How subscription procurement, renewal and allocation of open source has become complex?

Nimisha Jain
Updated on Jul 03, 2020

Open Source has changed the IT landscape. In the last 10 years, the attitude towards open source in enterprise IT environments has changed dramatically, as users have shifted from skepticism about its ability to cope with mission-critical workloads to deploying it widely across their enterprise grade infrastructures. Most enterprises agree that 30% of their IT budget goes into subscriptions renewals that runs critical applications including financial transactions and 24x7x365 customer support.

A vendor study reveals that one open source subscription may have more than 32 billing owners** which means a complex and multifaceted task for an enterprise with more than 500 subscriptions. Hence it has become more important than ever to have a clear real-time visibility of under-utilized and allocated open source subscriptions and renewals.

The Procurement Challenge

Procurement which plays a critical role in every business transaction are the front line impact receivers. The impact is not only external but internal, (39%)* of CPO have agreed that they face challenges due to organizational structuring which include M&A along with nonstandard processes. In addition, managing complexity within mega suppliers (37%)* and digital platforms within organization & vendors (29%)* contributes to CPO challenges. This data clearly suggests the challenges of the procurement teams. Technology innovations and frequent changes have contribute in increasing complexity further. The diversified requirements and relatively newer dimension of open source subscription renewals need more time and higher involvement from the beginning. Business and procurement must try hard to fit in the budget allocated which at times is challenging due to lack of timely information. Open source subscription, if it is over-due attracts compliance issues, hence it become more critical for enterprise to have real time and expansive insights into subscriptions renewal cycle.

The Business Impact

In the current economic climate business teams are already taking the heat of COVID-19 pandemic, which has sparked fears of the worst global recession since the Great Depression and are expected, rather forced to do “cost optimisation”. This has resulted in either postponement or slow-down for all new projects and the running projects are being optimised through various cost cutting initiatives. This means we must utilize more with the same infrastructure to achieve higher in disruptive times. Every industry like banking, telecom, hospitality, manufacturing, or retail have started talking of innovation to provide high customer satisfaction and enhance brand value at reduced cost. Business and IT teams must deep dive into running the projects to enable enhanced functionality and reallocate the existing resources for higher utilisation. Steps are being taken in every possible way to reduce the run time cost of every application and beat address the market challenges. As the load on the present projects will increase the chances of over utilisation of existing subscription will increase which might trigger compliance issues.

The Compliance

Though the organisations are focusing on preventing any non-compliance, the fast changing landscape, need for quicker turnaround, growing sophistication, evolving regulatory requirements create challenges in meeting the high standards of compliance. One of the key reasons in lack of availability of data in real time. Lot of efforts go in manually collecting and compiling data from many teams resulting in non-compliance status. Hence, they need data which can be readily used to stay compliant.

The need:

“DATA” the biggest power in today’s world and the solution to all the problems. The challenges procurement, IT, business, and compliance teams are facing is outcome of data unavailability in one place, in real time. Most companies that we have talked to, have concurred with this challenge. They have expressed the need for having a system that would give:

  • All subscription purchase and renewal data in place
  • Subscription allocation and deployment data
  • Projects wise, business unit was spent on subscriptions
  • Vendor wise spent on subscription

The solution:

A unified platform our team has designed to better manage open source subscriptions. Stay tuned for our next newsletter issue or reach out to us.

*Deloitte CPO Study 2019

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