When a business first starts out, it’s common to only pay for one or two types of business software. But as the business grows, you might sign up for several other platforms to streamline operations and support different teams.
Over time, this can lead to overlapping systems and unused subscriptions, meaning you are not getting full value for what you’re paying. If this sounds familiar, it could be time to carry out a software audit and see where you can cut back.
Create a central software inventory
Before you can assess whether your software is worth keeping, you need a clear view of everything your business is currently using.
To do this, you’ll need to pull information from multiple sources, such as finance records (including bank statements and invoices), IT or admin systems, and direct debits and app stores. Also speak to teams in different departments to see what tools they use every day.
Then make a list that includes the following for each tool:
The name of the software
What it’s used for
Who owns or manages it in the business
Number of users or licences
Monthly or annual cost
Renewal date
Categorise by business function
At this point, your inventory can feel more overwhelming than useful, so it’s important to organise it into different categories. This might include accounting, marketing, communication and admin, for instance.
This process makes it easier to spot duplication and see where you might be able to cut back. For example, across the business you might be using multiple tools to solve the same problem, in which case some of these could go.
Analyse usage and engagement data
The next step is to work out how your business software is being used. As well as looking at how regularly the software has been opened, it’s important to assess whether the features available are being fully utilised or whether you’re paying for tools you don’t need. Most software platforms provide admin dashboards and reporting tools that will show you:
The number of people using the software compared to the number of paid licences (for example, you might be paying for 20 licences but only 8 people are using it)
How often staff are logging in
Which features and tools are being utilised
Which departments use it most
Armed with this data, you can work out whether you’re paying for more licences than you need, whether a certain tool is not being used regularly or whether certain features are not worth paying for, and whether only a small number of users rely on the tool – in which case you may be able to downgrade the licences.
Evaluating the value to business
Usage data can help you assess how often a tool is being used, but what it doesn’t tell you is whether it’s worth the cost. Some software platforms might not be used often but could be critical to the business, while others might be used regularly but add little value.
To help you work this out, you need to consider what each tool contributes to your business. This could include whether it directly supports sales or lead generation, how much time it saves your team (if any), whether it supports compliance and data protection, and what the effect would be if you removed the software.
An easy way to do this is to list out your chosen criteria, and then score each tool against it. This could be on a scale of 1 and 5, with 5 being most valuable and 1 the least. This can help you work out whether there are some platforms you could do without and which ones are crucial to the business.
Reviewing contract terms and renewal dates
Once you’ve completed the above steps, you should have a clear idea of which tools are worth keeping and which aren’t. However, before you cancel anything, you need to check the terms and conditions of each platform to ensure you won’t get caught out.
Even if a tool is no longer needed, you may still be tied into a contract or approaching automatic renewal. You’ll need to check whether there are any fees for cancelling the deal mid-contract and whether you need to provide notice before you can get out of it – in some cases, this could be up to 90 days.
If a tool still has some value but you can’t justify the cost, you may be able to negotiate with the provider before cancelling your contract completely. You may be able to reduce licences, switch to a cheaper plan or secure a discount, for example.
Implementing a new tool process
Once you’ve reviewed your existing software, your final step is to ensure the same issues don’t build up again. To do this and ensure you don’t end up with duplicate systems or unused licences, you’ll need to establish a clear process for introducing new tools.
Before approving any new software, you might want to ask the following questions:
What problem does the tool solve?
Does the business already have a tool that covers this function?
What is the expected benefit?
How much will it cost and will this increase over time?
It’s also sensible to appoint a named owner for each new piece of software and give them the responsibility of monitoring usage and performance, as well as reviewing the cost and its value over time – say every 3 or 6 months.
On top of this, it can be worth carrying out an audit every 6 to 12 months to make sure you avoid software “bloat” in the future.
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Rachel Wait is a freelance journalist and has been writing about personal finance for more than a decade, covering everything from insurance to mortgages. She has written for a range of personal finance websites and national newspapers, including The Observer, The Mail on Sunday, The Sun and the Evening Standard. Rachel is a keen baker in her spare time.
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