In the lead up to our Australia Conference 2018, owner & founder of The ITAM Review – Martin Thompson, posed the following question to our Conference Sponsors experts:
‘Whose responsibility is it to save costs in the Cloud?’
Here are their responses:
Simple question, but the answer can be complicated.
First of all “Cloud” can mean different things to different people. If you are a Software Asset Manager, you think about Software as a Service (SaaS). If you are involved with datacenter management, you are probably thinking about Infrastructure as a Service (IaaS), Platform as a Service (PaaS) or any number of “as a Service” offerings from providers like Amazon, Azure or Google.
The basic challenge is that many people still believe that “going to the Cloud” means saving money. And that certainly can be true.
But, whose responsibility is saving costs in the Cloud? In a word – Everyone’s.
Software Asset Managers will naturally start managing SaaS applications – they will quickly realise this area is likely as complex as managing on premises software. Some challenges may be different, but old problems of “shelfware” and compliance still exist with SaaS. Shelfware happens because in many instances licenses are user based– with constant churn of people changing roles, being hired and leaving the company, this requires ongoing effort – and coordination with HR. Compliance can be an issue if the SaaS vendor does not cap how many people can access the application – so don’t assume all SaaS applications will prevent going over subscription limits.
In many cases, individual departments are able to get SaaS applications for their needs. They will manage to the budget, but won’t be able to optimise spend or get volume discounts. For that, you need overall visibility – something IT Asset Managers are focusing on more every day.
IT Operations (or Cloud Operations) teams will naturally start tracking spend on Cloud Services. Is Cloud Spend growing faster than expected? With many services charged on time of use basis, pennies quickly turn to thousands of dollars. Cloud Operations will manage to budget, but in many organisations budgets grow, so the focus isn’t so much on managing spend, as managing budget.
We are seeing more IT Asset Managers getting involved in managing Cloud spend – with good reason – IT Asset Management is built on finding ways to minimise spend – and there are plenty of opportunities to find savings by shutting down idle IaaS instances, terminating orphaned storage, right-sizing IaaS instances and many others.
The executive team will certainly scrutinise any expense line items that exceed budgets – that however means the money has been spent – they will certainly establish rules over time to correct the behaviour, but that can correct only future behaviour.
Everyone needs to be aware of the trap of “Cloud” – just because it’s “pennies per day” it doesn’t mean costs won’t exceed budgets if everyone doesn’t do their part. So, while IT Asset Managers are certainly a natural fit for managing overall spend, everyone needs to learn to use only what they need and cancel/stop/delete services they don’t need.
Investing in the cloud comes with a two-pronged “win-win” situation that allows for massive cost reductions across the business. As a result of the immense pressure upon CIOs and their teams to improve ROI and reduce TCO, public cloud spending has dramatically increased by $122.5 billion in 2017, according to IDC. They also found that nine out of ten organisations are using cloud-hosted apps and services on a daily basis, which is largely attributed to the cloud capability of increasing business efficiency and agility.
Regardless of industry or size, organisations can reduce their costs by moving to the cloud. By eliminating the need for large capital outlay on new hardware, software and applications, it allows organisations to divert valuable resources to other business projects and activities. Traditional IT structure sees companies spending a significant amount of money before realising investment which can impede on other business needs. Operating on a usage-based business model, you only pay for what you use, making it easy to scale for growth and meet the growing pressures of digital transformation.
With most enterprises embarked on the asset management journey, savings can be made by using cloud services for IT sourcing and procurement. Cloud automation can potentially reduce the TCO of an asset, freeing up valuable resources and staff that once managed it. Especially for companies who are looking at headcount, IT departments can consider outsourcing low-level tactical activities to reduce costs, while using resources to accelerate an asset management program which focuses on core value-adding business activities.
