The COVID-19 pandemic is having a tremendous impact on the global economy. Industries are struggling with unprecedented challenges such as consumers and workforce in lockdown, broken supply chains, and disrupted transport. As policymakers slash interest rates in attempts to stabilize the economy, all signs point to a global recession. What does this mean for IT departments?
Since IT resources fuel the work of almost every department and given the recent switch to remote work, it is crucial for the IT departments to stay functional during this recession. An HBR report revealed that smart cost-cutting is key to surviving a recession and emerging as a post-recession leader. This puts CIOs at the forefront of decisive strategy implementation to cut down on unnecessary expenses.
At AssetSonar, we believe in creating value and facilitating seamless operations for our customers. Therefore, we’ve prepared a helpful guide for CIOs to weather the storm of recession. It outlines how you can use the Financial KPIs in AssetSonar to trim unnecessary IT costs and avoid any potential penalties resulting from unlicensed software as you implement recession planning.
Here are the 5 primary metrics you can use:
- Total worth of unassigned IT Assets
- Potential license savings
- True up cost
- Software spend by publishers
- Software license compliance overview
Let’s get started!
1. The total worth of unassigned IT assets
Do you know if you have unassigned IT devices such as laptops, headphones, or LED screens? These unused assets could be tying up valuable financial resources. You can identify such non-value-adding assets with AssetSonar’s Total Worth of Unassigned IT Assets KPI.
Clicking on the metric shows how many IT assets are unused and can be disposed of at salvage value to generate cash flow. Additionally, you can re-adjust the depreciation value of unassigned IT assets to reduce expenses in the company’s books. It is a common practice during the downturn to renew the depreciation value of assets.
Furthermore, you can also run reports to identify unassigned peripheral items such as mice, keyboards, and cables, etc. and retire them as needed. AssetSonar keeps you updated on which IT assets are overstocked or understocked so you only invest in what is required.
2. Potential License Savings
Are you up-to-date with the number of users provisioned to access a software application? Are you paying for software licenses that are no longer needed? During the recession, CIOs must identify and deprovision such software solutions on a timely basis.
AssetSonar helps uncover licenses that are being underutilized with its Potential License Savings metric. It shows the dollar amount of licenses you are overpaying for so you can cancel their subscriptions when needed.
Clicking on the KPI directs you to a page listing all the underutilized licenses as shown:
You can then terminate the licenses you think are unnecessarily tying up your financial resources.
You can also generate reports to identify financial software information for individual users to regulate budgets for every user.
3. True up Cost
As you cut costs during a recession, the last thing your business needs is a lawsuit. A report by Flexera revealed that 85% of enterprises are not compliant when it comes to software — primarily because they are not even aware of it. Businesses can incur millions of dollars as penalties and hefty true-up costs due to non-compliance.
With the ongoing disruption due to COVID-19 and remote working, it is easy for expired or overused licenses to go unnoticed. This is why CIOs should implement dedicated compliance auditing. This can help detect gaps in your business’s licensing framework before you are charged for “accidental piracy”.
One of AssetSonar’s financial KPIs, True up Cost highlights the amount you must incur to become compliant. It is essentially the number of overused seats per license multiplied by the average cost of each seat.
Clicking on the True up Cost metric will take you to a page that lists all the overused licenses. You can then click on the relevant license and revoke the overused installations for the license.
In addition to this, set alerts on licenses expiring so you remember when to renew them.
This ensures that you make timely license fee payments, are always compliant, and can avoid true-up costs.
Pro tip: You can always reconcile software license data to make sure you’re running updated and legal versions of the software, and whether the current versions are licensed.
4. Software Spend by Publishers
During an economic downturn, it is essential to establish an open and honest dialogue with your vendors regarding your budget.
AssetSonar enables you to involve vendors in your cost-cutting strategy with its Software Spend by Publisher’s metric. It displays the total cost of software licenses per publisher.
You can identify publishers whose services your company uses the most or publishers that could charge you higher true up costs based on the number of licenses you purchase from them. You can then request them to offer special discounts during a period of crisis.
It is very likely that the vendors will be willing to share the burden if it brings them value and a long-term relationship. They generally prefer a good partnership rather than burning bridges with their customers during tough economic times.
5. Software License Compliance Overview
The AssetSonar dashboard also displays a Software License Compliance Overview. This is essentially an extension of over- and under-utilized licenses. It shows a cumulative percentage of licenses that are overused, underused or 90% completed.
A greater portion of the green area indicates that you’re overpaying and you can save money by terminating underused licenses. On the other hand, a greater portion of the red area indicates that you must revoke licenses of overused instances or incur true up costs to accommodate the greater number of software users.
Measuring the effectiveness of your cost-cutting strategy
Once you have implemented the cost-cutting strategy, you can measure its effectiveness with the help of the two graphs illustrated below.
Typically, you should see an increase in Potential Savings and Software Spend graph before you implement cost reduction.
Alternatively, once you’ve reduced your IT expenses, you should see a decreasing trend in the Potential Savings and Software Spend graphs. This indicates that you’ve made the right decision. There are now fewer underutilized and overused/expired licenses and you are spending less on software than you were before implementing the cost-cutting strategy.
Deprovision users with our LDAP integration
AssetSonar also integrates with LDAP so you can allow or deny your employees access to software applications.
Our system automatically syncs with your Active Directories. Whenever you delete a user in your AD, AssetSonar will remove the user from the system and send you an alert of all the users that have been removed. You can then retrieve the IT assets assigned to those members and retire them if needed.
Cost control can make or break your business during a recession
During an economic downturn, businesses should be proactive about cutting down their costs. It helps them steer clear from the impact of a crashing economy. However, companies need to be strategic with their cost reduction. They should not be too defensive or conversely, too aggressive. They must evaluate the utility of each of their assets and only retire ones that no longer add value but strain the company’s already stretched resources. With AssetSonar, you can optimize your hardware and software spend and only invest in assets that add value to your business.
About AssetSonar
AssetSonar is the leading hardware asset management software used by IT organizations across the globe. It offers powerful and intuitive reporting on your IT asset data so you can make timely, informed decisions.
Read more: 5 Ways AssetSonar Can Facilitate An Effective Remote Work Policy
