with SaaS no longer the default choice in an era when artificial intelligence and automation can handle workflows and problems previously siloed into unique SaaS tools. This concept is also reflected in the stock market, CNBC reported, “Advisory firm Constellation Research said […] the sell-off reflects concerns that AI could pressure profits and limit how much software companies can charge, rather than signaling a death knell for the industry. ‘There’s likely to be cannibalization of SaaS by AI-driven workflows and that will impact the multiple the sector trades on’”.
On a more granular level, there are calls from leadership everywhere and increased scrutiny on organizational IT budgets, necessitating a game plan and a shift away from the SaaS-first mindset. License rationalization is the strategic process of cataloging and evaluating an organization’s software portfolio to reduce redundancy, lower costs, and ultimately improve efficiency. This process is not intended to stop growth; rather, it seeks cost savings without sacrificing functionality in existing software environments.
Why should license rationalization be an organizational strategic priority?
- Eliminating redundancy
- Reduce multiple contracts for software that does the same thing
- Don’t pay for: Multiple video conferencing software like Zoom and Microsoft Teams
- Licenses to both the Microsoft Office Suite and the Google Suite
- Identifying “shelfware”
- Software that’s being paid for but not used or underutilized
- Many organizations, especially those that go through fast growth and changes in their tech stack, end up with underused software that is costing them but not bringing any value due to a lack of use
- Tracking actual usage data allows you to “right-size” your contracts, ensuring you only pay for what your team actually uses
- Fund reallocation and turning savings into strategy
- Budget tightening and software consolidation don’t have to mean a lack of growth or stalled progress
- Money freed up from license rationalization can be used on higher-priority or other modernization projects that actually drive business forward
All of this starts with an IT asset inventory to prepare for the scrutiny on IT budgets. Then by cataloging and evaluating your portfolio, you ensure that your organization isn’t just surviving the SaaSpocalypse but emerging from it with a more agile, modernized, and cost-effective foundation.