Almost two-thirds of companies plan on freezing or shrinking their software spend and 96 percent of organizations report that they're wasting money on software that is unused.
These are among the findings of a new report by Flexera Software in conjunction with IDC which looks at pricing and licensing. The biggest concern is that almost all businesses have "shelfware" that is never used.
The results show that 39 percent of companies report that 21 percent or more of their software spend is wasted on unused software. Yet at the same time software budgets are expected to remain the same or shrink over the next two years.
"It’s very easy for shelfware to accumulate when organizations don’t proactively implement best practices and technology to track, manage and optimize their software estates," says Amy Konary, Research Vice President -- Software Licensing and Provisioning at IDC. "Enterprises must have the ability to continually identify where software licenses are deployed, how those licenses are being used, and reconcile that data with the complex set of rules contained in the licensing agreements. By having this level of insight, CIO's can begin to identify shelfware, eliminate waste and reallocate their budgets more effectively".
Shrinking budgets are driving a shift in the way software is licensed though. The previously common perpetual software license is now only used for the majority of software by 45 percent of organizations. This is expected to decline to 36 percent over the next one to two years.
Instead businesses are switching to subscription (24 percent) or usage-based (17 percent) models. In response software producers are offering a wider variety of licensing options with only 35 percent saying that the majority of their revenue now comes from perpetual licenses.
"It doesn’t always make sense to pay up front for the full cost for software before the application has proven its value to the organization," says Steve Schmidt, Vice President of Corporate Development at Flexera Software. "In their drive to increase efficiency and cost effectiveness, some organizations prefer to pay for software in ways that allow them to better align their costs to value. That might mean paying over time via a subscription model, or by the features, functionality or capacity that they’re actually using, via a usage-based model".
The full report is available to download from the Flexera website.
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