As we get more information from multiple researchers around successful cloud adoption and how businesses are managing these growing assets, trends are emerging and highlighting some concerning patterns of organization wide over-spending.
Even the recent Wall Street Journal article ‘The Many Ways Companies Waste Money with Technology Spending’ identified the high costs of the cloud, along with other costly mistakes such as misinterpreting what customers really want and businesses have a tendency to want to develop their own new tools instead of buying adequate solutions for less, off-the-shelf.
Interestingly, the take-home stats all seem to be consistent and familiar. Cloud over-spending is estimated at around 25-30%; almost identical to levels of over-spending reported across the desktop, datacenter and SaaS applications. With business units and individual team members spinning-up cloud services with little to no governance, promised cloud savings are yet to flourish. It appears to be IT’s not-so-golden ratio of investment to wastage; the only difference being the rate at which cloud adoption and over-spending is growing.
Reducing over-spending is also top of the cloud agenda for CIO’s, so why is it not happening?
Building a Cloud Center of Excellence: The Role of ITAM & SAM
The solution to preventing this over-spending across technology assets clearly exists; the answer as we know is investing in modernizing IT Asset Management and Software Asset Management (SAM). Research by Gartner identified that business leaders who implement a robust SAM program with adequate people, processes and technology can reduce software costs by 30%.
Cloud is no different in theory – you still need solutions to see it and control it, skills to understand it and intelligence to optimize it; but in practice there are new challenges that need consideration to address. Most notably, the deficiencies with historic ITAM functions is a lack of technology to interrogate Cloud IaaS / PaaS and a notable Cloud ‘Skills Gap’ across the industry.
Cloud Doesn’t Need to be a Departure-Point from Unified IT Cost Optimization Solutions
ITAM & SAM solutions are much more powerful now, with tools like Certero’s Unified Platform bringing once siloed disciplines together. The logic being that to optimize software licensing costs you also need full visibility and control over hardware as well. So now, a single modern ITAM & SAM platform can give you the information needed to optimize IT technology assets right across the enterprise, including optimizing Cloud IaaS/PaaS costs.
However, it’s becoming apparent that businesses are not using their ITAM/SAM resources to control and optimize cloud, despite these teams being technical, skilled at finding cost-savings and highly experienced in navigating complex commercial licensing terms.
Managing cloud operationally is seen as an entirely new challenge and a separate discipline. However, this does not need to be the case when it comes to managing cloud cost and value as business assets that need to be optimized. Technology like Vitado by Certero enables the unified management of IT business assets to continue.
The Emperor’s New Cloud
Let’s look at how organizations are controlling the Cloud, whether public cloud or private cloud. ‘Cloud teams’, based around the Cloud Center of Excellence (CCOE) framework are commonly comprised of individuals from FinOps, Security, Legal, Cloud Architects, but not IT Asset Management. Whilst the framework is useful, and each team has their own cloud center of excellence responsibilities, the incumbent ability of ITAM teams to provide governance of cloud as a business asset is overlooked.
This may be due to an antiquated view of what IT Asset Management is, as John Lunt, CEO of Certero comments:
“ITAM & SAM are not simply disciplines that count how many computers or licenses you have – the insight that asset management brings is about measuring the business value obtained from technology investments, which should be used to make better decisions as business transform”.
The importance of measurement has also been raised by James Anderson, VP of Research at Gartner:
“With Covid, everyone’s seeing digital acceleration, but very few organizations are tracking what they’re getting in terms of business outcomes… Where are people wasting money? They’re not using business metrics to influence investment. They’re doing what people tell them to do”.
This appears to be true when deciding how to govern cloud costs and pulling together a Cloud Center of Excellence team that doesn’t include ITAM. Let’s also not forget where the Cloud Centre of Excellence concept originally comes from… AWS (courtesy of Stephen Orban, when he was Global Head of Enterprise Strategy back in 2016).
The breadth of legal and financial stakeholders within cloud teams is a good thing and echoes the sponsorship that Software Asset Management should already be receiving. The logical step would therefore be, to include and empower ITAM/SAM within your Cloud Centre of Excellence (ccoe) team to help shape the cloud strategy and ensure cost management through cloud financial management.
Including ITAM/SAM when Building a Cloud Centre of Excellence
With enough time passing to recognize that Cloud Teams aren’t always equipped to make the required cost optimization of Cloud assets a success. Maybe it’s time to circle-back to ITAM & SAM and stop thinking of Cloud as a separate silo says John Lunt, CEO of Certero:
“Optimizing Cloud really is not a ‘new world’ vs ‘old world’ scenario. The way in which you manage Cloud IaaS/PaaS is slightly different but ultimately you need the same things. Visibility, Skilled People with an understanding of the vendors, strong Governance Processes you can measure and a way to report on Costs and Optimization. That is ITAM & SAM and solutions like the new Vitado by Certero provide the tools you need. Plus, it’s on the same management platform as your on-prem and datacenter assets, so you don’t have to give up the obvious benefits of unification. You can really get a grip of everything now and see the bigger picture metrics across all your technology investments. That’s what really works to optimize Cloud costs”.
If you’re looking for a way to gain full visibility, governance and control over cloud costs, Certero can help.
Simply Contact Certero today and further information on Certero’s Solutions and Services for IT Asset Management can be found at www.certero.com including hardware, software, datacenter, SaaS & Cloud optimization.
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