- Apr 03, 2019
- Matthias Vianden
4 Cloud Cost Optimization Tips for Your Budget
Cloud software solutions provide businesses with untold freedoms and flexibilities. With just an internet connection, an organization now has access to hundreds of essential software apps that previously demanded local server space, on-site IT personnel, maintenance and support contracts, and a host of other resources to keep them up-and-running.
But the cloud costs money, and if you’re not careful, cloud software solutions can sink your organization’s budget if you haven’t implemented the appropriate cloud cost optimization measures.
It's no secret that cloud solutions are very flexible and easily installed. But over time, cloud solutions cost you more than traditional on-premises licenses if they are not managed correctly.
This short article provides a basic overview of cloud cost optimization goals, and shows you simple ways to to monitor and control your organization’s SaaS software costs using new cloud cost optimization tools and processes.
What is cloud cost optimization?
Cloud cost optimization is a business-focused initiative to drive cost reduction of your overall cloud spend by identifying mismanaged resources and eliminating waste, while maximizing your software investment and business value.
Total insight into your cloud environment is the key to successful cloud cost optimization. This helps you monitor usage and storage limits, customize workflows, and re-harvest unused licenses. Here’s how it works:
- Use what you’ve paid for. Monitor usage to ensure that subscriptions and services aren’t going to waste. Deactivate unused accounts, analyze inactivity hotspots, and monitor unexpected consumption and over-limit charges.
- Reduce your subscription costs. Avoid unnecessary purchasing and keep costs down, with features such as automatically reusing subscriptions.
- Always know who’s using your apps. Keep your environment secure and your costs low by always knowing who has access to your cloud apps. Know who’s using your apps, so you can manage subscriptions, and eliminate unauthorized access.
The SaaS sales approach: a ticking time-bomb
How did this happen? How did an innovative resource-saving technology become such a potential financial risk?
The SaaS spend explosion is directly tied to accurate software license management, or the lack thereof as the case may be here. The cloud doesn’t just give your organization new flexibilities; SaaS solutions also provide software vendors new sales opportunities and locked-in future revenues.
Software vendors no longer need to hack their way through corporate and organizational bureaucracy to sell and deploy a solution. Instead, they can go right to the individual business units. This is great both for the vendor and the customer; the vendor has a source for new steady revenue streams, and the customer has direct and easy access to the vendor, a win for everyone.
The organization on the other hand loses oversight. Without the right cloud optimization software and processes in place, an organization can quickly find itself with uncontrolled SaaS costs. When your Software Asset Management program lacks central contract negotiations and a common solution design and architecture, organizations can lose money through expensive local support service agreements and sub-optimal, expensive SaaS contracts. They will also deal with the added frustration and costs of heterogeneous systems.
Take a deep dive into SaaS spend challenges - and get strategies to control your future SaaS spend. Read the case study, Salesforce and the SaaS Spend Explosion.
Cut the red wire with strategic cloud cost optimization
With the right cloud cost optimization tools and processes, cloud Software Asset Management can be easy and save significant resources and costs. Here are three recommendations to keep your cloud costs in check:
- Know your environment. SaaS software can be slippery and difficult to manage. First off, you'll need to find all the SaaS software deployed in your environment. Use a combination of traditional on-premises discovery tools (especially useful for hybrid solutions), cloud discovery tools, and old-fashioned paper trails. Credit card receipts, invoices, and expense reports can reveal previously unknown SaaS solutions purchased by individual employees and business units.
- Get the data. Once you know which SaaS solutions are deployed in your organization's environment, you'll need the right data. A robust picture of your usage, deployment data and contract information is your ticket to identifying the right subscriptions to natch your company's specific needs.
- Engage your stakeholders. Like any Software Asset Management initiative, your front-line in containing SaaS software costs is well-informed and enabled stakeholders. Make them an essential part of your cloud Software Asset Management strategy by giving them the tools they need to provide accurate, up-to-date reporting, and to make timely licensing decisions.
Avoid a SaaS spend explosion
By moving software solutions off-premises, Software as a Service (SaaS) gives you quick and easy access to the programs that drive business growth. You no longer need to worry about your business expanding faster than your infrastructure, because with SaaS, you can scale-up your software within minutes, bounding over the hurdles associated with on-premises installations. Yet even as the cloud has made your software more flexible and responsive to your business needs, it still costs money. A lot of money.
According to the ITAM Review, “Software-as-a-Service expenditure will overtake perpetually-licensed software spend in 2019.” Salesforce, a cloud-first and cloud-only CRM tool saw revenue “in excess of $10 billion in 2018 and they are seeking to double that by 2022.”
That’s your money. If you want to keep it to reinvest in your own initiatives, you need to build cloud cost optimization practices to keep your software spend in check.
Build an effective cloud software asset management practice
In its 2019 white paper, How to Build an Effective Cloud Software Asset Management Practice, The ITAM Review explains a step by step process that ensures using cloud foundations is safe, secure, and cost-effective. The report highlights how to minimize 'Cloud Shock' – the unexpected, unbudgeted cost increase from delivering IT services via public cloud.
With expenditure on cloud growing at least 15% per annum for the foreseeable future, there is a fundamental need for IT departments to track and control spend in these new environments. For many organizations, cloud spend starts with migrating existing on-premises workloads & applications to the cloud. IT Asset Managers are already responsible for the cost and risk control of these and this research demonstrates why ITAM is the best approach to managing cloud spend and SaaS optimization processes throughout the solution lifecycle.
Learn how to minimize Cloud Shock – the unexpected, unbudgeted cost increase from delivering IT services via public cloud. Read the latest research from The ITAM Review.
Detect problems in your cloud before they blow up
And when you successfully detect problem spots before they ignite, you'll keep your SaaS environment safe and intact, ensuring that your SaaS solutions are in the position to help you grow to meet your business needs.