How to Audit Your Software Investments and Optimize Costs

As someone who’s led procurement during moments of intense cost pressure, I know that most teams cannot afford some 3-month transformation project to figure out which technology investments to keep or cut.

No one’s got time for that.

The directive is clear: optimize costs fast, without compromising operational effectiveness.

This is where a tech stack analysis comes in. I’m talking about a focused, actionable review that helps you:

• Understand what you’re using
• Cut what you’re not
• Determine where there may be duplicative spend 
• Get ahead of renewals
• Rebuild leverage with suppliers
  

This process not only uncovers immediate savings quickly, it helps create rationalization for every single tool you have and helps you create a proactive game plan for your upcoming renewal contracts.

Here’s how I’ve helped teams do it, and how you can too.

Step 1: Map All Your Current Tech 

You can’t optimize what you can’t see, so you need to increase spend visibility. 

Begin with a simple spreadsheet listing all your suppliers, along with:

• Supplier name
• Annual spend
• Stakeholder/owner
• Contract end or renewal date

Pro Tip: Even if you only track your top 50 suppliers, this will spark eye-opening conversations. But, don't just focus on your top vendors. Sometimes there's more opportunity in the tail because some tools aren't being used at all. Saving 2-3% on a $100,000 deal is good, but saving 100% on a $10,000 tool that's no longer needed delivers greater impact.

Step 2: Define Supplier Criticality

Don't stop at the first step. The key differentiator in this approach is adding criticality scoring, which transforms your raw data above into actionable intelligence.

Send each department a short questionnaire for the suppliers they own. Ask three key questions (dropdown or scale 1–5):

1. How critical is this to the business?
   
   • 5 = Mission-critical
   • 4 = Major Impact
   • 3 = Helps run business operations
   • 2 = Nice to Have
   • 1 = No longer needed

2. What business goal does it support?
   
   • Tie tools back to core initiatives (e.g., revenue, security, efficiency) and list out what the acceptable goals for your business are, so there is no ambiguity for your team

3. How open are we to exploring alternatives?
   
   • 5 = Strongly opposed
   • 4 = Preferably Not 
   • 3 = Indifferent
   • 2 = Open
   • 1 = High priority to replace

It's so interesting when you give a list of suppliers to a stakeholder to go through this exercise. You're going to get some fives, of course, and you're going to get some fours, threes, and you're gonna get some ones and twos, with people saying 'Wow, I didn't even know we're still spending money on that. We don't need that anymore.'

This criticality exercise typically takes stakeholders only minutes to complete but gives you tremendous insight into where to focus your optimization efforts.

Step 3: Identify Overlapping Tools

The software market has changed dramatically in even just the last year. What were once point solutions solving specific problems have expanded into multi-feature platforms. Meanwhile, buyers are looking to rationalize their supplier base to reduce management overhead and complexity.

This convergence creates a perfect opportunity to consolidate your tech stack.

With your mapped list in hand:

1. Look for functional overlap: Group your tools by primary use case (e.g., customer communication, data analytics, project management)
2. Prioritize "point-to-point" overlaps: These represent the quickest wins, where two tools are doing essentially the same thing
3. Consider platform expansions: Many existing vendors have expanded their capabilities and can now replace point solutions you may have purchased elsewhere

Increasing spend with one supplier also increases your business leverage. Adding a new product to an existing contract can even open the door for you to renegotiate mid-term and right-size overall spend.

Pro Tip: Engage with your account managers and sales reps to discover where feature parity may already exist across your tech stack. Supplier product roadmaps can introduce savings opportunities you might not be aware of.

Step 4: Consider "Build vs. Buy" Alternatives

This one’s often overlooked. In today's environment, where tools you already have can be used in many different ways, it's worth reassessing whether every solution really needs to be externally purchased.

This doesn't mean developing complex in-house solutions. Often, simpler alternatives exist.

Ask:

• Can we handle this with a spreadsheet and some ops effort?
• Is the ROI worth the renewal cost?
• Would using an internal resource buy us time to evaluate better solutions?

In many cases, this won’t work, but it is worth determining where it will.

Pro Tip: Consider temporary in-house solutions. Let a tool lapse and handle the work manually for a period. If you decide to return to a solution later, you'll often get better pricing as a "new" customer than you would have as a renewal. And, you’ll have a clearer idea of what really matters in a solution. 

