With the COVID-19 crisis, we are starting to see the financial impact begins to affect businesses. Whether it is a retail business temporarily closing 1300 stores or a healthcare system canceling all revenue-generating activities such as elective surgeries, the result is the same – lost revenue. But do you have time to think about these things when you are struggling to update your infrastructure to handle different workloads or monitor security with so many employees now working from home? Many people are in an “all hands on deck” mindset to create work environments that support the current times, but the bottom line is that the bills are still coming in. What are you doing to make sure that you are not just paying your annual invoices but really looking at them to maximize the financial impact for your organization?
We have compiled a list of the Top 10 most successful strategies that were learned during the financial crisis of 2008. In 2008 it started slow and certain businesses were affected but it accelerated rapidly and most businesses scrambled to find ways to cut costs.
- Get Help! – Identify the 3 most costly expenses impacting your company other than payroll. Once you do that, it will be apparent that Technology spend is in the top 3. Now is the time to accept that you will need help! Due to the complexities associated with all technology spend, 90% of all companies are not prepared or have the knowledge to cut costs and create a go-forward strategy that will help during these trying times. Bring on experts to do this work for you. You might think you don’t have a budget to hire a firm, but the question is really can you afford not to? If they are experts in getting spend reductions, then the results they bring will be significantly higher than what you and your team could even imagine. We are hearing from our clients that they are stretched too thin to be able to really do this themselves. Outsourcing is a proven way to affect change when it matters most.
- Take an Inventory – Know what you are using and what you are not. This sounds intuitive and logical, but 85% of companies that we surveyed had “an idea” of their inventory but truly did not know. It turned out that 95% of these companies were over licensed. These are staggering statistics. If there have been major reductions in force you probably own more licenses than you are using which can lead to substantial reductions in spending.
- Benchmark your spend – Find out how your pricing measures up. Did you buy software licenses several years ago and have been paying support uplifts year after year? Did you buy licenses during an audit and received poor discounts? Have you purchased true-ups? I benchmarked the spend of a client today and found they were paying double the list price on several of their high use items!
- Track your support usage – How often are you calling support for your products? Do you have some that you barely call support and others you call more? How up to date are you on your patches and upgrades? If you aren’t using support often, then now is the time to look at other options such as third-party support. Often clients get better service for half the price they are paying now.
- Look for low hanging fruit – Do you have items that were purchased by themselves that are no longer being used. These orphaned products may have been bought for a specific group or project and now are ripe for cancellation. Check your order numbers and not service numbers, often products will be combined on service numbers. These items can have support canceled without repercussions. There will be resistance but this can be overcome because of your contractual rights.
- Know what is locked in a bundle – these are the not so low hanging fruit. Now that you have taken the inventory and know what you are using and what you aren’t, identify those items that you are no longer using but were purchased on the same order as items you are still using. These still have the ability to be shelved or even canceled at times. Depending on what the item is and what the options are, you may still be able to cancel or convert to something you do need! Often times this is a contractual option and not a negotiation.
- Know your renewal dates – You have until the expiration date of your support to pay the renewal. You need to know when these dates are because if you want to impact them, you have to act before they are expired. Also make sure that anything that is on auto-renew currently is changed so that you control the renewal at least 60 days in advance of the renewal date! Often there are multiple support numbers with different renewal dates. Where these fall in the year is important and how they can be leveraged.
- Request maintenance uplift removal – There is a maintenance uplift fee associated with all renewals which is much like an inflation increase. But right now, the markets are down and there is a huge financial impact all over the world. Now is the time to ask for those uplift fees to be removed from your support renewals.
- Request Higher discounts – if you are in the process of making a purchase or even a cloud renewal, ask for more than usual. Almost all companies are impacted by this and probably are more willing to negotiate a better deal. Push this hard and use this financial impact as the major reason that the purchase might not happen.
- ASK FOR THE THINGS YOU WOULDN’T NORMALLY ASK FOR – We know that software vendors are often very stringent with their policies and rules. But these are not normal times and you should be asking for things that aren’t normal. Ask for dropping of support on items you aren’t using without penalty. Ask for a break on items that are increasing in price each year. Ask for any type of reduction you can possibly need and push hard for these requests without taking the first no as final.
All of these items can and should be done. During the recession of 2008, the companies that followed these steps ended up realizing immediate results. Since these are Top 3 expenses, the boost to the bottom line was advantageous making recovery less painful and much shorter. One important reminder for every item here is that accepting a longer-term deal in order to get better discounts is not usually a good thing. When you are locked into long term agreements you are contractually obligated for that entire term and have no ability to make changes to those products until the term is over. Remember, you are all busy and now is the time to outsource to experts who can make a huge difference to your bottom line and path forward. SLC has been in business for over 16 years and achieved a huge impact for companies like yours in 2008. We have been there, done that and would love to share our expertise to help you navigate these waters for the best possible outcome.
