How financial firms reduce software waste and vendor risk
Updated: 10 hours ago
Financial firms can reduce software waste and vendor risk by identifying unused licences, consolidating overlapping subscriptions, controlling renewals and assessing technology suppliers before purchase. A centralised software inventory helps firms manage costs while maintaining oversight of applications and vendors accessing sensitive information.
For alternative investment firms, including hedge funds, private equity firms and family offices, software procurement also involves protecting confidential investment data and managing operational dependencies.
Alternit One supports financial firms with vendor-neutral IT procurement, licence reviews and renewal planning, helping them reduce unnecessary technology spending and improve supplier oversight.
What causes software waste in financial firms?
Software waste typically comes from unused licences, duplicate platforms and subscriptions that continue after employees leave.
According to Flexera's 2026 State of ITAM Report, only 36% of organisations have complete visibility into their IT assets, down from 43% in 2025. A further 62% report only partial visibility. The survey covered 512 IT asset management professionals worldwide.
Two common problems are:
Departments independently purchase tools with overlapping functionality, creating duplicate subscriptions.
Employees change roles or leave, but their assigned software licences remain active and continue generating costs.
For investment firms, these issues can arise across market data subscriptions, research tools, reporting platforms and business applications.
Centralised procurement and regular usage reviews help identify these costs before they accumulate.
How does software waste increase third-party vendor risk?
Every unapproved application can introduce additional security, data protection and supplier oversight risks.
Financial firms need to understand which software providers can access confidential client information, investment research or internal business systems.
Common risks include:
Shadow IT applications processing information without appropriate approval
Suppliers that have not undergone security and access-control assessments
Duplicate systems that increase the number of vendors handling sensitive information
Missed cancellation deadlines that lock firms into unwanted contracts
A software inventory should record more than subscription costs. It should also identify the responsible business owner, the vendor's access to data and the contract renewal date.
Each platform should be assessed before deployment and reviewed throughout its contract.
What do UK regulators expect from third-party vendor management?
UK financial firms must assess technology suppliers against the regulatory requirements applicable to their business activities.
Regulatory framework | What financial firms should consider |
Requirements for outsourcing critical or important operational functions, where applicable | |
Due diligence, contractual controls, ongoing oversight and exit planning for relevant PRA-regulated firms | |
Identifying important business services and mapping supporting resources, including relevant third parties | |
ICT third-party risk requirements for EU financial entities and other organisations within its scope |
Not every software subscription qualifies as regulated outsourcing, and requirements differ according to a firm's regulatory status and the services involved.
The FCA's outsourcing and operational resilience guidance explains that firms remain responsible for managing risks arising from third-party arrangements.
Maintaining an accurate software and vendor inventory supports that oversight, particularly when identifying suppliers linked to important business services.
Why should IT procurement consider more than purchase price?
The lowest initial software price does not always represent the lowest overall cost.
A cheaper platform may require additional integration work, offer limited support or carry substantial renewal increases.
Financial firms should evaluate the total cost of ownership over the full contract term, including:
Subscription and licensing fees
Implementation and integration costs
Support agreements and service-level commitments
Contract renewal terms and potential price increases
Migration or exit costs when changing providers
Standardising contracts and consolidating purchasing can give firms stronger negotiating leverage and greater visibility over future spending.
For alternative investment firms, procurement decisions should account for both commercial value and the requirements of their existing technology environment.
How can financial firms reduce software costs and vendor risk?
Reducing software waste requires consistent procurement, licence management and supplier review processes.
Financial decision-makers can start with six practical actions:
Audit active licences quarterly: Compare assigned software seats with employee records and actual usage to identify unused subscriptions.
Include licences in employee offboarding: Reclaim or reassign software licences when employees leave or change roles.
Consolidate duplicate contracts: Review overlapping tools across departments and negotiate consolidated agreements where this reduces costs.
Centralise procurement approvals: Require IT or procurement approval before purchasing new software, including checking whether existing tools can meet the same need.
Maintain a renewal calendar: Track contract expiry dates and cancellation deadlines, with alerts at least 90 days before renewal.
Classify vendors by criticality: Apply more detailed due diligence to suppliers handling sensitive information or supporting important business services.
How can Alternit One help reduce software waste and vendor risk?
Alternit One supports financial services firms with vendor-neutral IT procurement, licence reviews and renewal planning.
For hedge funds, private equity firms and family offices, this means evaluating software requirements against existing infrastructure, reviewing supplier agreements and identifying opportunities to reduce unnecessary technology costs.
Alternit One's procurement and licensing services support software purchasing, licence management and supplier oversight alongside its broader IT management offering.
Contact Alternit One to discuss your software estate, technology procurement and vendor management requirements.
