DANTE DEO · THOUGHT LEADERSHIP · STRATEGIC COST MANAGEMENT
Are you paying for the business you used to be?
Software, cloud and AI bills are rising faster than most budgets. Leon Steyn, CEO of Dante Deo, argues that the biggest savings won’ t come from negotiating harder. They are hiding inside your current utilisation of your IT assets.
By Leon Steyn, CEO, Dante Deo
The renewal notice arrives. Over the past year your cash flow has tightened, you have closed a site, restructured a team and moved half your workloads to the cloud. The supplier has raised the price by double digits, and your margin takes another hit.
That gap, between what a contract assumes about your business and what your business actually is, is what we call the renewal gap. It is one of the most overlooked sources of cost in growing and changing companies, and the usual cost-cutting levers can’ t see it. LCCI’ s latest Quarterly Economic Survey found almost two-thirds( 64 %) of London businesses operating below full capacity, and almost a third reporting weaker cashflow. When capacity is under-used, paying for technology sized for a bigger business hurts twice. It is a gap worth closing now.
A problem hiding in plain sight The pressure is real. Gartner expects worldwide IT spending to grow by 14.2 % in 2026. Flexera’ s 2026 State of the Cloud Report found that organisations believe 29 % of their cloud infrastructure spend is wasted. Zylo reports that spending on AInative software more than doubled in a year. New AI features increasingly arrive as extra subscriptions, usagebased charges or premium tiers, so an experiment can become a recurring cost before anyone has proved its value. Regulators have noticed too: the Competition and Markets Authority has acted on cloud switching and software licensing, a sign these are commercial issues for businesses, not just technical ones.
Why negotiating harder doesn’ t close the gap Most of us reach for the same three levers: squeeze suppliers on price, renegotiate rates, hold back on spend. Each helps for a while. None changes what you are actually paying for, so the cost creeps back within a cycle or two. A 10 % discount on software you no longer need is still money wasted.
“ A 10 % discount on software you no longer need is still money wasted.”
Etihad’ s CEO, Antonoaldo Neves, put it in one line:“ The biggest cost we have is an empty plane.” Most of the cost of a flight is fixed whether the seats are full or not. Technology works the same way. An unused licence, an oversized cloud server or a duplicated data connection is capacity you have paid for and aren’ t using. For any organisation it shows up in per-seat subscriptions still assigned to people who have left, and in managed-service contracts and cloud commitments sized for last year’ s business.
The expensive part of a renewal is rarely the unit price. It is the footprint of users, connections, sites and seats, sized for a business that has had to adapt, or no longer exists. Reducing the price of technology is not the same as reducing the cost of running your business. Some of the biggest savings never appear in a supplier contract or a ledger. They only show up when you look at how the technology is actually used.
What it looks like in practice A global mining group had sold more than 80 % of its sites, yet its analytics software renewal implied a per-site cost that had more than doubled. Hard negotiation brought the vendor’ s £ 1.4M-a-year proposal down to £ 800,000. Real progress, but still not viable. The breakthrough came from mapping how the software was actually used. Year-one cost finished two-thirds below the original proposal, without touching a single operating site. The full story is on the facing page.
Three questions for this quarter
Pull your three largest renewals and ask of each:
1. Do we know what we actually use, as opposed to what we pay for?
2. What has changed in our business since we signed( size, sites, structure) that the price doesn’ t reflect?
3. Have we tested the price against the market and our internal comparable technologies, or are we just reacting to the invoice?
If you can’ t answer all three with confidence, you are probably paying for the business you used to be. That is the place to find savings, and it is where lasting ones begin.
You don’ t need an enterprise-wide transformation to start. Begin with a single strategic software renewal, a highcost cloud environment or a businesscritical platform where spend and value seem out of step. Before approving another technology budget increase, ask how much value is still untapped in what you already own.
Hear Leon Steyn explore this live: LCCI Lunch and Learn, 18 November, 1pm to 2pm. Details on the facing page.