I’ll bet I can cut your software costs by ¼ with one briefing…

Does your company have a formal step-by-step process for identifying, sourcing, testing, negotiating, and evaluating the functionality of a new software package?

Do you blindly purchase any product that the software industry dubs “standard”?

Do you purchase hardware that the hardware builder has arbitrarily loaded up with software?

Do you carefully control and monitor the entire acquisition process to ensure a good investment and positive business value return?

Read on for a 20+ point checklist that an effective asset manager can follow to maximize the quality of a given IT purchase. The idea, here, is to SAVE money--not spend more on non-solutions. Our goal for this program is to put more cash IN your pocket, not take more out.

Using this (highly) simplified phased approach for acquisition, you could increase the business value of a software (or any other technology) purchase while reducing costs:

• Do you establish a very clear business value to every software purchase?
• Do you have a process in place for measuring the delivery of that specific business value?
• Do you set very clear and measurable functionality requirements for all acquisitions?
• Do you have a process in place for measuring the delivery of that specific functionality?
• Do you select at least two viable alternative products as BATNAs for every purchase?
• Do you actually have the ability to fall back on that BATNA? (Don’t know what a BATNA is?)
• Do you conduct effective bench testing of product before the purchase?
• Does your bench testing match your requirements to actual product functionality?
• Do you establish a clear and strategic value you are willing to place on technical support and/or ongoing maintenance?
• Do you have two clear sets of contractual terms and conditions relating to this type of purchase?
• Establish one set of "must have" clauses and one set of "will not accept" clauses.
• Do you follow a formal strategic negotiations plan for this acquisition?
• Do you check the product that you receive to ensure it is what you ordered and in the quantity or quality that you ordered?
• Do you review all paperwork that accompanies (or doesn’t accompany) the product?
• Do you bench test the product you actually receive to ensure that it still matches the functionality that governed the purchase? (Don’t be surprised if this value has changed. It happens - A Lot.)
• Do you ensure that the product has been effectively implemented according to the agreed parameters?
• Do you follow up on the product within the warranty period to determine if it is fully functioning according to requirements?
• Do you ensure that warranty & support costs are actually applied via the warranty, or are you being billed for warranty services?
• Do you follow up on the actual technical support and/or maintenance services delivered by the provider?
• Do you check all invoices to ensure they are correct, cover delivered products/services, and do not represent double (or even triple) billing?
• Do you go back to the re-seller or provider with solid evidence of failure should failure occur? (Or do you just eat your losses and move on?)
• Do you clearly document this entire process?

Can I prove to you that any of these issues can bring a wide range of ROIC value to the enterprise?

Absolutely. Virtually every software asset manager or technology asset manager that I have worked with over the past six years has agreed that these steps represent the very tip of the IT and software cost reduction iceberg. However, in the majority of companies out there in the wild neither the software asset manager nor the technology asset manager is actually permitted to genuinely organize or control the acquisition , distribution, and utilization processes.

Unfortunately, even the basic steps we just listed are either not considered or they are fragmented across the enterprise to the extent that very little control is exerted on the purchase. Instead, in many enterprises, maximum control is exerted on nothing more complex than distributed silo ownership. In terms of the average technology purchase, if you do not have a centralized and very solid acquisition process in place, you will consistently lose money due to functionality, over-purchasing, ineffective implementation, pricing, and duplication of services.

So? Based on this information, the average company has a couple of major problems that prevent any realistic reduction in IT financial waste. First, there is essentially no meaningful, centralized, or knowledgeable control over the life cycle of technology assets. And second, executive management has literally no idea that their company is leaking IT dollars through a money sieve with hundreds of tiny but highly significant holes. So far, we’re only discussing the workflow of a relatively simple acquisition process.

Want more? Agree? Disagree? Don’t care? Let us know & we’ll follow up.