Are you spending far more money on cloud-based digital transformation projects than you’d bargained (or budgeted) for? If so, then you may be experiencing the relatively new phenomenon known as Cloud Shock.
As many businesses and organisations, understandably, move quickly to fund and green-light digital transformation projects, one common occurrence is the emergence of newly-empowered tech decision makers from across the organisation (both from within and beyond the traditional IT department).
Budget-holders are giving their teams a much freer rein to develop cloud services to help their organisation gain and maintain competitive advantage, through bringing new products and services to market before their rivals.
These newly-empowered technology decision makers from across the organisation are investing in cloud-based technologies, primarily infrastructure (IaaS) and software (SaaS).
The moment that Cloud Shock hits
Cloud Shock, refers to that particular moment when the budget holder (or worse, the CFO) realises that the company has spent considerably more on cloud-based projects than they had initially bargained for.
The irony here is that it is then, most often, that the IT department is first called upon to explain why the cloud bills are so unexpectedly high!
And this is set to become an increasingly more common problem, with varying analysts predicting growth rates of up to 100% for SaaS spend and 200% on IaaS over the next three years.
It’s easy to understand why cloud-based services are becoming so popular, as the benefits of moving apps, services and workloads to the cloud are hugely appealing. Yet the downside, where Cloud Shock hits due to an under-budgeted and un-governed cloud spend, is also becoming an all-too-common story.
How to avoid the pitfalls of Cloud Shock
At recent Snow user events in London, Sydney and Auckland we spoke with numerous customers about these issues and the vast majority of them agree that Cloud Shock is becoming a widespread problem throughout the industry. So how can you best avoid or manage it?
Organisations can use asset inventory and automation solutions to avoid or address Cloud Shock, by providing technology decision makers with the ability to:
- Govern the process of creating IaaS instances – automatically creating approved instances in the right environment with the appropriate attributes and cost centres, automatically retiring the instance after a pre-determined time or period of inactivity to eliminate wasted spend.
- To identify the use of SaaS applications across the organisation – pinpointing the use of SaaS applications is the first step to understanding the costs associated with cloud computing, especially when subscriptions are created with no involvement from the centralised IT function.
- To pull subscription data from leading SaaS applications – to manage costs, organisations need to understand what subscriptions have been provisioned, to whom and at what level. Effective subscription management for SaaS apps can yield significant cost recoveries.
The overall lesson that really needs to be learned is that monitoring and managing all forms of cloud spend will enable the asset management function to deliver new value to CFOs and lines of business managers, helping to avoid Cloud Shock and giving decision makers the confidence that they are investing wisely and making the most of their subscribed services.
Carrying out a thorough cloud audit
Most importantly, a thorough ‘cloud audit’ is required. You need to know exactly what cloud technologies and services are in use across your organisation, no matter who decided to set them up or who authorised the initial payment for each one.
As Business Unit IT becomes prevalent, so visibility and insight into usage becomes a massive challenge
for the centralised IT team and each individual business unit, They increasingly find they are spending without sufficient information about exactly what they getting or understanding the true consequences of ongoing costs.
It needs to be reiterated that these exercises are not all about reducing costs, but mostly about reducing the tendency that many organisations are currently displaying to overspend on cloud services that are not directly driving business value. Budget holders – and CFOs – need to be confident that the technology investments they are making are being used optimally and wisely.
Matt Fisher joined Snow as its first non-Swedish Vice President in 2013, with the goal of helping it become the undisputed leader in the provision of Software Asset Management (SAM) technologies. He has contributed to growing the business by an average of 60% year-on-year with a standout 90% growth in 2015. He works closely with the Snow marketing teams, product management and sales functions to ensure that Snow is front of mind for SAM and business managers that need to optimize their software assets and licensing.