Second-hand Licenses: A Cost-saving Opportunity for Businesses

Despite an increase in IT budgets in 2019, global spending is expected to drop by 2.7% this year due to the pandemic[1]. Some firms are even more pessimistic, estimating an 8% decline in IT budgets[2]. The health crisis related to Covid-19 is indeed pushing companies, and IT departments in particular, to review their budgets downwards and make savings. In 2021, most spending will focus more on hardware investments, especially in the cloud, rather than software. In this context, second-hand licenses represent a real cost-saving opportunity.

Non-compliance, mismatch with actual user needs, maintenance overheads, malfunctions, too many licenses purchased... If the cost of software represents 35% of companies' IT budgets[3], the hidden costs associated with them can amount to tens or even hundreds of thousands of euros each year. By rethinking their software purchasing model, IT managers can achieve significant savings without affecting their teams' performance.

 Buy at Lower Costs

 Companies waste 25% of their software spending on hidden costs[4]. A reality that affects almost all of them (93%). Indeed, over-licensing can represent up to 25% to 30% of the software budget[5]. However, to limit the impact of these unnecessary expenses, IT managers now have the option to legally resell their "software surplus" on online marketplaces. For the buyer, acquiring "second-hand" licenses can save between 20% and 80% depending on the product and its version[6].

 Sell and Reinvest in Your Business

 But buying isn't the only cost-saving opportunity available in the second-hand market. Indeed, the buyer can also sell their over-licensed software in parallel. With the money recovered, they can either offset financial losses due to underutilization of their internal software or reinvest it in new hardware or software purchases without increasing the allocated budget.

 In this way, they place their software assets at the center of a virtuous cycle for the entire company. The seller also benefits from several guarantees such as anonymity throughout the transaction process, secure payment before license delivery, and specific insurance for sales processes.

 A Legal Software Exchange

 For executives, buying and selling software also helps avoid hidden costs linked to potential non-compliance of the solution. The second-hand license market has been authorized and strictly regulated by the Court of Justice of the European Union (CJEU) since 2012. The secondary software market is governed, like all markets, by the principle of supply and demand. To assess the book value and set the right price, there are software license benchmarks to refer to.

 Similarly, the resale of software results in the transfer of the right of use attached to the previously acquired copy and the transfer of the associated license agreement. By going through an official marketplace, the buyer is guaranteed that the product offered is indeed an official and up-to-date license and can make their transaction safely.

 Every transaction is subject to a single and fixed commission of 15% that the seller can anticipate and include in their sales price. For the company's administrative and financial management, it is also an opportunity to anticipate these costs and have a clear view of future expenses.

[1] According to IDC forecasts, April 2020 – https://www.idc.com

[2] According to Gartner estimates, May 2020 – https://www.gartner.com/en/newsroom/press-releases/2020-05-13-gartner-says-global-it-spending-to-decline-8-percent-in-2020-due-to-impact-of-covid19

[3] According to a Forrester study, 2014 – https://www.cigref.fr/wp/wp-content/uploads/2014/12/CIGREF-Marche-secondaire-logiciels-Softcorner.pdf

[4] According to a Flexera Software report, November 2016 – https://www.decideo.fr/Le-cout-invisible-des-logiciels-d-entreprise_a8906.html

[5] According to Cigref, 2014 – https://www.cigref.fr/wp/wp-content/uploads/2014/12/CIGREF-Marche-secondaire-logiciels-Softcorner.pdf

[6] Interview with Habibou M'Baye, co-founder of SoftCorner, Le Parisien, January 2017 – https://www.leparisien.fr/economie/business/et-si-vous-achetiez-des-logiciels-d-occasion-23-01-2017-6605568.php