Businesses, however, have little visibility into or control over their cloud solutions’ true cost.
Cloud computing allows lines of business to self-provision tools, often without IT’s knowledge. The result is an increase in localized productivity. But provisioned systems are often redundant, contracts are poorly optimized, and businesses are unable to manage or audit the lifecycle and usage of these services.
The challenges that businesses face today are similar to those telecom expense management faced 10 years ago. Considering telecom’s best practices and tool sets can help us develop methods and techniques that maximize the benefits of the emerging cloud computing space.
- Most enterprises don’t know if they are paying too much for cloud services. Centrally monitoring and managing cloud-computing expenses and cloud resources can help companies derive the best value for their businesses.
- Cost governance — that is, the use of polices to limit or otherwise control and monitor the use of cloud services — is emerging as a best practice.
- Many lessons from telecom expense management and other asset and management processes apply to SaaS and other cloud services.
- Auditing and selection of the asset-management tool are important considerations when setting up these processes.
- Before the number of cloud services grows too numerous and difficult to inventory and track, enterprises should follow a well-defined process for implementing cost management and governance.
Lessons from telecom expense management
What lessons from telecom expense management and other asset and management processes can businesses apply to SaaS and other cloud services?
Cloud computing, like telecommunications, suffers from industry fragmentation, including the massive and complex growth it has experienced in recent years. This has led to a tangle of price points and pricing that enterprises must understand and manage. Additionally, in cloud and telecommunications, procurement is often decentralized. Because of shadow IT and other forces, many enterprises can’t gain a volume advantage for service procurement, and since duplicate services are often leveraged in different departments, enterprises pay twice as much to purchase one service. Finally, non-standard and unconsolidated billing is common because the enterprise can’t manage billing without a central service where all costs are known, managed, and controlled.
Other similarities include the underutilization of key cloud assets and the misallocation of these assets. Manual processes, such as receipt, allocation, and payment processing, become the norm, but additional human costs reduce the enterprise’s value from using cloud-based resources. Audits, which are typically an afterthought, are also difficult.
The benefits of increasing visibility
The following are some key benefits that will come out of the practices discussed in the previous sections of this report, and the use of tools and technology that track cloud utilization and expenses:
- The ability to proactively spot issues with cloud resource utilization and costs, and correct them before they become a larger issue.On a day-to-day basis, enterprises have much more control over cloud resources leveraged and the cost of those resources. Moreover, they can internally manage the use of those resources, change behaviors to further reduce costs, and return more value to the business.
- The ability to manage complex pricing plans along with utilization. Public-cloud prices are complex and can vary from customer to customer. Volume discounts should be applied whenever possible, necessitating a centralization of cloud service acquisitions and ongoing cost management.
- The ability to manage complex clouds, such as the movement to hybrid and multi-cloud. This means managing utilization and costs of many different cloud brands, all using different pricing models and rates. The ability to normalize the use of the cloud services that have ever changing pricing and terms will search out the best cost of cloud services.
- The ability to consider uptime history and performance in the cost models. This might include such things as not leveraging public cloud providers with a record of excessive number of outages in the last year or identifying a cloud provider that has violated its SLA and owes the company a refund.
- The ability to have a complete and overall accounting of all costs. This includes cloud services, resources provisioned, humans, network, and integration, as well as how all of these costs are allocated among those who leverage the cloud resources.
- The ability to support audits, including a complete accounting of what cloud resources were leveraged, when, where, and by whom. Also needed here is the ability to track any dependencies that drive additional costs — such as support services that charge by the minute — as a part of the cost of a specific cloud service.
For increased visibility into cloud utilization and manage cloud-computing expenses and cloud resources please contact us.