A lot of the excitement about AI is around how it’s going to allow organisations to dramatically reduce costs. What’s not being talked about so much is the investment that’s going to be required to realise those gains. The respected accountancy firm RSM recently highlighted this. Separately, Moore Global suggested the average investment on new AI initiatives was $1.5m based on a global survey of organisations.
That investment is primarily going to be in software, so it’s more important than ever that businesses get on top of their software costs if they’re going to be able to afford the benefits of AI.
How is AI going to be implemented? Some of it will be embedded in existing software, and some of it will be in new applications.
In the first case, there may not be visible additional costs, but vendors will have to recoup their investment in developing their AI functionality somehow. So, even if there is no explicit additional charge, vendors may try and raise subscription costs, arguing that they have enhanced functionality. Alternately, they may levy additional charges if customers want to use AI capabilities.
If the AI functionality delivers the expected ROI, then in a sense this doesn’t matter. However, ROI won’t be achieved on day one, and in the meantime, the organisation has had to fund the new AI capabilities; in the case of a new application or module, this could be for months and involve substantial investment.
It's therefore important to ensure that any software that is already deployed is earning its keep. Since SaaS and cloud services became the dominant ways that software is delivered, there’s no guarantee that’s the case. There’s nothing inherently wrong with using Cloud software, it’s just that for a variety of reasons there’s more likely to be surplus or inappropriate software in place than when IT had tight control of software deployments. These reasons include –
The frequently quoted figure in the industry is that 30% of software is surplus to requirements because of the factors above. With organisations typically spending £2,000 a year per employee on software, this overspend can be a significant amount - £160,000 for a 250-employee company for example.
So how do you make sure that you aren’t wasting money on software that could be used to support AI initiatives? Costimised can help you identify where you can make savings on your software costs quickly and cost-effectively. Contact us today at enquiries@costimised.com and we’ll set up a no-obligation discovery call with you to assess the size of potential savings.
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