How to apply zero-based budgeting to software: justify every product from need, rebuild the portfolio, and keep the discipline without a yearly overhaul.
By the MI Solutions SAM team9 min read2 exhibits
Zero-based budgeting starts from nothing: every cost must be justified for the coming period, rather than carried forward from the last. Applied to software, it asks of every product: if we were starting today, would we buy this, at this volume and on these terms? It is demanding, but for a portfolio that has grown for years without review, it can reset spend quickly.
If we were starting today, would we buy this, for these people, at this volume, on these terms?
The funnel
Exhibit 1
How to run it
List every product
With spend, owner, users and active users.
Ask the owner to justify it
The need, the users, and what would happen without it.
Using notice deadlines, so decisions take effect on time.
The justification template
Keep the discipline
A full zero-based exercise every year is heavy. Many organizations run it fully every two or three years, and in between apply a lighter version to renewals over a threshold.
Exhibit 2
How MI One helps
Frequently asked questions
Is zero-based budgeting too disruptive?
It need not be. Focus on decisions at renewal, not mid-term changes.
Who should justify each product?
Its business owner, with data provided by the SAM function.
Which products should be exempt?
None entirely, but core platforms can be reviewed more lightly if their use is clearly broad and well measured.
See where your software budget goes
Bring your five largest vendors to a 30-minute call. Our SAM experts will show you where the savings usually hide, and how fast MI One can surface them.
