Why pay for unused software licences?

R. Shekar | Updated on June 12, 2011 Published on June 12, 2011


It was an eye-popping discovery. The cost of software was ten times the wage bill! It was unbelievable that against an annual average of Rs 6 lakh wage per employee, the recurring cost of software provided was estimated at Rs 67.5 lakh! What was worse, while the cost of hardware and communication expenses were coming down, increasingly higher levels of provision for software were being made out as inevitable. The study group made some startling discoveries.

Data points

About 450 types of user licences were in use. They were all grouped broadly into seven categories:

Mail exchanges for internal and external interface

Proprietary software: Pay roll, Accounting, Computer Based Training etc

Spreadsheet: All forms of data collection, graphical depiction and basic computation

Testing Tools: Various types used for audit and Quality assurance

Analytical tools such as SPSS etc

Estimation of work, Project planning and management controls and

MIS reporting software for generating dashboards and scorecards

The history of usage of software by each workstation was traceable from the system built into each desktop. The price of software and quantity could be validated against each machine serial number.

The authenticity of data was therefore unquestionable. It was a no brainer and someone had just to sit down and collate the details.

A census of the level of provisioning and the extent of actual use threw up some disquieting trends in the levels of assumptions of usage assumed against the actual!

Except the software for exchanging mails, all other avenues for speeding up learning and decision-making were woefully underused!

Assumptions relating to software procurement about the actual number of users were never verified after procurement.

Renewal of software licences happened automatically and as a matter of routine without any consideration to how well the users learnt them and derived the intended benefit from these investments.

Question for the Directors

Even if such a huge opportunity for savings was identified, no one came forward to book the savings.

Every user now made a virtue of holding on to a software licence and was unwilling to part with it.

Interestingly, without linking the provision of software to a productivity index, there was little incentive to learn the use the software.

Was an investment in software a boon or a curse?


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Published on June 12, 2011
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