Major South African public and private sector organisations are achieving savings of over 20% on their software and IT services costs through boutique IT sourcing and procurement firm Dante Deo’s model for IT asset licence and services renewal management.
Dante Deo recently commercialised its IT Renewals Service, a comprehensive offering that efficiently manages and optimises IT software and services procurement and licence renewals.
Dante Deo CEO Leon Steyn says the software and services procurement risk management service model is built on years of engagements by the company’s legal, project management, IT asset management, enterprise architecture and procurement experts.
“Most recently, we completed a 12-month pilot project for Anglo American. This service has proved to be extremely beneficial for the Anglo American worldwide group of companies, to the point where they have not only just retained the services, but also expanded the scope as well,” Steyn says.
He explains that inefficient management of software and IT services renewals can cause significant over-spend and expose organisations to risk. “Many organisations are paying as much as 20% more than they should for software and services, due to factors such as technology duplication, over- or under-subscribing, penalties and not consolidating their contracts to negotiate discounts,” he says.
In 2016, Dante Deo worked with the Chief Procurement Officer at the National Treasury and the State Information Technology Agency (SITA) on a cost containment exercise that optimised software and services contracts. Steyn says: “We focused on renewals of the top 11 suppliers’ contracts and slashed billions in unnecessary expenditure.”
The National Treasury noted that Dante Deo’s review, analysis and market research had highlighted significant inconsistencies in the conditions, charges, billing practices and provision of services, resulting in government departments paying significantly more than private sector corporate entities.
Finance Minister Pravin Gordhan stated in the 2017 National Treasury Budget Vote that centrally negotiated software licence agreements would save the fiscus R2.5 billion over three years.
Dante Deo also reviewed the IT and Tyres and Conveyors category portfolios for AfriSam in 2016, and helped the organisation realise a cost reduction of around 20% across the hardware, software, services and telecommunications commodities.
Steyn says savings such as these are the norm, when software and IT services renewals are managed efficiently and timeously.
A common oversight in managing renewals is not studying the terms of contracts and making decisions on whether to renew, terminate or change the contract in good time, Steyn says. This, too, can cost the organisation.
“Most software asset management departments don’t have the capacity to carefully study the terms of each contract – they do a cursory review and renew it on the anniversary of the contract. However, this can result in unwanted expenditure.”
He cites the example of an organisation that did not wish to renew a software contract and assumed they could cancel it on the renewal date. However, the contract specified that they were bound to pay annually in advance, with a 30-day notice period, and the contract would automatically renew for the year ahead on the expiry date. “They missed the notice of termination date by a week and had to pay $150 000 to renew software they no longer needed,” he says.
Dante Deo’s Renewals Management Service assesses each contract, looking at what the software or service is used for, how critical it is for operations and whether these functions are duplicated. The service also analyses utilisation and the terms of the contracts. Says Steyn: “Around 90 days before the anniversary of the contract, we start engaging – if the client does want to renew, we pull it through the motions, and 30 days before the anniversary we make a call on partial termination, stopping the contract or renegotiating the contract. We can manage renegotiation through our procurement centre of excellence, or hand it back to the client’s in-house procurement team. We also manage post-renewal activities, including raising POs, invoices and making sure the customer gets paid on time.”
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