Software is now one of the largest and fastest-growing lines in most IT budgets. Zylo's 2025 SaaS Management Index put average SaaS spend at $4,830 per employee, up 21.9% in a year. Yet a large share of that spend buys nothing: licenses nobody uses, premium tiers nobody needs, and tools that duplicate each other.
Software cost optimization is the discipline of removing that waste without hurting the people who rely on the software. It works through four levers. This article explains each one, how to sequence them, and how to keep the savings once you have them.
The four levers
Remove licenses from people who have not used a product for a set period, typically 90 days. Quickest lever, low risk when users are told in advance. See license reclamation.
Match each persona to the edition it actually needs, cutting cost per user without cutting headcount. See right-sizing.
Standardize on fewer products for the same job: video, project management, file sharing, diagramming. See application rationalization.
Usage evidence, timing and term strategy improve price and flexibility. Often the largest saving, if preparation starts months ahead. See negotiating a renewal.
Each lever behaves differently. Reclaim and right-sizing reduce volume; consolidation removes whole contracts; renegotiation changes price and terms. The levers also reinforce each other: the volume you reclaim before a renewal is the evidence that makes the negotiation work.
Which lever to pull first
A practical sequence for most organizations:
- Weeks 1–4: reclaim and remove leavers
Across the top vendors. These savings show up at the next true-up, renewal or monthly bill.
- Weeks 4–8: right-size editions
Start with the largest per-user products, where a tier change affects thousands of seats.
- Ongoing: prepare every renewal 90 to 120 days ahead
Combine the reclaim and right-sizing results with price and term negotiation.
- Quarterly: consolidate
Review overlapping categories and consolidate where the business case is clear.
How big are the savings?
Gartner reported that organizations applying three software license optimization best practices could cut software spending by as much as 30%, with mature, tool-supported organizations averaging 30% in the first year of using SAM tools. Results vary with vendor mix and how long the estate has gone without review. A conservative planning range for a first program is often well below that ceiling, rising as renewals come round.
Keeping the savings
Savings decay. New hires receive licenses by default, projects end without their tools being cancelled, and teams buy new subscriptions. Without a routine, a typical estate drifts back toward its old level of waste within a year or two.
Four routines that protect the gains
How MI One helps
Frequently asked questions
Is software cost optimization the same as cutting tools?
No. Most savings come from paying for what is used and on the right terms, not from removing software people need.
How quickly can we see savings?
Reclaiming inactive seats can affect the next monthly or annual bill. Larger savings arrive with renewals.
Does optimization require a SAM tool?
For a few vendors, spreadsheets can work. Across dozens of vendors and hundreds of renewals, a tool keeps the data current and the routine running.
Sources
- Gartner, "Gartner Says Organizations Can Cut Software Costs by 30 Percent Using Three Best Practices," July 19, 2016. https://www.gartner.com/en/newsroom/press-releases/2016-07-19-gartner-says-organizations-can-cut-software-costs-by-30-percent-using-three-best-practices
- Zylo, "2025 SaaS Management Index," January 16, 2025. https://zylo.com/news/2025-saas-management-index