by Jan Malasek | Sep 13, 2023 | Strategic Sourcing
As companies move to IT Cloud-based computing infrastructure, many are finding that costs far exceed budgeted forecasts. Such was the case with an organization that recently moved to Cloud-based systems and needed to find ways to reduce and mitigate the unexpected costs. SITUATION OVERVIEW A fast-growing Digital Advertising Firm, which had recently migrated to a cloud-centric compute environment was faced with costs that greatly exceeded forecast. The CIO, CPO and CFO were all under pressure to rein in the overages, enhance transparency and implement governance processes. They were also asked to allocate cloud costs to each business unit, to foster accountability. The company engaged Jamie Martino, a member of the OnDemand Professional Network with Strategic Sourcing / IT Category Expertise and an extensive expense management background, to evaluate the cloud optimization market. Martino was charged to work with IT and Procurement to identify aligned vendor solutions, which could reduce costs by at least 30%. DISCOVERY & EVALUATION During the Discovery Phase, the team learned that there was a robust set of platforms and managed services available in the market, which claimed to far exceed the capabilities of generic tools offered by the cloud compute vendors themselves (AWS, Azure, GCP). Through conversations with reference clients of these firms, the team was able to validate that 30% savings was a realistic goal. They learned that common drivers of overages stem from a lack of visibility and challenges related to aligning the purchase decision for each Instance with the best opportunity available. Cost overages were often due to: Zero Usage InstancesOver Engineered InstancesDecentralized non-strategic ‘buying patterns’Unclear Ownership & Inability to allocate costsLack of Internal Resources...