Step 5: Review License Utilization

This is potentially the biggest lever for immediate savings. Industry statistics show billions are wasted annually on "shelfware,” licenses purchased but never or barely used.

Request usage reports from vendors or internal admins:

• Who has a license?
• Who’s actively using it (not just binary, but engagement - logins, tasks, output)? The acceptable level of usage will be different for everyone, but define this before embarking on the exercise.
• Who hasn’t logged in for 30+ days?

Right-size your licenses before renewal:

• Reclaim unused seats
• Offer opt-outs (and cheaper/free alternatives)
• Buy for actual usage, not assumed need

Let me share a real example from our own company. We had ballooned from 100 to 200 licenses for a particular tool, and our CFO was concerned about the cost. When we analyzed usage patterns, we discovered half the licenses weren't being used in a way that justified the expense.

We approached those users and said, "Here's how you're using it. Unless there's a compelling reason why you need this license, we're going to reassign it." Only about 10% came back with valid reasons to keep their access.

Interestingly, we also approached the active users and offered them the option to switch to a free alternative, and another 10% voluntarily gave up their licenses. Through this process, we cut our license count in half with minimal disruption.

Pro Tip: You can almost always add more licenses later if needed. It's much harder to downgrade or remove licenses mid-contract, so start with what you know you need now rather than projecting future usage.

Step 6: Look at Total Cost of Ownership (TCO)

That $50K contract might be costing you $150K once you factor in implementation, admin hours, and infrastructure fees.

We’ve seen teams overcommit to “cheap” tools that end up pulling multiple engineers into support. Suddenly, that little tool isn’t so cheap anymore.

Factor in:

• Implementation or onboarding costs
• Admin support (internal or external)
• API/integration or infrastructure costs (e.g., AWS)
• Feature tiers that unlock key functionality

This TCO view often shifts the conversation from “cut or keep” to “what’s worth investing in?”

Step 7: Use Price Benchmarking Data

By now, you’ve likely spotted a few opportunities to optimize. This is where benchmarking data comes in. The right data turns a ‘we think this is high’ into a ‘we know this should be lower.’ That changes everything.

Whether it’s data from Tropic, or at minimum peer intel, understand:

• How do your pricing and contract terms compare to your peers?
• Start understanding what alternative tools offer the same functionality?
• What’s the best-in-class deal for your company size?

Step 8: Plan Ahead for Upcoming Renewals

Renewal negotiations require advanced planning. One of the most common mistakes I see is waiting until the last minute, which severely limits your leverage.

Create a renewal calendar (or use Tropic) showing all upcoming contract renewals for the next 180 days, then:

• For renewals in the next 60 days: Initiate action immediately
• For renewals 60-120 days out: Develop your strategic approach and kick off within 1-2 weeks
• For renewals 120-180 days out: Begin preliminary conversations to understand stakeholder satisfaction and openness to alternatives
  

If you really want to maximize savings, you ideally need to be kicking off your renewals on average 90 to 100 days in advance. And depending on the supplier, even 6 months in advance. This isn't happening at most companies.

Timing is actually your leverage. We’ve found that you can save up to 39% on average if you engage six months before your renewal date. Comparatively, at 30 days the savings are 14% and at 60 days the savings are 22%.

Pro Tip: In the current market, vendors are pushing unprecedented price increases, we've seen more uplifts in the past year than in previous years combined. Be prepared with renewal caps during negotiation to prevent unexpected cost increases. Set internal expectations that requests must be created by a certain date ahead of renewals.

Step 9: Create Competitive Tension

This is perhaps the most powerful negotiation tool at your disposal. When vendors know you have viable alternatives, their flexibility increases dramatically.

Because, while vendor margins are important, churn is equally critical to them. They will work hard to prevent losing business when they believe there's genuine risk of you switching.

Here's how to create effective competitive tension:

1. Research viable alternatives with similar functionality
2. Request formal quotes from competitors
3. Be transparent (but diplomatic) with your current vendor about evaluating options
4. Understand feature parity so you can counter claims about unique capabilities

Pro Tip: Don't bluff. The most effective negotiations happen when you've developed legitimate options and are genuinely prepared to switch. This often produces both better pricing and a solution that better fits your needs.

