Information Technology is big business for financial services companies, worth several billions. If we look at the global picture, the annual spending on IT requirement of companies stands at about $350 billion. The costs could be for proprietary, custom made or packaged software and hardware services. Almost 35 percent of this spending goes to third-party service providers. Thus IT is an important tool for these companies to leverage their competitive edge, and it is crucial to find simple and cost effective methods. Of all the different areas involved in offshore software development, the licensing part is generally the most expensive and troublesome area. Here are a few tips to recognize and therefore avoid unnecessary costs.
Evaluate Current Patterns
Study the factors that determine the licensing expenses thoroughly. With time, software vendors have become more and more flexible about the terms and options they offer. Thus it pays to be updated about current trends. It is also important to evaluate the licensing configuration of the software the company is using at the moment. Most of the companies with a good standing allow their customers to upgrade to more advanced software through resettlement. Another method to reduce costs is to select for a term license rather than a perpetual license.
Thorough Cost Analysis
This is crucial to maintain competitive edge. Even slight margins can sometimes lead to huge losses. Once the cost analysis is done properly, the manager can set the budget. For example it is often more cost effective to outsource non-core functions like HR and payroll. Thus it doesn't come as a surprise that many companies outsource functions like Customer Relationship Management, procurement and billing.
It is crucial to develop the right kind of schedule, so that the project is completed in time so as to meet your requirements. The deadlines have to be realistic enough too, so that quality is not compromised. The customer company should have the final say on this, and also keep a keen watch over the proceedings.
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