Software is either the first or second largest category of IT spend. Of that total spend, fifty to sixty percent of dollars spent annually actually go toward maintenance and support. During the life cycle of enterprise applications, which average twelve to fifteen years, customers pay for the software four to five times over again without any tangible ROI.
In addition, many organizations pay annually for software that was never deployed (shelf-ware) or has outlived its value (costing $12 billion annually per industry experts). Given that software products stabilize over years of deployment, the need for support and maintenance costs should decrease year-over-year.
How can you stop the hemorrhaging of dollars that are depleting your IT budget and draining dollars that might otherwise be used to fund innovation? This is where SM Financial can help! There are several ways:
- By negotiating maintenance terms when the software is purchased (when you have the most leverage),
- Auditing maintenance payments to determine waste and abuse,
- Implement governance procedures that ensure accountability (particularly when procured outside of IT) and
- Renegotiating terms or identifying third-party maintenance providers that align with your business requirements.
Don’t “give into” these vendors. Engage with SMF and let us help you come up with a course of action to put hard dollars back into your IT budget for 2017.