Putting Your Tech Stack Analysis Together

Here's a simplified game plan of the steps above:

1. Create your supplier spreadsheet with criticality scoring 
2. Identify quick-win opportunities: unused tools, obvious overlaps
3. Develop your renewal strategy calendar for the next 180 days
4. Deep-dive on utilization for your top 10 tools by spend
5. Research alternatives for renewals coming in the next quarter

While this tech stack analysis is much quicker to execute than a 3-month transformation project, this also isn’t a one-time exercise.

The most successful teams incorporate these practices into their ongoing procurement processes, continually refining their tech stack to match current business needs and market conditions.

The combined impact can be substantial. I've seen companies reduce their software spend by 15-30% through this systematic approach, all while improving overall utility and alignment with business goals.

If you need help getting started, grab a free custom savings assessment from our team over your top three software contracts to uncover immediate savings opportunities you can act on. Included is a benchmark analysis from $15B in spend data.

FAQs

1. What is a software audit and why is it important for cost optimization?

A software audit is a structured review of all the technology and SaaS tools your business uses to ensure they deliver value for the cost. It identifies unused or redundant software, highlights renewal risks, and uncovers savings opportunities. For finance and procurement teams, software audits are key to improving spend visibility, eliminating waste, and strengthening negotiation leverage with vendors.

2. How do I start auditing my company’s software stack?

Begin by mapping your current tech stack in a simple spreadsheet. Include vendor names, annual spend, contract renewal dates, and internal stakeholders. This visibility forms the foundation for identifying duplicate tools, tracking renewals, and prioritizing high-cost vendors. Even tracking your top 50 suppliers can reveal immediate opportunities to cut costs or consolidate platforms.

3. What are the most common sources of wasted software spend?

The biggest culprits are unused licenses (“shelfware”), overlapping tools with similar functionality, and contracts that automatically renew without review. Many teams also overlook total cost of ownership (TCO) - including admin time, implementation, and integration costs. Addressing these areas can reduce software spend by 15–30% without disrupting operations.

4. How can I identify duplicate or overlapping software tools?

Group your tools by primary function - such as communication, analytics, or project management - and look for overlaps. Often, one platform now offers multiple features that replace smaller point solutions. Consolidating to fewer vendors reduces complexity and can strengthen your negotiating position for volume discounts.

5. Why should I assess software criticality when auditing my tech stack?

Not all software contributes equally to business outcomes. By rating each tool’s criticality (how essential it is to operations or strategic goals) you can focus optimization efforts where they matter most. Low-criticality tools often represent fast savings wins, while mission-critical tools benefit from better contract leverage and long-term planning.

6. How can I use license utilization data to reduce software costs?

Request detailed usage reports from your vendors or IT admins to see who’s using each license and how often. Reclaim or reassign underused seats, downgrade inactive users, and align purchases to actual usage. This approach can cut software licensing costs by up to 50% with minimal disruption.

7. What is total cost of ownership (TCO) in software procurement?

Total cost of ownership includes not just the contract price but also implementation, admin time, training, and infrastructure costs. A seemingly cheap tool can become expensive once hidden costs are factored in. Calculating TCO helps you decide whether a software investment truly delivers ROI or should be replaced or renegotiated.

8. How early should I start preparing for software renewals?

Ideally, begin renewal planning 90–180 days in advance. Early preparation gives you leverage to benchmark pricing, explore alternatives, and negotiate renewal caps before vendors raise rates. Companies that start six months ahead can save up to 39% more compared to last-minute negotiations.

9. What role does benchmarking play in optimizing software costs?

Price benchmarking provides data-backed insights into how your contracts compare with market standards. Using spend benchmarks (like Tropic’s $15B dataset) turns subjective “this feels expensive” discussions into factual negotiations. It helps you secure better pricing and fair terms aligned with your company’s size and usage.

10. Can I handle a software audit internally, or should I use a partner?

You can start internally with a structured framework - mapping tools, scoring criticality, and checking utilization. However, many teams partner with procurement experts to access benchmarking data, renewal management support, and vendor negotiation expertise. This accelerates savings and ensures no opportunity is missed.