Quick Cost Savings Guide For The New Age CFO!
Think of the ability to automate tedious tasks, streamline operations, and automate repetitive tasks—all with the help of cutting-edge technology. Today's CFOs have this power at their fingertips. These advancements help them unlock significant cost-saving opportunities, optimize resource allocation, and drive operational efficiency across the organization.
But here's the challenge: With organizations using a staggering number of SaaS tools (nearly 350-400), including cloud services, productivity apps, and more, managing these tools can be a real challenge—often called shadow IT. It can quickly eat up nearly 30% of your operating budget.
This article will delve deeper into shadow IT and explore how CFOs can manage their costs better.
What is Shadow IT?
Shadow IT refers to using information technology (IT) systems, devices, software, applications, or services within an organization that are not explicitly approved or supported by the organization's IT department. It often involves employees or departments independently procuring and using IT resources to fulfill specific needs or tasks without proper oversight or authorization.
What are the Common Examples of Shadow IT?
Below listed are some common examples of shadow IT:
Why is Shadow IT Supposed to Be On a CFO’s Radar?
Shadow IT accounts for 30-40% of IT spending in large enterprises. It can quickly drain company finances, making it a concern for CFOs. These unauthorized tools and services can lead to unexpected costs in several ways:
How can CFOs Manage Costs of Shadow IT Better?
Below listed are some best practices for CFOs to manage the rising cost of Shadow IT:?
1. Gaining Better Visibility into your IT
CFOs can tackle shadow IT costs by gaining deeper IT visibility. They can identify unauthorized applications and redundant services by monitoring device data, SaaS tool usage, and license information. This allows them to eliminate unnecessary subscriptions and consolidate tools with overlapping functionalities.
2. Re-negotiate With Insights
Equipped with data, CFOs can negotiate favorable terms with vendors, such as securing grandfathered pricing, longer-term contracts, or multi-year agreements to ensure cost stability and maximize savings.
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3. Price Protection
During software license negotiations with vendors, CFOs should opt for price protection clauses that offer cost benefits when scaling up the number of legitimate users. This can be achieved by opting for a tiered pricing structure, where the cost per user decreases as the number of licenses purchased increases. Alternatively, CFOs can secure the right to buy additional licenses at a predetermined price for a set period.
4. Price Increase Cap
CFOs can negotiate price increase caps with vendors. This limits the annual or biannual increase in software license fees, helping control future costs associated with approved and potential shadow IT use.
5. Negotiating Renewals Early
Initiating contract negotiations early empowers CFOs to secure better terms, avoid last-minute decisions, and get better concessions from vendors.
6. Strengthen your IT buying process
Establishing robust procurement procedures for both SaaS and devices ensures efficient and cost-effective acquisitions, minimizes unnecessary spending, and optimizes resource allocation.
7. Leverage Workforce Tech Platform
Workforce tech platforms like Livlyt can be your central hub for managing all your IT assets. Track software usage, calculate ROI, manage contracts, and identify cost-saving opportunities like device leasing and better software procurement. Livlyt empowers you to save on software costs, optimize spend, and maximize the return on your IT investments.
8. Regular Audits
Regular audits are necessary to identify duplicate subscriptions or underutilized resources, enabling CFOs to eliminate wasteful spending and ensure optimal resource allocation across the departments.?
Conclusion?
In today's tech-driven world, new software and devices are popping up daily, making cost management a tightrope walk for new-age CFOs. But worry not! It's time to turn those cost-saving tips into action.
Livlyt's workforce tech platform offers a one-stop view of your entire SaaS, IT infrastructure, and devices. This data-driven approach empowers you to make informed decisions and control rising costs. Get started with Livlyt today and take control of your tech spending!?
Visit our website now!