Worldwide spending on IT for businesses is expected to reach US $3.7 trillion this year, according to Gartner, despite the availability of a wealth of well priced software-as-a-service solutions and other cloud computing services. Small businesses alone will spend $602 billion this year on IT software and related services, accounting for around 30% of total SMB spending this year. IT experts like Dave McComb, author of the book Software Wasteland: How the Application-Centric Mindset Is Hobbling Our Enterprises, asks us to rethink this expenditure, in order to avoid waste and to improve productivity and efficiency. Taking advantage of free software can also help reduce a company’s overall IT expenses.
Busting Software Myths
McComb’s book is worthwhile reading for any company that is worried about the amount it is spending on software. Because IT spending comprises such a large expense of a SMB’s total budget, companies sometimes raise extra finance or rearrange their finances to accommodate the cost of cutting edge software. In fact, McComb told Strategy Business, many businesses have become convinced that they need to spend more than they do. He cites child government child support enforcement systems (which in reality are simple to create) as one example. These systems started out with a cost of $70 million; now, contracts for these systems are costing $300 million or more – despite the fact that these systems are easy to develop and manage.
Reducing Software Costs
One of the biggest problems when it comes to software costs, notes McComb, is the amount of data companies are storing, and the complication of existing data by the creation of too many applications. Many of these applications are unnecessary, he says, since most businesses function of a smaller number of key concepts than they realize. Companies should work to streamline the number of applications they use, continually analyzing which they still need and doing away with those that have become superfluous. Companies need to have a comprehensive overview of all the licenses they have purchased and to analyze how each is used across their business. They should also check how each type of software is used and by whom. This is because roles, goals, and procedures may change and initially purchased licenses may cease to have relevance from year to year.
Crucial Software for Companies
When it comes to licensed products, it is important for companies to make wise decisions and to go with those they truly need to get the job done. Many review sites suggest top software for everything from finance to document-sharing, tax accounting, and marketing. Companies should take advantage of software that offers free trial. For instance, FreshBooks, a cloud-based product that integrates with mobile devices, offers a free trial for 30 days. Plug-ins like Yoast, meanwhile (a popular WordPress plug-in that allows you to hone your SEO and improve readability) are mainly free. Yoast does offer paid extensions for added functionality, but its most important functions (writing titles and meta descriptions, setting target keywords etc) are free.
Companies wishing to reduce their software cost need to conduct thorough research into what each piece of software is used for, and by whom. As noted by Dave McComb, many companies have multiple applications that perform the same functions. Many also store data that is irrelevant and does not relate to the company’s key functions. Checking may take time and effort but it could save SMBs in particular a big share of their budget, which could be applied towards investment, new products and services, marketing and social media, etc.
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