by Tony Crawley, CEO of Synyega

UK Government borrowing in February significantly exceeded expectations, with a £10.7 billion shortfall between income and expenditure. This sharp increase in borrowing put additional pressure on Chancellor Rachel Reeves, as we saw in her Spring Statement.

Against this backdrop, Public Sector organisations are under renewed pressure to reduce administrative costs by as much as 15%, as recently highlighted by the Chancellor. IT budgets—particularly in software and cloud—are now squarely in the crosshairs. And yet, for many departments, these categories of spend continue to rise year-on-year.

While software and cloud are among the most complex areas of IT spend, they also represent one of the greatest opportunities for strategic cost optimisation. The challenge is substantial, but the potential cost savings are greater still.

It’s not about cutting for the sake of cutting

The problem isn’t simply overspending—it's overspending on the wrong things. Many departments are locked into opaque, vendor-driven pricing models, where value is difficult to measure, and contractual complexity almost always favours the supplier.

Having advised the UK Government on software reform and led initiatives that delivered in excess of £300 million in NAO-audited cost savings, I’ve seen the transformative power of smarter procurement and smarter licensing. Working with dedicated teams across the Public Sector, we’ve demonstrated that even in constrained fiscal environments, savings are not only possible, they are inevitable with the right approach.

A growing cost base—but also a growing opportunity

Software and cloud costs have exploded in recent years due to several key factors:

• Vendor complexity: Licensing models have become more confusing, not less—this can mean true costs are obscured and require specialist expertise to understand and challenge effectively.
• Bundling & over-procurement: Vendors encourage the purchase of features and functionality well in advance of actual need—potentially costing millions in unused entitlements. Vendors often use end of year to drive these types of deals. Let me share a secret: every so-called “one-time” deal I’ve seen was always put back on the table.
• Inadequate governance: Managing the complexity of software and cloud spend is challenging and often requires specialist skills. As such, departments often lack basic visibility into where spend is going—and the understanding of how to rein it in.
• Advice is not objective: Reseller revenue is primarily based on the sale of software and cloud; this creates a natural “risk to objectivity”. Put simply, incentivised sellers can use complexity to drive deals that aren’t in your best interests. Similarly, Top 4 consultancies also participate in vendor programs that create the same objectivity risk. I explore these concepts further in my earlier blog, “The KPMG Scandal & Beyond: Navigating the high stakes of independence in the ITAM world”.
• AI Price Volatility: AI has the potential to transform public services, but without effective management, it could create a new financial black hole for government buyers. Escalating Cloud Costs – A recent report shows that the average organisation is now spending 30% more on cloud services than last year, largely due to increased AI-driven demand.

Yet, despite these challenges, there are substantial opportunities to strip out waste, reclaim value, and negotiate software and cloud agreements more effectively. At Synyega, we’ve helped Public Sector organisations save hundreds of millions by applying these principles. Our work with the Crown Commercial Service was even recognised through a joint ITAM Review award for software cost optimisation across Central Government.

The answer - 10 ways to drive smarter software & cloud spend

Here’s a practical guide to driving smarter, more cost-effective software and cloud procurement:

1. Challenge vendor assumptions
   Don’t let vendors dictate your needs. Demand transparency in pricing models and question bundled offerings that include unnecessary or unused features.
2. Avoid buying ahead of need
   Over-procurement is one of the biggest sources of waste. If deployment timelines slip—as they often do—the forecasted “value” often quickly evaporates.
3. Shift Left - embed cost governance from the start
   Whether it’s cloud migration or digital transformation, ensure that cost considerations are embedded early in the programme lifecycle—not bolted on after contracts are signed. We call this concept “Shifting Left” meaning cost-conscious decisions are taken earlier in the development process.
4. Use independent, vendor-neutral expertise
   Many organisations rely on resellers or Top 4 advisors with financial ties to the vendors they are evaluating. This creates a clear conflict of interest. Work with experts who sit firmly on your side of the table.
5. Understand Government wide deals 
   The UK Government has been a leader in successfully negotiating several pan Government wide software and cloud deals. These may offer increased discounts or improved terms and conditions to what your organisation can access individually. However, it is also worth noting that many deals are negotiated to provide the best discounts and terms for most of the government organisations. However, if you are looking at making a significant purchase, a group-wide agreement may not offer the best value.
6. Reassess old contracts with fresh eyes 
   Longstanding vendor relationships often go unchallenged. However, pricing models evolve, and so should your contracts. Periodic reviews can surface major cost-saving opportunities, and the advancement of second-hand software market and third-party support services are increasingly applicable.
7. Convergence - integrate software licensing oversight into cloud FinOps 
   Too often, software and cloud costs are looked at in isolation. When making changes to the IT estate, it is essential to understand the full Total Cost of Ownership (TCO) of the change – sometimes a change is beneficial to infrastructure costs but causes a significant increase in licensing costs. A converged view of software and cloud models is essential to ensure the best decisions are being made for your organisation. “FinOps Scopes – Licensing” within the broader FinOps framework provides a cohesive methodology to tackle these emerging challenges effectively.
8. Capture sustainability benefits 
   Cost optimisation programmes often look at removing unused software and cloud resources. Removing these resources can have a significant beneficial impact on CO2 emissions which is rarely tracked effectively. With the proper tools and techniques, a cost optimisation programme can demonstrate significant sustainability benefits as well. We can help kickstart your GreenOps journey.
9. Use existing Government procurement tools smartly 
   The Government already has compliant, single-supplier frameworks available (e.g. Valuematch Framework) that provide quick access to the best independent ITAM, FinOps and GreenOps advice without triggering the need for complex and lengthy procurements.
10. Factor in Security Clearance Timelines Early 
    Many public sector cost optimisation initiatives, particularly those involving sensitive systems, data, or infrastructure, require Security Cleared (SC) personnel. However, securing clearance can take weeks or even months, and failing to plan for this can cause delays at critical moments. This doesn’t just risk slowing down delivery, it can mean missing key contractual renewal windows and the chance to reduce volumes or renegotiate more favourable terms. Missed opportunities may not reappear until the next renewal cycle, reducing the overall value delivered by the programme. To avoid this, build clearance lead times into your planning from the outset—or work with partners with appropriately cleared resources ready to deploy.

Final thought: Cut waste, not capability 

Unmanaged software and cloud spend does not just create technical and security risks—they can represent significant financial liability for your organisation. In today’s economic climate, no department can afford to operate with vague assumptions on these complex categories of spend.

The path to IT cost optimisation is clear: it requires strong governance and a proactive, commercially minded approach. If expert advice is sought, it should be independent and free from the influence of a reseller, top 4 or vendor.

We know how daunting it can feel, but we also know what works. If your organisation is looking to reduce spend while maintaining delivery, now is the time to act.