For many enterprises, software licensing has become a bigger financial constraint than hardware investment. Bundled features, inflexible renewals, and limited pricing transparency are leaving procurement teams paying for capacity they don’t use, with little room to scale contracts down as requirements change.
During the “Simplifying Technology Procurement in Indonesia” roundtable organised by Jicara Media and hosted by AWS, senior IT and procurement leaders discussed how these pressures are shaping purchasing decisions, from licensing negotiations and vendor selection to the operational risks that follow.
Cost of innovation
For integrated property firm PT Bakrieland Development, software use across its operations often carries a higher cost than hardware procurement.
“We buy software licences like Adobe, AutoCAD, and one licence alone is more expensive compared to when we procure laptops, for example. Several laptops may cost 20 million IDR, but one software licence alone is 30 million IDR,” noted R Maart Adi Waskita, the company’s Head of Corporate IT.
Another challenge for the company, he said, is that everything is bundled, with features they do not use but have no choice but to pay for.
“We cannot buy just one feature of Adobe. We must buy the complete one, and we cannot select a la carte. Maybe we just want Acrobat or Photoshop, but we have to buy a complete software suite,” Waskita added.
There is also the inability to downgrade from existing licensing contracts, which Waskita said limits flexibility.
“When we buy three licences, and then for the next one we only need two, we cannot step down,” he said.
The same issue applies to a large travel platform, which is left with limited flexibility during software licence renewals.
“We did the analysis and found out that we are only using 50% of their features, therefore we don’t need the other half. Come renewal time, the vendor tells us that we cannot move to a lower pricing plan,” said a procurement leader from the company.
Vendor selection
In the case of a financial services institution, the procurement team faces a dilemma over whether to work with smaller, local vendors or larger, more established providers.
“We are encouraged to use the local entities, because they tend to give a more reasonable price for delivery. The challenge is including these local entities in our procurement processes, because some of them are just a single person,” said a procurement executive from the organisation.
According to the executive, vendors are assessed across technical, administration, commercial, and risk scoring.
“The local players may win in the commercial aspect, but they are so far below the main players in terms of administration and risk,” they said.
For a large enterprise with a centralised procurement operation, vendor selection is comparable to finding the right fit across thousands of registered companies.
“Trying to find a vendor across thousands already onboarded on our system is one thing, but dealing with new ones that are not yet onboarded is another challenge,” said a senior procurement leader from the organisation.
Simplified solutions
To help enterprises find the right tech vendor faster, AWS continues to add more features to AWS Marketplace, which now has more than 25,000 listings across several categories.
“We are trying to help customers solve some of these problems by helping them find solutions to compare,” said Kunal Narang, AWS Marketplace Lead – ASEAN.
Via the product matching engine embedded within AWS Marketplace, customers can view similar products when they evaluate a specific solution, enabling quicker comparative analysis.
“There are user reviews on there as well, for example, which means buyers who have bought this product on Marketplace, what has their experience been like? That can help you in evaluating that solution and building up your internal report that you will probably have to give to your management in order to choose which solution you’re going for,” Narang added.
To help customers zero in on a particular vendor or solution, AWS has also introduced the ability to request demos for every listing.
“This was feedback that we’ve heard from a lot of customers in terms of how they enable their teams to be agile so they can experiment quickly with solutions before putting them into production,” Narang said.
For the more than 25,000 listings on AWS Marketplace, customers can request a demo, after which a vendor representative will follow up to walk them through the solution or enable some form of access for experimentation.
Aside from these features, every AWS Marketplace listing also includes an indicator price, which Narang said helps improve pricing transparency.
“An indicator price can vary, because this is the retail listing price. It’s public. Some vendors, when you actually negotiate with them, will negotiate by 30%. Some vendors will negotiate by 70%. The listing price also has to be taken with caution because it’s just a list price. That doesn’t mean it’s going to be indicative of the final price that you will get to, but at least it’s some kind of reference,” he concluded.
