manage it," said Buchanan.
SingHealth's Chong said maintaining open source software could rack up a hefty bill for companies. Testing for compatibility and building new interfaces from scratch can also be costly, she said. "Any change in the open source [codes] could also spell heavy testing since these may not be assumed to be robust.
"The level of testing required is usually much higher when using open source," Chong noted.
Interoperability still presents some challenges, said NCS' Bok. He said: "Exchanging data with proprietary software may not be as seamless in some cases. If your business requires frequent data exchanges with your business partners who use proprietary software, you need to consider how to enable such exchanges."
Bok too said critical enterprise applications relying on open source software require "exhaustive evaluation and testing". He added that companies also need to have a certain measure of inhouse expertise to carry out their open source deployments and bug fixes themselves.