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3 SaaS cost management tips for new-to-cloud usage
When it comes to SaaS spending, IT must ensure that everyone from users to management is on the same page. Use these strategies to stay within your cloud budget.
The accelerated push to cloud-based SaaS offerings can be attributed to any number of factors -- the global COVID-19 pandemic, obsolete software and hardware or even just simple equipment failure in corporate data centers.
But soon, if not already, your first bill will be due. And that bill could come as a shock if you're new to cloud services and don't have the proper SaaS cost management controls in place.
IT staff might not see the cost as a problem and treat it as something for accounting to deal with, but SaaS bills can balloon to the point that even senior executives take notice. Ultimately, IT will have to explain these new costs -- the who, what, why, etc. And that is only the start.
Most cloud services are month to month, which means that cost conversations will continue to come up. Maybe you're lucky and your consumption goes down, so your bill goes down. However, if your consumption goes up and your bill with it, those conversations with senior executives will get more problematic each month.
While there are a few things you can do to recover from a rapid or unscheduled move to cloud resources, it's important to remember that the initial impact is already done. There is no do-over here and that might be a bitter pill to swallow. But if you follow these SaaS cost management tips, you can avoid setting off the budget alarms inside your organization.
Cut the service
One of the first and simplest questions to ask is, "Do I need this service?"
That might sound like an odd place to start. But in a crisis, people buy or subscribe to things they don't always fully understand or even need. This falls into what I call the "gym" example.
You joined the gym with good intentions, but in the end, you're not using it like you hoped. So why continue to pay for it? This challenge is often more political than technical, but it is still a conversation you need to have.
Figure out if the service in question is actually being used and how many people are using it. In all likelihood, it won't make sense to continue to pay a high price for cloud resources only used by a small number of people or with little impact on business outcomes.
Consolidate cloud services
Many organizations have overlapping tools and services, so the next SaaS cost management tip pertains to potential consolidation. If you determine that you absolutely need a cloud resource, then you need to decide which one.
And that is the main issue with SaaS cloud services -- they're common. A common example of this dilemma is video conferencing services. Zoom, Skype, Google Meet, Amazon Chime, Cisco Webex and Microsoft Teams are some of the most popular video conferencing, SaaS-based applications. The issue isn't what each one might offer in terms of features or costs; the problem is you might have multiple services in demand or already in use at your company. HR wants Zoom, engineering wants Teams, accounting prefers Google. This is an absolute nightmare for IT.
Ideally, this decision would be driven by research, security and compliance needs, features requirements, import/export capabilities and many other factors. In reality, you should probably go with whatever service is already in use and has adoption.
Now, paying for multiple services takes away any chance for volume discounts or standardization, not to mention the support nightmare. Consolidating services is like herding cats. If you try to do it all at once, you will fail -- and most likely in a very public fashion. Making users angry at IT is something no one wants.
Like our previous tip, cloud consolidation will require diplomacy. Take the time to understand why people are using particular services. Work with them as smaller groups to get them to embrace the idea of switching to other tools.
It won't be easy or quick. It can be painful to ask people to give up new tools that might work better than what they have, but be honest in these situations. Explain the costs; there is no reason to keep it hidden or buried in an IT-only budget. People will understand that excessive bills have real impact on the company and the employees.
While this isn't perfect and takes time, it does remove IT from being the "bad guy" when removing services that people want. It doesn't shift the blame to someone else; IT simply lays out the impact of the decision and works with the users to understand that impact.
Now, the larger the group, the harder this is to achieve. Look for the service champions. These will be the folks who were the focal points in bringing in the new services. They will allow you to start at the source and work through the entire group.
Monitor the service
If you can't remove services due to usage or adoption, then switch the conversation to control and monitoring.
New tools and services might require new monitoring tools and alerts to ensure proper service levels. These monitoring services might come with a cost, not just for the tools but also for the agents on the different systems. That might not be something you want to hear, but it can't be ignored. It's part of your ecosystem, and IT must treat it as a supported system.
To sell this to management, look at consumption. If possible, use that data to support your argument to reduce usage, which ultimately reduces costs. Of course, it also could backfire. If the cloud services in question are in fact being used, it could justify the cost. That might not be the answer you want, but at least you know then.
Remember, these services weren't adopted with malicious intent. It was done so people could continue to work, and IT and management should acknowledge that. Yes, these services need to be under control, and you can't let shadow IT run amok. But you also can't ignore the positive impact these services have or the potentially negative effects of removing them.
IT needs to understand all sides of SaaS resources, from the end users to management to operational teams and the help desk, with everyone in between. Everyone has some involvement in this process, and it falls to IT to be both traffic cop and diplomat to find that ideal middle ground that is best for all parties.