In the digital age, software is a resource to manage just like employees, and it costs nearly as much. In 2025, Gartner estimates that global spend on software increased by 14.2% from the previous year, up to $1.3 trillion.
Just as with employees, for a business to remain profitable every software contract must earn its share of the bottom line, providing a justifiable return on investment for cost, and helping your company perform vital functions and meet key business objectives.
It's especially important to view software in this way given the climate of rapid technology adoption. The average company uses around 132 apps in 2025, and each of these software contracts gets more complex and costly year-over-year. The average annual software price hike sits around 20-35%, making SaaS inflation 495% higher than consumer inflation and costing companies more money for the same software stack each year.
Most companies need support to manage their software estates optimally. But what are the best options to do so? In this blog, we’re looking at one of the traditional methods for IT asset management: Managed Service providers. We’ll discuss its key facets, what it’s good for, what it’s not, and how it lines up with the software optimization services we offer at 2Data.
What Are Software Managed Services?
Software Managed Services (MSPs) refer to outsourcing arrangements where third-party providers oversee an organization’s software environment, including infrastructure, licensing, contracts, and IT processes. Typically contracted for 1-3 years, these services encompass:
Emerging in the late 1990s with the shift from on-premises IT to outsourced models, MSPs expanded rapidly with the rise of cloud computing post-2006. MSPs became integral for delivering consistent service levels, reducing operational overhead, and enhancing compliance readiness.
Managed services are deeply entrenched in enterprise IT strategies - but as is often the case with best practice, at some point it’s stops being the best choice when innovation in the field has outpaced its usefulness. As business needs evolve, traditional MSP models often struggle to meet the demands of agile, fast-moving organizations.
Drawbacks of Traditional Software Managed Service Programs
Aimed at Enterprise Budgets: Software managed services are traditionally geared towards enterprises. That’s because in the early 90’s and 2000’s, it was predominantly these enterprises that had high technological demand. This is no longer that case, with medium businesses spending significant amounts of money on software per employee as large enterprises. Some research suggests that a company of 100-200 employees spends 4x less on software per full-time employee than a company of 10-20.
This means that SMBs would also benefit substantially from third-party software optimization support, but they often don’t have the budget for an expensive traditional managed service program.
Vendor and Tool Incentives: Another major drawback of traditional managed service providers is their incentivized relationship with software vendors and SAM tool providers. Most major providers are partnered with vendors like Flexera or resell Microsoft licenses to their clients. While this might seem like a convenient one-stop shop for a lot of companies, there’s an obvious and inherent conflict of interest at play. If true optimization is your goal, an independent third-party advisor is the way to go for unbiased guidance.
Low-Touch Engagement: By virtue of their third-party setup, traditional managed service programs also tend to be low-touch. Companies are assigned a contact person to manage their customer relationship, but access to real licensing experts is limited, and almost never in real-time. This reduces the long-term value of the service and prevents in-house teams from upskilling and learning from their optimization partner.
Reactive Approach: A managed service program’s focus is clear in the name: management. These programs often lack a proactive approach to optimization and are geared instead towards maintaining the status quo of a company’s IT environment. The result is basic licensing hygiene only and support for expected milestones, leaving out unexpected audits, proactive optimization exercises, and initiatives to discover new optimization potentials or plan for future technology mapping.
When Are Traditional MSPs Still Relevant?
While traditional MSPs have limitations, they remain suitable for companies that meet certain criteria:
Operational Continuity: Organizations with stable IT operations, low staff turnover, and minimal short-term digital transformation initiatives may benefit from predictable managed services.
Financial Stability: Enterprises with reliable cash flows and less pressure to reduce IT costs can justify long-term MSP engagements.
Maintenance-Driven Needs: Organizations that have already optimized their licensing and compliance posture may find MSPs sufficient for routine maintenance and monitoring.
Optimization as a Service (OaaS): A Modern Approach
Recognizing the gaps in traditional models, at 2Data we've developed Optimization as a Service (OaaS), an approach tailored to grow with modern companies and deliver continuous, tangible value.
OaaS goes beyond the reactive frameworks of traditional MSPs by integrating dynamic optimization, compliance assurance, and cost management into a unified, ongoing process that also enables internal teams in the long run to sustain optimization efforts.
Key Pillars of Optimization as a Service
Continuous Optimization: Instead of routine maintenance, Optimization as a Service (OaaS) focuses on continuous optimization. Our licensing experts are constantly looking for areas to improve, from compliance to cost to audit preparedness. This is achieved through regular assessments to identify and eliminate inefficiencies, and ongoing adjustments to maximize license utilization and prevent waste.
Cost Savings and Overspend Prevention: Cost savings is a top 3 priority for more than 90% of CIOs and CTOs. We employ proactive monitoring and strategic adjustments to reduce overspending and consistently discover new savings opportunities with every renewal cycle to keep costs under control. Clients of all sizes get an average of 25X for every dollar the invest with 2Data.
Vendor and Tool Independence: We safeguard your best interests by remaining completely vendor and tool agnostic. As an independent advisory, our only role is to optimize your software estate – not sell a tool or license bundle. Our licensing experts have wide experience with tooling, and can offer tool configuration or advisory, when necessary, guided by your tooling maturity and preferences.
Unexpected and Expected Milestone Cover: The best preparation for an unexpected audit is continuous compliance optimization with an eye towards audit defence. Our experts have experience in guiding 100’s of companies through audits, offering a full spectrum of support from anticipated renewals to unexpected critical events.
Negotiation Support: An often overlooked but crucial component of software optimization is commercial negotiation. This is a soft skill piece that not many IT professionals are taught, and one that we specialise in to help our clients win more favourable agreements.
Expert Assurance: We offer a high-touch experience with a focus on internal enablement, providing easy access to our licensing expertise and negotiation support for all relevant events throughout your software cycle. This is not a siloed or impersonal approach, but one that fosters collaboration and learning between your team and our experts to deliver long-term value.
The Strategic Reinvestment of a Self-Funding Model: OaaS is built to deliver continuous ROI, allowing companies to put a portion of the savings achieved back into further optimization. Our service becomes self-funding over time, continuously driving added value that you can prove and measure.
Optimization as a Service is dynamic, comprehensive, and results focused. This model ensures your software investment is always optimized – not just maintained, and not just at renewal time. It’s designed to support modern companies with modern challenges, moving with your business.
At a Glance: Optimization as a Service v Traditional MSPs
Strategic Next Steps for Software Optimization
Software overspend is draining budgets in nearly all companies we’ve worked with or spoken to (even the ones that already have in-house SAM or procurement teams). This reflects just how complex software and contract management has become. To the strategic next steps to better optimization, you need to ask these questions:
If the answers are unclear or not where you want them to be, it’s time to reassess your strategy.
Modern IT environments demand more than maintenance. As Gartner notes, “Software costs are spiralling faster than CIO budgets can adjust. Optimization-first models are no longer optional—they’re critical.” Companies need proactive, continuous optimization to maximize value, reduce risk, and align your software investments with business priorities in a measurable way.
Research thoroughly, ask tough questions, and select the model best aligned with your business needs. Whether a traditional model is the best fit or a more modern solution like OaaS will deliver more value, above all you need to take proactive action to optimize your software assets. It’s crucial to sustain profitability and operational success in the digital age.
2Data is an independent software licensing advisory specializing in Microsoft, Oracle, SAP, Salesforce and IBM optimization. We help companies reduce contract costs, manage risk, and simplify their software licensing.
