While the cloud is bringing digital transformation advantages through the front door, it’s also carrying larger and larger portions of the IT budget out the back door. Studies show the cloud is dominating IT spending, and as companies increasingly rely on cloud-first strategies and multi-cloud environments, their digital innovation is accompanied by rising costs.
For example, Shadow IT or unsanctioned cloud applications can consume as much as 30% of IT budgets, and squandering money on cloud infrastructure services is commonplace. Gartner and other analyst firms quantify cloud overspending by as much as 50% and even 70% on average.
So, how do you stop cloud waste? ZK Research shows IT and finance leaders how to plug the cloud-spending leak in a newly published Buyer’s Guide for Cloud Expense Management (CEM) Solutions. As author Zeus Kerravala states in the guide, CEM solutions are the “machine behind the FinOps curtain.”
What is FinOps? How does Cloud Expense Management Cut Costs?
FinOps is a term gaining traction, because it’s a conceptual framework and financial management discipline for keeping cloud costs under control. But putting FinOps principles into practice is difficult without supporting technologies. Cloud expense tracking and analytics platforms introduce much needed observability into Shadow IT and infrastructure instances, bringing forward service usage insights and pricing trends alongside suggestions for reducing cloud waste and costs. Thus, CEM solutions are considered the leading tool in operationalizing FinOps.
CEM solutions are considered the leading tool in operationalizing a FinOps strategy.
“FinOps requires advanced analytics and automation to efficiently arrive at a complete inventory of the cloud estate including the detailed information necessary for ongoing cost optimization. A CEM platform can be the difference between cloud innovation done right or gone wrong,” Kerravala explains.
Critical Capabilities: Evaluating Cloud Expense Management Solutions
The first step in cloud cost governance is to define your assets, usage, and spending. Start keeping a closer eye on spikes in cloud service expenses, as managing these variable costs is the best way to stretch innovation dollars further, accelerate cloud ROI, and rationalize more investments in SaaS applications and cloud infrastructure (IaaS).
6 Critical Criteria for Cloud Cost Management
ZK Research recommends that decision makers exploring cloud cost management solutions take a look at CEM tools with these six critical criteria in mind:
- Cost Optimization: Money and productivity savings for IaaS, SaaS, UCaaS and more
- Expense Management: Financial administration for invoices, bill pay, and contracts
- Analytics: AI-powered cost savings recommendations based on service usage data
- Automation: Workflows and tools that accelerate time-to-insights and time-to-savings
- Integrations: Vast information gathering and solution customization options
- Reporting: Real-time alerts, budget forecasting, and tracking capabilities
Check out the 6 CEM Must-Have Capabilities infographic
FinOps & CEM Solutions: Insider Tips from ZK Research
With FinOps evolving into an emerging market of solutions, every CIO, CTO, and CFO wants to fast track their success in keeping technology expenses in check.
ZK Research advises any executive looking holistically at controlling IT costs to first prioritize the cloud. Amid today’s macroeconomic headwinds, many companies are putting technology investments under the ROI microscope, and Kerravala says cost management initiatives aimed at the cloud are delivering higher returns when compared to the same programs aimed at other IT service costs.
Starting with the cloud makes sense, because here at Tangoe, we see our clients save 20-40% on average and achieve ROI in one year.
Download the complete CEM Buyer’s Guide for more tips to control cloud costs.
5 Ways the Tangoe One CEM Platform Enables a FinOps Strategy
- Rightsize Your Resources: Optimization recommendations and tools optimize your costs, making each penny of cloud spending count toward your scalability and business growth.
- Get Sweeping Views of Infrastructure Expenses Just the Way You Want Them: Business intelligence analytics allow you to aggregate expense information and build reports according to your business needs and definitions.
- Ease the Burdens of Infrastructure Cost Governance: Upload your financial budget and use it compare your actual daily costs against your projected spending – one platform makes it easy to analyze budget-to-actual variances across multiple cloud service providers
- Automate Infrastructure Management: Automatically apply rules against cloud costs and usage data to normalize information across all major cloud service providers and allocate costs to the appropriate lines of business.
- Further Reduce Manual Work: Allow Tangoe to pay your cloud invoices for you, processing invoices according to your financial rules and generating a custom General Ledger file.
Learn more about Tangoe One Cloud Expense Management