September 20, 2021

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Job: One in four public IT dollars is thrown out the window

Job: One in four public IT dollars is thrown out the window

Imagine buying an expensive Porsche, driving it home straight to the garage and never using it again. Pretty bad investment, right?

In the same way, it would be unwise to pay for software licenses that are never used. However, it is unfortunately a common practice in both private and public companies. This is something we discuss regularly with our clients, and we have also talked about in public.

But where we only mentioned individual examples earlier, we recently decided to do something new: let’s estimate the percentage of unused licenses for everybody our clients. What is the size of the domain then?

The result was amazing. You will probably pay every fourth generic krona for IT operations for licenses that are never used.

These are numbers that naturally vary from business to business. But as a provider of services to a wide range of public sector clients, we have every reason to believe the results are representative.

What have we done? Yes, we have reviewed all user licenses associated with different software and tools in different cloud solutions on behalf of our customers. Then we looked at how many of these licenses are already in active use.

When the public sector and private companies have to “move to the cloud,” the payment model is for the company to pay for actual consumption and the number of people who will use the services. This is called licenses.

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For our public clients, active use of licenses was only 77 percent. This means that 23 percent – or roughly every fourth crown – goes to pay for licenses that are never used.

Hence, it is scant consolation that the public sector in this context is better than private actors who have only 72 percent active use.

The result is that we are wasting tax money to enrich the international IT giants.

Why are we doing this in the world, when we also know that public finances are going to be much tighter than they are today?

In all municipalities of the country there are constantly raging debates about how best to use the last kroner from the budget. So it’s really ironic that we allow ourselves to waste every fourth crown on IT licenses as we do.

However, to solve the problem, one must acknowledge it, actively go for its solution. Getting an overview of the Agreements and the active use of the licenses associated with them is time consuming.

But when waste is identified, savings can also be made on an ongoing basis. If you spend 1 million kroner per month on licensing expenses, you will be able to save an average of 230,000 kroner per month pretty quickly based on these figures.

make money. But when we were trying to figure out the total amount of waste, we realized the second surprise:

There is no overview of what the Norwegian public sector spends annually on IT licenses.

Based on a report from the Ministry of Local Government in 2015, we can estimate that it may be several hundred million annually. Maybe several billion. no one knows. What we do know is that this money could have been spent filling Norwegian swimming pools, not the pockets of international IT giants.

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Make demands – save money.

Our role as intermediary for these services, from international IT giants to Norwegian public institutions, means that we have a responsibility to point out the potential for savings to our clients. We do this every day.

But when we see the amount of waste combined with the fact that no one knows how much Norway is spending on this type of IT license, we also have a responsibility to raise this issue publicly.

So everyone responsible for general IT budgets should ask their suppliers – either directly or through service providers like us and others – for an overview of how many licenses are actually in use.

With this overview, you can make demands to reduce payments. Before politicians who want to balance the budget empty swimming pools and leisure clubs, they should check whether they have an expensive, unused Porsche in the garage.(Terms)Copyright Dagens Næringsliv AS and/or our suppliers. We would like you to share our cases using a link that leads directly to our pages. All or part of the Content may not be copied or otherwise used with written permission or as permitted by law. For additional terms look here.