Sometimes it's the simple things that can save money
Published on July 22, 2002
IT leaders trying to make the most of their ever tightening budgets typically focus on cutting big-dollar projects or restructuring staff. But sometimes, a tidy savings can result from just spending a little extra time reviewing a budget, as one TechRepublic member learned. With a keen eye to detail and a little negotiation savvy, Mike Selinger not only found a spare $20,000 by reviewing a mysterious software license cost, but another $10,000 when he revisited the licensing agreement one year later.
How it all came about
Selinger heads the IT department of Regina, Saskatchewan, Canada-based Thyssen Mining, an underground mining contractor and world leader in shaft sinking. The tech leader was reviewing his FY2000 budget and noticed that $50,000 had been allotted for J.D. Edward's WorldVision-a software package used for financials, accounting, and fixed-assets management.
"That $50,000 stuck out like a sore thumb," recalled Selinger, who realized that he was not the one who brought WorldVision into the enterprise and so decided to investigate.
It turned out that the application had been purchased in 1996, before Selinger joined the company. The enterprise package was supposed to be deployed at all of Thyssen's mining operations-10 different sites in North and South America. But the software proved too cumbersome for the staff to learn independently, and training proved quite costly. Somewhere along the way, a decision had been made to deploy the training only to staff in the company's main office.
Initially, the goal was for staffers in remote offices to input the data directly into the system, but the decision to train just the head office staff meant that the remote office data would now be sent to the home office for entry.
Upon learning this, Selinger suspected that his company wasn't getting a $50,000 value from the WorldVision 40-seat software license. Yet he still needed real data to back up his suspicions.
A lesson in licensing
While studying the software documentation, Selinger found that the software kept a usage log. So he queried the log for the previous three years and, to his surprise, he learned that the average number of concurrent connections was a mere 20. "I think it peaked at one point at 23," he said.
With proof in hand, Selinger made "about 10 to 15 calls" and finally found the appropriate J.D. Edwards representative with whom to discuss the issue.
"I explained the situation and wondered if we had to pay all of that money for all the licenses," said Selinger. The rep said no, and with that, Selinger sought approval from the IT VP to drop some of the licenses.
With permission in hand, the tech leader returned to the rep, who tried to convince him to keep the redundant licenses, "saying if I cut the users back, I'd have to pay more for the seats in the future."
Ultimately, Selinger decided to drop 15 licenses-an annual savings of $18,750.
"We are still using the system three years later, so this in total has saved us $56,250," said Selinger.
Recently, around renewal time, Selinger used the same method to revisit the software's usage. This time, he determined that only 17 users needed seats, so he cut an additional eight from the licensing agreement for an additional $10,000-per-year savings.
With the saved funds, the tech leader has been able to purchase additional hardware, desktops, and other needed tech supplies-which made it possible for more of the home office's 25-person staff to come online.
Thyssen's president has also expressed gratitude. "I sort of got a pat on the back from the president," said Selinger, adding that "he said, 'anything you can do to save money is a good thing.'"