The software spend audit: finding what you pay for and forgot about

There are three kinds of waste in a software budget, and only one of them is the forgotten subscription everybody talks about.

1. The tool nobody opens

Bought for a project that finished, or by someone who has since left. It is the easiest to find and usually the smallest number.

2. The tier you grew out of downward

You bought 25 seats when the team was 25 people. It is 14 now. Nobody downgrades at renewal, because renewal happens automatically and nobody is asked. This is often larger than everything in category one put together.

3. The price that crept

The renewal came in eleven per cent higher and was paid, because the invoice looked like last year’s invoice and nobody had last year’s number to hand. Compounded over three or four years, this is usually the biggest of the three — and the only one that is invisible unless you deliberately keep the history.

Four sources. Work through all four — each one finds things the others miss.

The fourth is the one that changes the result. Statements tell you what you buy. Only people tell you what gets used, and they will tell you plainly if you ask about the tool rather than about their judgement in having bought it.

One line per thing, with six fields. Resist the urge to add more — an audit that takes three weeks doesn’t get finished.

• Vendor — the name on the invoice.
• Owner — a named person, not a team.
• Department — whose budget it comes out of.
• Renewal date — and, for contracts, the last date you could give notice.
• Annual price — normalised to a year, so monthly and annual lines are comparable.
• Last year’s price — dig it out. This is where category three lives.

That is exactly the shape of the free spreadsheet template if you want somewhere to put it.

Every line gets one of three outcomes, and every line gets one today. A “come back to it” pile is how the last audit ended.

Keep. It earns its place. Record who owns it and move on.

Downgrade. Fewer seats, a lower tier, annual instead of monthly. Usually the largest recovery and almost always the least disruptive, because nobody loses a tool they use.

Cancel. With one trap attached, below.

Add up the annual price of everything cancelled, plus the difference on everything downgraded, plus — for anything where you went back to the vendor on price — this year’s figure minus last year’s. That is your number. It is worth writing down and telling whoever holds the budget, because it is the thing that gets you the time to do it again.

Run this audit and you will recover real money. Run it again in eighteen months and you will find a similar amount, because nothing about the process changed — only the list did.

The reason is not carelessness. It is that an audit is an event and renewals are a process. Between audits, roughly one thing happens: a renewal date arrives, nobody owns it, and it goes through. Every line you cancelled this month was, at some point, a renewal that passed without a decision.

So the durable version of this exercise is not a better audit. It is making sure each renewal has a name against it and reaches that person before the date, repeatedly, until they say keep or cancel. That is all a register does — how the reminders work covers the mechanics. And it is worth remembering that software is not the expensive half of this: a lapsed domain or SSL certificate costs you the website, not the licence fee.