How to Use COVID Cost Cutting to Make ITAM More Strategic

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How to Use COVID Cost Cutting to Make ITAM More Strategic

This article was written by AJ Witt, ITAM Review and Kim Weins, VP of Cloud Strategy, Flexera.

As the pandemic and the resulting economic slowdown begin to ripple through a wide swathe of industries, companies are seeking  to tighten IT spend for 2020 and beyond.  Software asset management (SAM) teams are well positioned to help eliminate wasted software spend.

However, the recent Flexera 2020 State of the Cloud report found that fewer than 10% of SAM teams are extending their reach to govern SaaS and public cloud costs. This is a critical gap, since SaaS and cloud use are growing much more rapidly than on-premise software. In addition, SaaS and cloud represent opportunities for quick wins on savings as compared to the three-year contract renewals for large on-premise vendors.

Increasing strategic value

You can increase your strategic value by getting aligned to C-level priorities.  As a SAM leader or practitioner, take this opportunity to become a trusted resource for opportunities to uncover savings.  If you are not yet versed in optimizing IaaS cloud and SaaS costs, what better time to dig in and learn?

The hardest part can often be knowing where to start, so here are three things you can do now:

1. Get the CFO perspective. Find out how much your organization spends on cloud – both IaaS and SaaS. The State of the Cloud Report showed that cloud spend is expected to grow 47% this year and spend was over budget by an average of 23%.  With cost-cutting a top priority, your CIO and CFO will welcome help to get these areas on budget. Even if you don’t currently have SaaS & Cloud discovery tools you can still approach senior stakeholders with opportunities to cut these costs– the accepted view is that wastage on public cloud is in the 30% band. Cutting costs is hard – if you were able to deliver on even 10% savings on your cloud spend – that’s far easier than trying to optimize costs for on-premises software.
2. Connect with your cloud teams. Find out their challenges in managing spend and look for opportunities to apply your ITAM processes and skills to these new environments.
3. Get skilled up. Learn the various special items to consider when optimizing IaaS and SaaS use. There are three key opportunities to pursue, all of which will deliver a payoff in the short to medium term. Estimate the size of these opportunities and present your findings to your CIO or CFO.
   • For public cloud (IaaS), a quick win can be achieved by identifying cloud resources that are only required during working hours – yet are currently running 24×7. Get the processes in place with your IT Ops or Dev Ops teams to ensure those are switched off overnight. That will cut the bill for those instances by up to two-thirds. There are several other ways IaaS cloud spend can be reduced – but that’s for another day!

• • For SaaS, check your invoices to see how many seats you’re paying for. Chances are you’ve made layoffs this year and so the immediate step to take is to reduce seats. A key metric for SaaS vendors is paid user numbers and this provides leverage in a negotiation – rather than reducing seats you may be able to reduce the price, negotiate a payment holiday, or get 15 months for the price of 12. The outcome for your business is the same – a reduction in monthly cost.

• • Alongside optimizing committed seat numbers, build out a SaaS renewals schedule. Identify contracts due for renewal in the next 60-90 days and focus your cost management activity on those. You can do this, even without tooling, by engaging with your Finance/Accounts Payable team and digging into regular payments for software spend.

Getting buy-in

That’s your three-step plan for engaging with your C-Suite. But how do you get them to buy it? The key is to present the opportunity in language they understand. Don’t swamp them with data, they don’t need the detail. Present a simple ‘Problem-Solution-Outcome’ framework and focus on those quick wins. For example;

“We need to cut costs. I’ve reconciled our leavers list against our Microsoft365 user list and found hundreds of active accounts for users who have left. If we deactivate those accounts, we cut monthly costs by several thousand dollars. It’s just a few clicks in the admin portal to do that.”

Structure your plan so you’re delivering tangible benefits in the first 30 days; that enables you to build momentum behind your program. At this stage this is still somewhat tactical but if you consistently deliver savings month to month, you’ll soon find that you’ll get invited to work strategically on managing new and existing technology investments.

Further Resources

Flexera State of the Cloud report

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