With overall IT spending in many cases expected to be flat in 2019 managed service providers (MSPs) will need to find more creative ways to free up funding within IT budgets that all too often are not allocated in an efficient manner. But, it’s not all doom and gloom — one source of potential funding that MSPs can tap is the large amount of money that gets wasted on maintenance fees for software.

A report from the Campaign for Clear Licensing (CCL), an independent, not-for-profit organization campaigning for more manageable license programs and the rights of business software buyers, suggests that as much as $250 billion a year is being spent on software support and maintenance.

Much of that money is poorly spent for maintenance contracts on software that is either not mission-critical or isn’t even being used anymore, says the report’s author. In many cases, premium levels of support for software applications are not required. In addition, the report notes there are plenty of third-party options for software maintenance that are considerably less expensive than support provided by vendors. A survey of 100 IT leaders conducted by CCL found that over half the respondent (51 percent) say that third-party maintenance is just as good as the support they received from the original vendor. Another 23 percent had no experience with providers of third-party software maintenance providers.

The report recommends that the surest way to reduce software maintenance fees is to inform the software vendor of plans to not renew the license at all. The software vendor may recognize that move as an opening gambit because often the total cost of switching software can be cost prohibitive. But it does send a clear signal that usually results in a drop in many of the ancillary fees the software vendor provides.

Software maintenance fees are only the tip of the iceberg when it comes to IT budgets that are often not rigorously reviewed. As much as 70 percent or more of most IT budgets are allocated to simply keeping the lights on. Automation and open source alternatives to some applications create additional opportunities to reallocate IT funds by reducing the total cost of acquiring technology and owning it.

MSPs need to tread lightly

Of course, MSPs need to tread lightly when making such suggestions. There may be a host of political reasons for why one application continues to be maintained in its current fashion. IT leaders can also be sensitive to anything that suggests they might not as efficient stewards of IT as they imagine. Overcoming that sensitivity usually becomes easier when there is some new IT project that needs to be funded without increasing the overall size of the IT budget. MSPs will need to be sure they’ve built a customer relationship based on trust before making recommendations concerning how any IT leader could be more effective.

Nevertheless, there is an opportunity for MSPs to expose IT leaders to more creative approaches to fund IT projects. The best thing about software maintenance contracts is that they provide a place to start that presents an easy win, without involving anyone’s ego.

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Photo:  Panchenko Vladimir / Shutterstock.

Mike Vizard

Posted by Mike Vizard

Mike Vizard has covered IT for more than 25 years, and has edited or contributed to a number of tech publications including InfoWorld, eWeek, CRN, Baseline, ComputerWorld, TMCNet, and Digital Review. He currently blogs for IT Business Edge and contributes to CIOinsight, The Channel Insider, Programmableweb and Slashdot. Mike blogs about emerging cloud technology for Smarter MSP.

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