Delivering IT as-a-service is one of the newer trends in IT, driven by a growing enterprise-wide need to manage the IT lifecycle across software, platform, and infrastructure categories. In recent years, IT has increasingly become both usage- and service-based, and as a result, a variety of complex cloud service pricing models have emerged.
This trend is creating a new set of challenges for enterprises that are intent on managing the lifecycle of these services. Examples of these challenges include:
- Determining how to gain visibility across multiple accounts and cloud service types;
- Achieving a usage-based, cross-charge model for departments or business units;
- And determining how to optimize variable costs on an enterprise scale.
Fortunately, there is a solution that most large organizations already have in place; and it has perfected the art of managing data at this level of complexity: Telecom Expense Management (TEM).
TEM is a solution category deeply rooted in communication services. Over the years, this software/service category has helped organizations optimize and gain visibility into usage trends, expenses, and financial allocation.
TEM increasingly includes new IT spend and asset categories arising from the crossover in device and unified communications solutions. This means in order to address the entire lifecycle of enterprise IT, businesses should leverage best practices and core competencies established by TEM vendors. What’s more, TEM vendors themselves must accept that their role now encompasses IT expense management.
Consider the similarities in the challenges between traditional TEM and cloud expense management:
- Usage-based billing for various network services
- Identification of billing errors and contract discrepancies
- Proactive management of increasing cost and identification of overspending
- Transparency to ownership of “always on” assets, resulting in charges that are not commensurate with actual usage
- The qualification and quantification of unused assets generating unnecessary costs
- Holistic lifecycle management and business intelligence to help organizations maximize purchasing power and the collaborative use of assets
It’s no surprise that some traditional TEM vendors have evolved their offerings to include what they call IT Expense Management (ITEM), which addresses a broader scope of IT services inclusive of cloud, license, data, mobility, telecom, Internet of Things (IoT), and more.
A world-renowned institution of higher education has been able to experience the benefits of ITEM best practices first-hand. In this use case, the university was able to reduce costs, optimize usage, properly allocate costs back to the right department based on usage, and gain insight into how to best manage and evaluate the various payment models.
This university has implemented a public cloud strategy with Amazon Web Services (AWS). Its centralized IT team wanted to help its internal clients optimize their use of AWS. Like most cloud service users, it was challenged with a multitude of accounts spread across many departments, as well as myriad billing formats based on pay-as-you-go agreements where the bill includes recurring, non-recurring, and usage-based charges.
The university took the first logical step. It consolidated all accounts by implementing a single shared service account that encompasses all of the departments’ activities using AWS services and data. As a result, the university started receiving the detail-based charges as one aggregate bill. However, it was still unable to centrally coordinate service activation, feed the charges directly into its general ledger based on department or actual usage, or optimize the services it was paying for in a meaningful way. Plus, the departments lost visibility into usage from its own individual accounts. This is where the university was able to take advantage of its existing TEM solution.
It worked with its TEM vendor to import data feeds from AWS into the TEM solution, which in turn used its expense management and financial allocation engine to uncover better insights and reduce costs.
When leveraging ITEM to manage cloud services, organizations are able to get more granular with the data and roll it up in a meaningful and actionable way. The following are some best practices to help optimize cloud services.
- Get granular department-level insights: AWS and other cloud tools have their own sets of dashboards and analytics. However, when more detail into specific departments or granular usage-based charges is required, you’ll benefit by importing the data into an ITEM solution that has purpose-built visual analytics and can provide more visibility around the details.
- Payment model optimization: You will gain the ability to understand the benefits and disadvantages of on-demand, reserved, and spot payment models. The goal will be to optimize your usage on an enterprise scale based on what’s best for your business.
- Stakeholder chargeback support: Your internal stakeholders will want visibility at some level. You can support the organization through usage-based shared services chargeback capabilities. Reports or bills can be created at both the summary view and at the detailed line-item view. This will help you drive transparency and accountability by sharing the costs of cloud-based services, while promoting increased engagement and self-governance.
The alignment of IT lifecycle management approach with business objectives is relatively new to the rest of the IT world, which is still focused on technological administration challenges and one-time asset purchases. As this trend continues, there will be an evolution from supporting the automation of invoice processing for cloud services to progressively include additional IT management through reconciliation of charges, cost identification, and predictive modeling of cost. However, while the rest of the industry is catching up, you can take a look at your current TEM vendor to begin optimizing your IT expenses.