For example, in an integrated IT Service Management (ITSM) and security solution, cloud plays an imperative role in improving operations for IT management and IT security. As a result, business efficiency outcomes are checked and overall cost reductions are increased. In an extended threat-response team for cloud operations, each role is of equal importance in ensuring that business efficiency is met and costs are saved. As the service desk, operations and security team work closely together, the tasks of risk identification, patch deployment and service cataloguing ensure that the organisation can enforce governance for the prevention of future threats and increase cost savings in overall business performance.
For companies looking to implement processes to proactively manage their software assets with cloud providers, it is imperative that managers conduct regular assessments to determine precisely what they need and how to meet those needs accordingly. Evidently, maximising cost with cloud-hosted providers requires an integrated approach and effort from all decision-makers to actively respond to company needs and deliver value across all functions of the business.
I find it useful to think of responsibility for cost control as a continuum, and this is particularly true when looking at Cloud costs. What I mean by this is that the whole of responsibility is made up of smaller parts, and each needs to have a level of awareness to achieve the goal of control. We don’t expect our CFO to be able to talk in detail about CPU time in our Azure estate, but we do hope they have eyes on growth in Cloud budgets and how they are impacting other more “traditional” cost centres. Likewise, our systems engineers have a laser like focus on disk throughput metrics but are less conversant when it comes to the impact on moving workloads has on capital write downs. Everyone has a part to play, and it’s the unified whole that needs to gel to truly gain control; tooling can help of course, but knowing that your part of the cost continuum, and the value of that, is truly essential.
In this day and age, large corporations expect all employees to be aware of cost, spending and waste. Whether this be relinquishing an expensive concurrent or named licence for a cloud based application that is unused, checking with central IT before signing up for a subscription based solution in case there is already something in place or a technician maintaining a close watch on virtual resource use and ensuring new cloud services are correctly sized and specified (e.g. Does the Marketing Intranet Server really need a 5TB disk and expensive SQL). If we consider that everyone is responsible for saving costs, someone has to monitor and identify cost savings to support the business and everyone in it to achieve this goal. Often the same team who manage software deployment or work closely with them would be responsible for this action. Maintaining an accurate inventory and layering on precise and detailed usage information is critical to being able to effectively support the business in this drive towards healthy spend.
So, within these instances, who should be responsible for saving costs within the cloud?
The people who are responsible for saving costs within the cloud should be:
Three main challenges are evident when discussing cloud expenditure: Shadow IT; Bill Shock and; Cloud Sprawl. As the market develops, we are sure that new terminology and challenges will emerge.
Shadow IT refers to the procurement of IT systems within an organisation, without the knowledge or approval of corporate IT. These systems could be signed off by budget holders within the business, but these individuals do not always fully understand what they are approving and therefore cannot apply the necessary governance.
The rise of Shadow IT is one of the main drivers of Cloud Sprawl within any organisation. Cloud can remove the need to procure/provision hardware servers and software in the datacenter, which enables greater simplicity and flexibility across the business. However, this simplicity can lead to ineffective management and monitoring of systems. As initiators of cloud services, how can we ensure that all of these environments are being effectively managed and retired when they are no longer needed? With so many SaaS applications being procured by so many different parts of the business, the organisation as a whole can end in up ‘cloud chaos’, with no visibility or governance to manage the problems and their associated costs.
Bill shock is receiving an invoice that is substantially higher than was originally expected, which can be due to many reasons from miscalculation of usage to unexpected add-ons. But unfortunately, by the time this is realised, the procurement has been done and contracts have been signed. The ability of the organisation to correct issues is limited, reactionary and often too late.
The solution can lie within the SAM team, whose role it could be to identify and measure cloud activity within the organisation. A typical solution would involve the creation of policies, along with education and governance, to ensure the whole organisation is aware of the processes involved in procuring new cloud services and adheres to enforced rules. This would all be supported with the usual measurements, reporting, governance and actions.
It all sounds so simple, doesn’t it? If only it was. This is where SAM tools come in to play, which enables teams to take control of their cloud environments. Are the vendors stepping up to the plate and helping organisations overcome these new challenges? That’s a whole new different question.