Software giants could use green projects to cover price increases

Software giants could use green projects to cover price increases

If you use dedicated collaboration software or productivity software for your business, you'll likely pay a third party to provide it. New Gartner analysis suggests significant price increases could be on the way, citing green projects as a key contributor.

Over the next 36 months, software-as-a-service (SaaS) providers expect their prices to increase significantly, by as much as 20%.

Gartner's article, titled "3 Reasons SaaS Providers Are Raising Prices and What You Can Do About It," suggests that sustainability regulations could be introduced around the world, meaning many providers will need to change the way they work to deliver.

Rising Software Prices: Energy Prices

With a global focus on energy use at a time when unit costs are higher than ever, businesses are likely to become more reliant on reducing their carbon footprint, through the use of green data centers, for instance. Although this may be partly responsible for rising prices, green data centers are specifically designed to use less energy. Because they are more efficient, running costs should be lower (after any capital outlay, which may be reflected in higher software prices).

The solution? Gartner recommends speaking with your provider to investigate their green credentials and rule out greenwashing. He says about two in five of the company's sustainability claims were "exaggerated, false, or misleading," which might give you reason to question the company's pricing.

Rising Software Prices: Labor Cost

The last two years have been particularly difficult, and a new period of turbulence caused by the Russian invasion of Ukraine has added more pressure on global supply chains. The same source suggests that the invasion reduced the global tech talent pool by as much as 5%.

The solution? Gartner suggests looking at the company's workforce and, even better, its use of automation. Check to see if he's committed to maximizing your efficiency, which could help lower your labor costs.

Rising Software Prices: Inflation

The third reason for the study focuses on inflation, which is skyrocketing worldwide. Unfortunately, there is very little to negotiate here. That said, check to see that the percentage increase somewhat matches the percentage of inflation, or is not drastically disproportionate.

If you're committed to your current SaaS provider, consider committing longer by renewing your contract early, rather than waiting for an auto-renewing price.

Via The Register (Opens in a new tab)