Why Reining in Unnecessary Cloud Spending is IT’s Next Priority in the COVID Era

The faster businesses can understand their cloud consumption habits, clarify policies, and enact accountability, the sooner they can effectively manage their sprawling cloud spend.

Manish Srivastava

October 7, 2020

4 Min Read
Why Reining in Unnecessary Cloud Spending is IT’s Next Priority in the COVID Era
(Source: Pixabay)

When the COVID-19 pandemic hit, organizations across every industry rushed to create business continuity plans, which heavily relied on cloud services to support the fully remote workforce. As a result, cloud spending during the pandemic surged. But this increase in spend comes at a tough time as IT budgets face increased scrutiny and CIOs work to reduce avoidable costs.

Unfortunately, unnecessary cloud spending accounts for billions wasted every year. And organizations will continue to fall victim to wasted cloud spend if workflows that moved to the cloud are not optimized. Managing and reducing this spend must be a top priority as organizations face prolonged remote working that will extend well into next year. After all, the faster businesses can understand their cloud landscape and start eliminating waste, the better prepared they will be to survive the current crisis and thrive in the post-pandemic environment.

Below are a few steps organizations should take to get started.

Harnessing the power of automation and AI/ML technologies

A critical first step in reducing unnecessary cloud spend is identifying where the excess spending is occurring, what teams are causing it, and for what reason. Attempting to do this manually is a tall order as that involves continuously monitoring subscriptions and usage across a multitude of SaaS and cloud portals. Automation tools that bring in data from all of these sources onto a single pane of glass can help tremendously. This allows IT leaders to then make informed decisions that will not only make better use of IT resources but also more closely align IT with an organization's strategic priorities. While it is necessary to understand spend patterns, it is not sufficient. Automation is also needed to apply policy-based optimization rules, using configurable workflows to action waste reduction. This is especially important in the current environment where traditional consumption patterns have been disrupted by COVID-19 induced remote work paradigm.

The ease of signing up for cloud services and SaaS applications has led to the inevitable sprawl of spend that is not immediately visible to IT. For example, say different departments have deployed different video conferencing software for their respective sales and finance organizations. AI and machine learning-based systems can be used to analyze expense reports and corporate procurement card transactions to identify these duplicative software purchases. This then allows businesses to start consolidating their software tools to reduce spend. Machine learning systems can also analyze activity patterns, surfacing cost-saving opportunities such as turning off idle cloud resources. On the flip side, analyzing usage patterns and predicting future usage can help plan for additional capacity in a well-negotiated fashion instead of expedited purchasing, while also positively impacting employee productivity.

Switching from a specialized to holistic approach to software purchases

In addition to identifying unnecessary spend through automation, organizations should conduct an internal review of their cloud-based tools and applications to ensure they don’t have too many specialized solutions. Businesses often go wrong when they start purchasing one-off tools for specific tasks rather than opting for solutions that can be deployed across multiple departments. These siloed tools aren’t as effective as enterprise-wide deployments since they are disconnected from the rest of IT management systems, create siloed processes, and ultimately drive up unnecessary costs.

Instead, enterprises should take a more holistic approach – deploy solutions that work with the current infrastructure and are designed to easily integrate with existing solutions. By looking at cloud assets holistically, leaders can identify the top consumers of cloud resources and make necessary adjustments for cost optimization. This can be best done with a central IT platform that provides business app context to cloud usage and provides visibility across the organization.

Keeping teams accountable for cloud spend in this new normal  

The final step is to implement systems that hold teams accountable for their cloud spend. Once an organization has accountability, the necessary cultural and behavioral changes become much easier. After all, cloud and SaaS consumers at every level need to make a continuous effort to ensure cost reduction best practices are actually happening. And combining these right-sizing habits with automated workflows will help organizations successfully identify and control cloud spend in the future. 

For example, software spend detection helps identify technology purchases happening by the individual business units.  The visibility into spend activity across the company can be used to identify duplicate spend of similar capability software and centralize usage tracking to improve contractual volume discounts with vendors.  Tracking spend by department can help facilitate chargebacks, which will help business unit accountability.

The bottom line

Wasted cloud spend is projected to continue to grow rapidly, and COVID-19 has only accelerated the trend making it critical for IT teams to address it sooner than later. The faster businesses can understand their entire cloud consumption habits, clarify policies, and enact accountability, the sooner they will be on their way to effectively managing the wide variety of cloud spend sprawling throughout their organization.

About the Author(s)

Manish Srivastava

Manish Srivastava is VP and GM of IT asset management at ServiceNow.

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