5 Ways to Optimize Application Sourcing Costs in an AI-Enabled Market
Application sourcing —software, support, labor and managed services — presents a prime opportunity to reduce spend and improve value realization.
Advisory
Software Advisory Services
De-risk and accelerate your digital transformation initiatives and financial outcomes with expert advisory on how to optimize your strategic software suppliers and ecosystems.
Maximize your Software Spend, Services & Benefits
Software is the largest area of IT expenditures for most enterprises today. Software, unique from other areas of spend, replaces other things and brings new capabilities to your organization. Optimizing how you acquire, deploy, renew and govern
software assets provides the agility needed for business transformation and transparency to control costs.
ISG’s Software Advisory practice leverages our unmatched market insights, research analytics and expertise in validating your architecture, requirements, bill of materials, utilization and compliance to help you to effectively reduce costs, manage
software assets, mitigate software compliance risks and resolve software audit issues.
ISG brings the objectivity, research and expertise across the digital ecosystem to help you rapidly realize the benefits of your software acquisitions and the digital transformations they enable.
Refresh Your Banking Platforms & Software
There are many reasons why Core Banking and associated platforms are being refreshed across the banking landscape –
Fintechs are attracting bank clients, and banks are challenged to handle the shift to digital engagement models. We can
answer your questions:
- What major technology projects should be in my plan for this year and the next? (e.g., Dual Core Banking Platforms, GRC Platforms, Insurance Platforms, CCaaS Platforms, etc.)
- How can I significantly improve my software risk, flexibility, savings and time-to-value for my banking platform environment?
ISG can help you solve for your banking platform challenges, including building an actionable strategy and business cases, sourcing the right software and implementation partners, transforming your operating model to align with new capabilities, and realizing the value of your software investments.
Featured Insights
Frequently Asked Questions
-
Q1. How do software vendors package and price AI features for enterprises?
There are two common models. Some vendors embed AI in the base product, which can raise subscription costs, even if usage is limited. Others offer AI as a higher tier or separate module, letting customers adopt when they determine the time is right. Pricing can be per user, per unit or based on tokens or consumption.
-
Q2. What should I know before adopting AI features in an enterprise suite?
Validate total cost of ownership across delivery models, including migration and exit costs. Review data rights, responsible-AI terms, compliance and regulatory fit, security and processing standards and service levels. Confirm how usage is metered (e.g., tokens or units) and whether costs are forecastable.
-
Q3. How can we negotiate with large software providers?
Finding leverage with large providers can be difficult. Start by scrutinizing the bill of materials to remove waste. Set fair targets using market data, assign clear owners and an escalation path, and structure the negotiation around outcomes, so pricing and terms improve as the software delivers measurable value.
-
Q4. Which value drivers should shape a software negotiation?
Use four anchors: Price-to-value (align pay with outcomes delivered), time-to-value (get clear on pace of benefits after purchase), flexibility (ensure capacity to adjust as needs change), and predictability (get clarity on cost for expansions, true-ups and renewals).
-
Q5. How do we stay audit-ready and reduce audit risk?
Run a software asset management program with accurate entitlement and deployment records, periodic internal reviews and clear governance. Common audit triggers include reduced spend, merger or acquisition activity and any major changes to your environment. Proactive hygiene reduces exposure and speeds resolution.
Attend our Software Advisory Webinars
Sourcing IaaS and PaaS – Looking Beyond Discounts
Learn how to identify oversights that cause overspending and increase transparency around determining your commitment compared into your consumption.
Watch On-DemandUnderstanding Oracle’s Software Licensing and Best Practices For Negotiating with Oracle
Review Oracle’s licensing models and gain insights to Oracle’s negotiation practices and build and execute an effective sourcing and licensing strategy.
Watch On-DemandTips for Negotiating and Contracting with Oracle
Learn how to build and execute an effective sourcing and licensing strategy to deliver cost savings and risk avoidance.
Watch On-DemandTop Strategies to Source and Contract with Microsoft in 2021
ISG’s software advisory experts discuss Microsoft 365 and its refresh of hosted user productivity offerings, Microsoft’s “last mile” of traditional perpetual software, and Windows Enterprise back from the “brink.”
Watch On-DemandHow to Build an Effective Software Asset Management (SAM) Program to Reduce Costs & Audits
When it comes to IT cost control, an underused discipline is Software Asset Management. Watch to learn what you need to know to drive more value out of your software investments.
Watch On-Demand