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12-Step Plan to Slash Software Costs

Avoiding budget surprises is a top priority for IT. Two main keys: Spend smart up front, then manage licensing and maintenance.

Focus On Life Cycle

After getting a strong initial deal, it's just as critical to effectively manage software licenses and ongoing maintenance throughout the product life cycle -- but often more difficult:

7. Establish effective asset management. Yes, that's easier said than done, but it's not uncommon for 30% or more of software purchases to be undeployed, resulting in a substantial effective increase in maintenance costs. It's a worthwhile effort.

8. Invest in reliable asset tools and supporting processes. There are many products on the market to support asset management, but the tool is only as good as the information that goes into it. We often see these systems become error ridden -- increasingly so over time.

9. Holistically manage the software supplier relationship. The ability to hold vendors accountable and ensure that internal contract and supplier management capabilities are nurtured is thankless but critical work. This role is a misunderstood and underserved specialty. (We discuss four ways to make this happen in our full report.)

10. Keep an eye on alternatives. Never let a software supplier believe it's the only game in town. Yes, we like stability in the application portfolio, but maintain at least the appearance that you have real options on the table.

11. Understand and manage the long-term impacts of software spending, and proactively manage the architectural choices that impact it. Nothing is more valuable to the enterprise IT function than an architect who understands the interaction of technological components within the portfolio.

12. Integrate operations and maintenance planning into project management office processes for project delivery. Few project teams consider "run" cost requirements. Most often, project teams are rewarded for on-time and on-budget performance related to delivery of project requirements and objectives -- despite trade-offs that may shift increased costs to ongoing operations.

Steve Keegan and Andrew Alpert are principals at IT consultancy and advisory firm Pace Harmon. Write to us at

chart: What's your company's top business priority?

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