How to establish accountability for cloud spend
14 February 2018
7 minute read
Many ITAM Review readers are yet to get a handle on cloud spend and lack a definitive cloud procurement strategy
This article has been contributed by Bali Kuchipudi of SoftwareONE.
How to establish accountability for cloud spend
We all know that the cloud has vastly changed how we view our IT landscape, priorities and budgets.
This onslaught of cloud adoption has led to a myriad of questions surrounding licensing, procurement, management and more.
While there are many tips available to help organizations manage cloud and overall cloud spend, it is important to take a step back and examine the why and the who – to better understand the what.
Why Organizations Must Be Aware of Cloud Spend
Why must organizations be so cognizant of their cloud spend today? There are various reasons, including these startling statistics:
- According to Gartner, a company with a corporate “no-cloud” policy in 2020 would be as rare as a company operating without the internet today. IDG estimates that currently 70 percent of enterprises are running at least one application in the cloud, and that number is projected to reach 90 percent in the next 12 months. (From Network World byline) That is a lot of cloud, and certainly warrants a closer look.
- The benefits of moving certain applications to the cloud are appealing – including scalability, lower upfront costs, less downtime and increased computing capacity – however the flexibility and ease that the cloud provides can also cause companies to not maintain control over their cloud deployments. One study found that organizations are using an average of 16 SaaS applications on a daily basis. This can leave a company vulnerable to cyberattacks, higher than expected cloud consumption bills, and can cause waste if those applications are not managed and monitored on a consistent basis.
- On the flip side of cloud overspend is cloud spend waste – meaning the amount that companies budget for but never actually use – similar to paying for unlimited minutes on your mobile when you only use a fraction of that in real time. According to a recent survey, the estimated total waste on cloud spend is anywhere between 30 – 45%, not a small amount.
Now it has been determined that we need to be paying closer attention to what is going on with our cloud spend and strategy, we need to better understand who is best suited to managing this new environment. Not surprisingly, this is a company-wide endeavor and the same folks that had a stake in the on-premises world must still be held accountable in the cloud. However, adding a layer of complexity to cloud – and directly impacting the spend – is the fact that what makes the cloud so appealing in the first place (lower barrier to entry, lower upfront costs) is what also makes it a challenge for the IT department.
Why Tracking Cloud Spend is Challenging
Although the IT department and CIO should still be leading the way in terms of what cloud resources are procured, an increasing number of department heads and lone individuals are simply purchasing cloud applications that they need to more efficiently run the marketing or HR or finance department. This rogue, or shadow, IT is a huge headache for a majority of organizations as they try to maintain control over cloud spend and usage. In fact, over 40% of digital solutions are chosen by departments other than IT. It is helpful to map out a cloud strategy at the start in order to avoid cloud overspend by department. Organizations should identify key stakeholders – be it the CFO, CIO or various line of business managers – to ensure that cloud procurement is aligned with overall IT strategy, and not purchased at the individual or department-level.
Establishing Cloud Spend Accountability
In order to effectively control cloud costs, organizations need to understand that the benefits that cloud can provide – scalability, lower up-front costs, less downtime and increased computing capacity – are only possible if the cloud strategy becomes a natural extension of the existing on-premises strategy. Although some modifications may be necessary, at its core the strategy should allow for three key components.
- Communication – this includes identifying the key stakeholders mentioned above, to keep the lines of communication open throughout the departments and the company as a whole. The CIO must make transparent the technologies available today, what the longer-term plan is, as well as those technologies that may be retired at some point. Departments or individuals often go “rogue” if they don’t feel they are being listened to. Having an open line of communication about the overall IT strategy will help to diffuse some of this.
- Tracking and Analysis – setting a budget is great but what you really want to know is exactly how different departments are using applications. Are there certain power users in the organization for specific applications, or is one application simply not being used in the way the company thought it would be? These are all questions that need to be asked, and constantly monitored, in order to track usage against the actual budget set for the cloud applications. Modifications may be able to be put into place immediately or in the short-term to help save the organization money. There are also various third-party tools today that can help companies manage and track cloud spend across the entire software estate.
- Future Roadmap – the cloud (or any software investment for that matter) is not a “set it and forget it” situation. It requires constant monitoring and analysis to ensure you are providing the best value to your organization for the money being spent. Cloud should not be deployed for the sake of cloud – it should add value to the current business processes – by making information more easily accessible, and in turn allowing companies to better serve their customers. The end goal is to create a strategy that provides the cloud resources you need at a cost that can be managed to better service your customers.
Bali Kuchipudi of SoftwareONE
The cloud is increasingly moving out of the optional IT category to be business critical across organizations. As companies adopt this cloud-first mentality and individual departments take ownership of these initiatives, organizations are at growing risk of overspending and under-utilizing. Using these steps to establish accountability across lines of business and company leadership allows organizations to right size their cloud investment.
This article has been contributed by Bali Kuchipudi of SoftwareONE. Bali is the Product & Services Marketing Leader for PyraCloud and SoftwareONE Services. Previous to SoftwareONE, Bali had experiences at Dell/EMC and RSA in areas of cloud infrastructure and security.