Beware! You Could be Throwing Money Away

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While companies search for the most economical way to implement new applications, for some the answer could be a big surprise. They already have it installed as part of a larger suite and aren’t aware of the fact. Or they are buying applications they don’t need.

Software purchases are consuming an ever-expanding portion of IT budgets. According to Andy Gallagher, managing consultant for Compass Publishing BV’s office in the UK, companies spent 10 percent of their mainframe budgets on software in the 1980s, but today that figure runs in the 30 to 40 percent range.

Taking a look at desktops, Dell was selling its Dimension 2400 workstation — including a 17-inch LCD flat panel monitor, 2.66GHz Pentium 4 processor and an 80GB hard drive — for $599 in March. But you can spend far more than that on software for the machine.

Microsoft’s Office 2003 Professional Edition alone lists for $499.99, almost as much as the hardware. Then installing a firewall, antivirus, defragmenter, remote access software and any applications users need to do their job adds a few hundred dollars more.

Organizations, as they should, always will look for ways to cut their software expenditures, as exemplified by the open source movement. But it is one thing to pay for expensive, but necessary, software. The real problem is companies buying software they don’t need — either because their employees don’t or won’t use it, or because they already have the application and aren’t aware of it.

Paying Twice

Some firms, it turns out, are wasting a huge amount of money buying unnecessary software. Gallagher reports that 8 percent to 15 percent of software spending goes to the purchasing, renewing and support contracts for shelfware.

”Companies do own a lot of tools that have functional overlap,” says David Friedlander, senior analyst for Forrester Research in Cambridge, Mass. ”In some cases, it is due simply to a lack of awareness of the existence of a tool.”

This problem takes many forms. On the desktop level this includes desktop licenses being purchased for employees who don’t ever use that particular application. And sometimes administrators buy more licenses than the number of copies actually loaded. Sometimes this is due to buying bulk licenses to meet anticipated future growth expectations, rather than arranging a phased purchase agreement to add the additional licenses at a later date. At other times it is simply due to sloppy inventory and record-keeping practices. While it may be better to have too many licenses in case of an audit by the Business Software Alliance, it is even better to have just the right number.

Different business units independently buying software easily can result in extra licenses scattered throughout the enterprise. One branch winds up buying additional licenses to meet its growing needs, rather than taking advantages of another branch’s unused licenses. Independent purchasing also drives up the cost per license.

”If you don’t have centralized purchasing, you can have groups buying the same software from the same vendor without any sort of negotiated discount,” says Friedlander.

Another problem arises from buying plug-ins that cover functions that are now part of the basic functions of a piece of software that the company already owns.

For example, WordPerfect and StarOffice/OpenOffice productivity suites both allow a user to save word processing documents in a PDF format. This may be enough functionality for many users to avoid purchasing copies of Adobe Acrobat for them.

Similar problems exist at the server end.

”Especially in the area of capacity planning, enterprises have a lot of tools that they don’t use,” says Milind Govekar, a research director at industry analyst firm Gartner, Inc. ”Probably 50 percent to 60 percent of enterprises are finding it is becoming an expensive form of shelfware.”

Continue on to find out how you can avoid these expensive pitfalls…

Tackling Servers and Mainframes

The reasons that enterprises wind up with too much software on the desktop also apply to the data center. But unique problems plague the server and mainframe level.

Personnel changes are a big part of the problem. With some specialized tools, there are only one or two people in the organization who can use a particular piece of software. Sometimes, this software may only be used occasionally, such as when modeling changes to the network or migrating to a new operating system. If those users get assigned new duties or leave the company, others may not even know that software exists, so they buy something new the next time that issue arises.

Another issue surrounds custom Software. A company may have extensive custom software that was developed in house or by a contractor. These modules often can be reused in other applications, but instead the software gets rewritten since there is no record of what these elements are.

And then there’s the problem of dealing with unknown features.

Enterprise management software is incredibly complex and the feature sets keep changing all the time. IBM, for example, provides over 150 different courses to train admininstrators on how to use different parts of Tivoli. If you are a Tivoli shop, it is not unlikely that the software contains features that no one in your IT department knows about.
It gets worse if other departments can purchase their own software.

”The finance group might decide it needs to do a software inventory in order to reconcile their purchase records with what is installed,” says Friedlander. ”They might be unaware that they can get the data from Computer Associates’ Unicenter or Microsoft’s SMS and so the go out and buy an inventory tool.”

Plan Before Buying

Someday you may be able to look at a centralized library of software features and see if you already have the functions you’re looking for before buying something new.

Reading the features listed on all the software boxes sitting on the shelf, or scanning through a directory listing of all the applications loaded on the network won’t necessarily answer the question of what features you have available. But there are a few steps one can take.

First off, create a complete inventory of all the software you have. Don’t just list what is deployed in the production environment, but all the tools that developers and programmers might have loaded on their own workstations.

Secondly, have one set of people to evaluate software and keep records who are familiar from a tech standpoint with the products they have installed, advises Friedlander.

Also remember to talk with your vendor. Companies are constantly adding new features to their existing software. With a quick call or e-mail, you may find that you just need to download a new module for your existing software. Even if you wind up having to pay for an upgrade, it can still be cheaper than having to buy a new tool.

And don’t forget to check Open Source. If you are looking at a tool to solve one particular problem that your existing software doesn’t address, there is a good chance someone has a freeware tool to address it. Visit sourceforge.net or other open source sites and see if they have something that meets your needs.

You also need to check tech support sites. Not everything makes it into the product brochure or owners manual. By checking Microsoft’s TechNet or Developer Network (MSDN), or similar sites from other vendors, you may find hidden features or downloads that will do what you are looking for.

Metadata Repositories is another thing to check. For custom-built software, using a tool like Flashline, Inc’s Flashline 4 lets you identify the characteristics of software modules so they can be reused for other projects.

You also can post a question to a newsgroup and see if anyone else knows about the feature in question.

Of course, following these steps won’t eliminate all your software purchases. Sometimes it is easier to just buy something you know will do the trick rather than spending a lot of time researching the issue. But before buying anything major, check what you already have in house, and you may be able to save a good chunk of the budget.