Don’t Let Cloud Expenses Rain on Your Parade: How to Wrangle Recurring Costs in 2019
At this point, saying that cloud computing has taken over is like saying the Earth is round. Sure, at one point that may have been a surprising statement, but not anymore. Close to three-fourths of all organizations are now using the cloud to some degree, with enterprises spending around $3.5 million annually on the cloud, according to IDC. And yet, these figures feel small.
But while the cloud is now mainstream, why do so many companies still struggle with cloud expense management? For finance departments and accountants used to predictable contracts for tangible items, purchasing and continually paying for cloud software and infrastructure can be maddening.
If only there was a better way! Sorry for the cheesy infomercial line, but luckily there is. If you’re struggling with cloud expense management, then here are some no-nonsense tips for you.
Tip 1: Make Pricing Consistent at the Beginning
Not all clouds have a straightforward pricing model. Some charge by performance or usage, while others have flat monthly or annual fees. As much as possible, aim for regular, predictable pricing.
While a more variable option where you pay based on bandwidth and performance might seem tempting, it can lead to higher costs down the road. Do you have a foolproof crystal ball you can use to accurately predict the future every time? Yeah, we didn’t think so.
Tip 2: Fully Understand How Performance Factors into Contracts
Make sure you have a firm understanding of how usage and performance is built into all cloud contracts. Ensure service-level agreement adherence is written into contracts, and make sure you know when you’re liable versus when they are.
For example, let’s say your cloud VoIP provider guarantees 99.99 percent uptime annually in their contract. Sounds great, right?
Well, not so fast. That equates to almost an hour of downtime in a year - which again doesn’t seem like much, until you realize that an hour of downtime can cost some businesses $540,000 or more. Suddenly, a small provision in the contract can end up costing your company a lot of dough.
Cloud contract SLAs should also account for usage. The inherent decentralization of the cloud is great for business, especially those with a global and/or distributed workforce, but less so for management. Do your contracts guarantee satisfactory cloud uptime regardless of where someone is located or what device they use?
Tip 3: Make Replacement Planning Annual
A cloud solution that’s great now could be terrible in the future. As such, it pays dividends to have an internal plan in place for looking into replacements/other options on a regular basis. Also, be sure you know what your switching cost is, and factor that into all end-of-life decisions.
Tip 4: Make the Most of Billing
A bill may not seem like a strategic asset, but it can yield a lot more than you realize. By ensuring as much information as possible is included in your bills, you can get a better sense of how usage fluctuates month and month and who uses what features for proper chargeback within the organization. With a detailed bill, you can see if you’re paying for anything you don’t need. Also, aim to set up billing so that you’re seeing and managing multiple spend categories within a single interface.
Tip 5: Consider an Outsourced Vendor
The headache and sheer scale of managing your cloud expenses getting you down? Instead of fretting, look for a software platform to help you manage all of the nitty-gritty details. The benefit such a solution provides it that it allows you to get best-of-breed cloud expense management and support without having to make dedicated internal hires or train team members.
When choosing a spend management solution, know that not all vendors and solutions providers are alike. Be sure to select one you trust and have worked with before. It makes much more sense to use a vendor you already trust and can give you a single consolidated view, as opposed to using another vendor for just cloud management and nothing else.
Get Help Before 2019 Approaches
A technology expense management (TEM) platform has a head start in managing multiple complex spend categories. Since these platforms already interface with your key ERP and HR systems, bringing spend into the platform enables you to allocate those costs back to business units, while shutting down items that are no longer in service. What’s not to like?
Whether or not your organization’s fiscal year is aligned to the calendar year, now is the ideal time to seek help. Start 2019 on the right foot with dedicated expense management expertise on your side across any type of recurring technology expense.