According to the consumer price index (CPI) on writing this, inflation just hit 9.2% in the United States, the largest 12-month increase since 1981. That means rates haven’t been this high since the Raiders of the Lost Ark was playing in theatres.
In Europe, the situation is even more dire where rates are creeping up to the 10% mark. The highest ever on record.
The topic has become a political hot potato but the truth is we’re in this inflationary period for many reasons – a combination of the post-covid spending stimulus, a geo-political crisis in Europe with the war in Ukraine, squeezed and cut supply chains, and broader economic debt cycles.
And not to be the bearer of bad news but as the Fed raises interest rates in the US, it is very possible we are also simultaneously heading for one of the worst economic downturns since the 1970s.
Ok! We get it. Things are bad. But what does this mean for us?
Well, unfortunately, as you have no doubt already felt, the software industry is in no way immune to the ills of inflation.
We are already seeing publishers and software tooling vendors raising their prices. It’s difficult to find solid numbers on these increases but anecdotal evidence abounds. And of course, unlike cars or vacuum cleaners, the pricing for software is often made in negotiations behind closed doors. Publishers know it’s a pain for customers to switch vendors giving them an advantage when it comes to setting prices.
Last week, one of our Oracle experts commented on a news article on Oracle’s decision to increase their support fees by 8%. We’re also seeing pricing increases from some of our software tooling partners, “to account for record-high regional and rising costs.”
Sounds hopeless. What can I do?
Actually, quite a lot.
If you’re like most organizations, more than likely you are pretty far off the mark when it comes to right-sizing your software (paying for just the number of licenses you need). If you’re not sure what you own or who exactly is using what software, you may be duplicating efforts or paying for far more licenses than you really use.
Making sure you are ready for audits is another way to keep your books balanced. During the last economic downturn, software companies were also feeling the pinch. Many ramped up their auditing activity as a way of bolstering the bottom line – making it even more important for customers to make sure they had their licensing estate in order. With all costs rising for your organization, you will be less likely than ever to afford a costly audit.
And how do I make sure I do that right?
Speak to us!
At Anglepoint, we’ve been working with customers for years to create an Effective License Position (ELP) for their software estates.
And the time is now. Use these record inflation rates as a wake-up call to really examine your cost savings and avoidance opportunities.
Your renewal may not be for another 8 months but when it comes around, trust us, you won’t have time to do an assessment and optimize your position. Spend the time today to review and check if you’re paying for 1000 licenses when you only need 700.
To make the best case for renegotiation, we recommend doing your ELP 60-120 days before your renewal. Let us help you stretch your dollar because your $1 million budget this year isn’t going to cover $1 million in services next year.
You can’t stop prices going up but you can make absolutely sure you are only purchasing what you need to keep operations running.
If you want to learn more about our experience and advice on both cost savings and cost avoidance during these difficult economic times, don’t hesitate to get in touch with us below or check out our Software License Management services.