How to plan for renewal management
If your company has uncovered issues in underlicensing or overspending on software licenses — or even if you just want to be more proactive about IT needs – it’s time to rein in renewal management. Renewals can hit your company throughout the year from various vendors for everything from software maintenance to hardware leases. Even original equipment manufacturer (OEM) warranties eventually expire and create a need for a new warranty or new equipment.
The problem is that many companies fail to track these renewal or expiration dates. When the invoice for a renewal arrives without advance notice, they simply pay it based on their past agreements without stopping to think strategically about current and future needs. The issue is only exacerbated by the adoption of the cloud as perpetual licenses, which have no expiration date, get replaced by subscription and term licenses, which do expire.
By tracking expiration and renewal dates, as well as key dates internal to your company — such as when budgets are set — you can replace the reactive response to renewals with a more proactive stance that will not only potentially save your company money, but equip employees with the tools they need to do their jobs.
With advance warning of impending renewals, IT and procurement can take time to analyze and discuss any renewals, negotiate new agreements, or vet alternative vendors or solutions that better suit the state of your business. For example, your company might need to right size the number of commitments it has, reducing software maintenance to 800 desktops from 1,000.
Here are four points you should consider before renewing:
- Your commitment to certain software or hardware. Are you really using a particular program or device? Do you need more licenses? Fewer? Upgraded capabilities? Less? Or is it time to seek out a different solution?
- How the product fits into your overall IT portfolio. Is it still part of your strategic direction or have you reached an inflection point for change? Do you need different functionality from different solutions?
- How commitments fit your upcoming plans. Do you anticipate increasing or decreasing need for a particular piece of software or hardware? Should you reconstruct your maintenance agreement to factor in potential new hires, acquisitions, or other events?
- How to handle equipment retirement. As warranties expire, should you commence end-of-life processes or commit to extended warranties, banking on sufficient lead time to gain a better negotiating position and avoid paying penalties for lease close-out dates?
Of course if your company isn’t taking the time to ask itself these questions now, the situation will only get worse moving forward. Software as a Service (SaaS), cloud, and hybrids of various licensing models all have some aspect of renewal or subscription to them. The Adobe Creative Suite’s move to a subscription model is one of the more notable recent examples of a growing trend to replace perpetual licenses with subscriptions using the cloud. The subscription model puts greater dependence on knowing expiration or renewal dates, because you lose access to the software on those dates, whereas under a perpetual license you would only lose access to the latest updates.
Gaining control of renewal management starts with greater visibility into when licenses, warranties, and contracts expire. That way if your software licenses end in May, but you set your budget in September, you can accurately determine the budget, factoring in the renewal.
This combination of internal and external dates can set off triggers to remind you of upcoming events and offer plenty of time to ask yourself the questions above. Services like the Polaris Renewal Organizer (PRO) offer alerts leading up to renewals that allow you plenty of time to determine which renewals to accept and which to renegotiate.
But even if you don’t employ an automated service, keep an eye on your renewal dates and take the time to determine whether those renewals are necessary or beneficial. It’s easy to just renew whenever an invoice shows up, but that can mean overpaying and procuring unnecessary assets. Renewal management ensures that the IT assets you purchase directly support your business objectives.