FL Smidth saved 12 million DKK on a software check

FLSmidth’s director of IT and IT security Mads Madsbjerg Hansen invested half a million kr. and now stands to save 12 million kr. on software.
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ranslation of an article from Børsen posted on 27. september 2017.

The industry giant threw half a million kr. after a start-up company with an analysis tool that can track unnecessary licenses for software. The result: 12 million kr. saved.

At the engineering giant FLSmidth, the director of IT Mads Madsbjerg Hansen is very pleased.

When he was faced with a new three-year deal with Microsoft on software licenses for the company’s servers all over the world he was talked into letting a young, Danish company check if he could avoid some of the expenses. To say that he could, would be an understatement.

Kostner, as the company is called, asked for about half a million kr. to let its self-developed technology scour through FLSmidth’s IT systems globally. The savings on the new three-year contract were noticeable.

“About 12 million kr. over three years. But others have different numbers. So the really interesting part for me is that the investment was earned back in three months,” said Madsbjerg Hansen, who is in charge of IT and IT security at FLSmidth who are far from alone on being able to save quite a bit of money.

According to chief analyst, Anders Elbak from IDC, companies pay too much for software. This thought is shared by Kostner.

“We have analyzed 21 top-25 companies in Denmark. We have never found savings less than 2 million kr., says co-founder of Kostner, Helle Naesager.

When FLSmidth can avoid expenses of 12 million kr. in the next three years it has a simple explanation according to the IT director.

“if the licensing structure was simple, we could have figured this out ourselves. But it just is not. If I am being a little rude, that is what many software companies make their money on, that the people doing the work don’t understand it,” he says and uses an example.

“We have data on servers in over 50 countries. When a colleague asks my guy in Chile if he can set up a server to help an engineer he says yes. Then after a couple months, they found out they don’t actually need it anymore but they never turn it off again, so it just stands there pulling licenses,” says Madsbjerg Hansen, who does not put the blame on his colleagues.

Not a chance

“The guy who set the server up does not think commercially, he only wants to help his colleague with a server. Even if he does think commercially, he would not have any chance to understand when a license counts and when it does not,” he says and does not believe there is a possibility for more manual control.

“I don’t have someone I can set aside to use half a year on understanding all the different aspects, it has to be online. Change happens constantly in all companies. You move around, and open and close systems. It can be hard to keep track of.

The solution from Kostner came from running data from FLSmidth’s systems across the world. It quickly became apparent there was a lot to save.

“The frustrating thing is that the money does not go to our bottom line. It would have been money that was taken out of our budget if we had not done this. So I would call it cost avoidance over money saved,” says Madsbjerg Hansen, who from the start chose to pay Kostner a set price instead of letting them have a percentage of any potential savings.

More aha-moments.

“It quickly ends in people discussing what was savings and what was not. My life is too short to argue with people,” says the IT director, who gained some additional aha-moments during the process.

“I had thought that I would have to close a lot of small data centers for security purposes around the world. But the report made it clear that this was a clear cost element and that it is cheaper to centralize because you can use the licenses better when they are run centrally. I had not expected that. So if it cheaper and more secure, then I am twice as happy,” says Madsbjerg Hansen.

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