by Scott Davis
IT organizations face a growing trend towards usage and service-based cloud delivery of software, infrastructure and platforms. With the variety of new spend categories under IT-as-a-Service (ITaaS), comes a greater need for increased visibility into usage-based costs and how to tie those costs to consumption and improve optimization. This becomes extremely complex given that an enterprise typically has multiple cloud and software agreements in place that span across numerous platforms, vendors and internal departments.
As IT organizations move from service providers to enablers of services for consumption, they must decide on how to best handle all of this. Effective management of cloud and software can provide visibility, standardization, efficiency and cost reduction. Ironically, many of the management challenges identified with ITaaS are strikingly similar to those experienced in the early days with enterprise telecom and mobility – which have been successfully addressed by TEM vendors.
Let’s take a look at the top five management challenges:
Managing usage-based billing – Supporting multiple vendor relationships for cloud-based services and software licenses, enterprises are pressed to more effectively track usage with better granularity and standardization. This becomes especially difficult with allocating seats to employees and purchasing and paying for subscriptions in bulk. Given that no two vendor billing formats are the same, it adds another level of complexity. TEM providers have been able to address this challenge in the mobility arena through a combination of working with existing telecom billing standards and building relationships with carriers, and developing systems that can support and process a multitude of file types.
Identifying billing errors and contract disputes/compliance – To determine whether software and cloud licenses are being billed at their contractually agreed upon rate requires a time-consuming process of reviewing both the contract and the bill to identify discrepancies. As with mobility, few enterprises are willing or equipped to undertake this in-house.
Controlling cost creep and overspend – Enterprises often experience “sticker shock” when the variable costs for cloud and IT services exceed what they had agreed upon or budgeted. In the Infrastructure-as-a-Service world, providers advertise rate cuts which can provide a false sense of security around the need to manage costs. When there is a lack of visibility into usage and a difficulty reconciling costs to contracted rates, it becomes a challenging problem for enterprises to solve using internal resources.
“Always on” assets can quickly drive overage charges – Enterprises using cloud services, are charged for data storage on a per kilobyte, megabyte, or gigabyte basis. If there is poor visibility into the source of data storage and processing charges, they may be bleeding excess spending without knowing it. Enterprise developers frequently fail to identify and turn off these hidden costs from idle cloud usage, leading to tens of thousands of dollars in charges per month. This is similar to telecom situations where enterprises pay for international roaming – continuing to use IT assets without paying heed to the potential for overage charges.
Unused cloud and software licenses still being actively billed. Enterprises that purchase extra seats for software licenses or cloud storage capacities beyond what they need are paying a sunk cost that is lost money and generates no value. Identifying unused storage or user licenses, especially across multiple platforms and vendors is difficult when enterprises try to do it internally. This is much like the mobility challenges when enterprises are still being actively billed for mobile devices no longer being used – something TEM solutions address every day.
As IT organizations are pressured to drive down costs and support business transformation, they are faced with a new set of challenges that include managing a broader range of IT assets – ones that mirror the old days of telecom, and more recently, mobility. IT has the benefit of being able to leverage the in-depth expertise and best practices that TEM vendors have applied to complex user billing with telecom expense management and optimization. Those same principles can be built upon and expanded to include software, cloud, licensing and other areas of IT asset management. In fact, Calero works with many enterprise customers who are actively seeking guidance and help in these areas. Enterprises looking to optimize their IT investments should look to the TEM industry as the gold standard. TEM providers have built core competencies in telecom and mobile and are already applying those disciplines to account for the challenges that ITaaS presents.
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