Eliminating the Hidden Fees that Destroy IT Budgets

Michael Vizard

The ongoing maintenance and licensing fees for hardware and software products can wreak havoc on an IT budget. This is how most vendors make their real money, but most customers have little insight into what they are really paying for. As a result, they're often paying fees for applications no one really uses or hardware that is outdated.

In these tough economic times, eliminating these fees could mean the difference between hiring and firing people, or at the least, funding the next round of system or application upgrades.

Far too few IT organizations have a handle on the problem. During purchases, they use spreadsheets that make it difficult to keep track of all these fees, or a purchasing department handles the process, treating the ongoing fees as yet another line item. Yet these fees quickly add up, consuming up to 25 percent of the overall IT budget in some organizations.

Alas, too many IT organizations are afraid to take a hard look at them for fear of being out of compliance with various licensing agreements. A company paying for software licenses for 500 people probably has only one-third that many people using them. And worse yet, you're probably paying maintenance fees for all kinds of applications and IT infrastructure that is just sitting idle.

The problem is that most IT organizations lack the administrative capacity or financial acumen to really efficiently manage these contracts. To give IT organizations a leg up on this process, Managed Maintenance Inc. has created a software-as-a-service application that allows IT organizations to see at a glance what they are spending on products and fees. But MMI president Tina Lux says IT organizations should push the onus of managing this process back on their IT services providers who sold them the products in the first place. Basically, she advocates demanding that IT service providers be able to give a complete accounting of the financial relationship with the customer at the touch of button.

She might be right about that from a tactical perspective, but some IT organizations that deal with hundreds of IT service providers will want to own the budget process themselves. Either way, MMI is one of a handful of IT budgeting tools that are now avalable as a service so the days when there was no transparency into license and maintenance fees may finally be over.

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