Cutting software spend without cutting capability: a downturn playbook
The mandate arrives as a percentage: cut 15. The wrong response is across-the-board freezes and canceled tools people need. The right one is a sequence: waste first, price second, scope third, capability last, with evidence deciding each stage.
Key points
- The mandate arrives as a percentage: cut 15 by year end.
- For most estates, stages one and two together reach or pass a 15 percent target without a single user losing a single feature, which is a sentence worth reading twice before anyone freezes anything.
- The 15 percent mandate lands and a blanket freeze goes out first, punishing the teams with legitimate needs while the waste sails on untouched.
- For most estates stages one and two together reach or pass a 15 percent target without a single user losing a single feature, which on a $20M software estate is an illustrative $3M banked before anyone has to argue about cutting capability.
- The honest limit: a deep enough downturn outruns any sequence, and a 30 percent mandate will touch things people use no matter how well the first stages run.
First the money nobody will miss, then the price nobody checked
Stage one is waste, and it is bigger than the room expects. The shelfware radar prices the licenses nobody opens. The overlap and shadow spend findings surface the duplicate tools and the subscriptions matching no contract. The invoice reconciliation recovers the billing errors and cap breaches that were never anyone's decision to spend. Every dollar in stage one shares a beautiful property: removing it changes nothing about what anyone can do. It is the only truly free money in the exercise, and a mandate that starts anywhere else is leaving it on the table while it burns goodwill on harder cuts.
Stage two is price: pay market for what you keep. The portfolio view ranks every vendor by distance from the market, and the above-market positions with renewal windows inside the mandate period are your stage two campaign. Same tools, same seats, same capability, at the percentile the market actually supports. For most estates, stages one and two together reach or pass a 15 percent target without a single user losing a single feature, which is a sentence worth reading twice before anyone freezes anything.
app.isvcosell.com/opportunities
The mandate's work order: every opportunity ranked by dollars and reachability, waste at the top.
THE SAME JOB, TWICE
TODAY, BY HAND
The 15 percent mandate lands and a blanket freeze goes out first, punishing the teams with legitimate needs while the waste sails on untouched.
Cancellations are chosen politically in meetings: the tool whose champion left, the platform the CFO finds confusing.
The evidence base, contracts, usage, market position, is never assembled, so nobody knows which spend is dead and which is alive.
In month three someone cancels a system a revenue process depended on, and the reinstatement costs more than the saving.
A quarter of firefighting, with capability cut before waste
WITH ISVCOSELL
Spend the first fortnight building the evidence base: contracts in, spend connected, the shelfware and overlap scans run, the portfolio benchmarked.
Open the opportunities view, every saving ranked by dollars and reachability with waste at the top, and bank stage one: idle licenses, duplicates, billing corrections.
Run the price campaign on every above-market position with a renewal window in reach, benchmark first, rider attached.
Track banked savings by stage against the target in the spend view, and report the invoice-verified figure, not the claimed one.
A fortnight to the evidence base, ninety days to the target
What changes: the sequence runs waste, then price, then scope, then capability, instead of the reverse. For most estates stages one and two together reach or pass a 15 percent target without a single user losing a single feature, which on a $20M software estate is an illustrative $3M banked before anyone has to argue about cutting capability.
"Remove what is dead before touching anything alive, and know which is which before the first incision."
STAGES THREE AND FOUR
Then scope, and only then capability, with the downturn on your side
Stage three is scope: keep the capability, shrink its footprint. Edition right-sizing moves users from premium tiers their activity profile does not justify. Consolidation retires the second and third tool in an overlapping category, timed to renewal boundaries where exit is a negotiation rather than a write-off. The rights register funds much of this stage for free: the true-downs, swap windows, and credits you already own are scope reductions with the contract's own signature on them.
Stage four, capability, is a business decision wearing a procurement costume, and by the time the sequence reaches it, it arrives with honest numbers: what each remaining tool costs at market price and right scope, what it is used for and by whom, and what cutting it actually saves versus what the first three stages already banked. Some capability cuts will still be right in a hard enough downturn. The sequence's job is to make them last, deliberate, and small.
And through all four stages, remember the market context: the downturn is squeezing your vendors too. Reps miss quotas, churn terrifies deal desks, and the concessions that were exotic in the boom, real caps, flexible terms, generous multi-year pricing for commitment, get granted. A downturn is the best market for the rider terms in years, if you ask from preparation rather than from visible distress, because a buyer who arrives with a benchmark and a plan reads as disciplined, while one who arrives begging reads as an audit prospect.
app.isvcosell.com/spend
The mandate, tracked: banked savings by stage against the target, verified the way finance counts.
THE PLAYBOOK
The ninety-day version, in five moves
1 Weeks 1 and 2: build the evidence base. Contracts in, spend connected, the shelfware and overlap scans run, the portfolio benchmarked. The mandate's entire quality is decided by whether this fortnight happens before the first cut.
2 Weeks 3 to 6: bank stage one. Reclaim the idle licenses, kill the duplicates at their windows, file the billing corrections. Fast, visible, and painless, which buys the political room the later stages need.
3 Weeks 4 to 12, in parallel: run the price campaign. Every above-market position with a window in reach gets the war room treatment, benchmark first, rider attached, and the vendor's own quarter pressure doing half the work.
4 Weeks 8 to 13: execute scope. Edition right-sizing and consolidations at renewal boundaries, funded by the rights register wherever a true-down or swap already exists.
5 Week 13: report verified, not claimed. The number that goes upstairs is the invoice-verified figure, staged against the target, with the capability-cut list, if any remains necessary, presented with its honest price. A mandate closed on verified numbers is the last one that arrives as a panic.
The honest limit: a deep enough downturn outruns any sequence, and a 30 percent mandate will touch things people use no matter how well the first stages run. What the playbook guarantees is narrower and still decisive: capability is the last thing cut instead of the first, every cut above it is funded by waste and price before it is funded by function, and the decision about what the business can live without is made once, at the end, with real numbers, instead of weekly, in the dark, by whoever shouted last. Downturns end. The estates that ran them on evidence come out smaller and better. The ones that ran them on panic come out smaller and slower, and spend the recovery buying back what they cut.
About the author
Morten Andersen, Cofounder, ISVCOSELL
Morten brings two decades of enterprise and software procurement, with stints across Oracle, IBM, SAP, and Salesforce shaping how he reads a deal. He has led sourcing through hundreds of renewals, from mid market order forms to nine figure global agreements, and learned that the buyers who win are the ones who walk in knowing the market. He built ISVCOSELL to make that pattern recognition repeatable.
More posts by MortenConnect on LinkedIn →
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- rider terms
- percentile
- invoice reconciliation
- war room
- portfolio view
- rights register
- activity profile does not justify
- invoice-verified figure
- overlap and shadow spend findings
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