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...
by Jan Malasek | Sep 22, 2015 | Uncategorized
Along with the rest of the economy, the IT industry plodded through the Great Recession bringing with it tight corporate IT budgets. A ray of sunshine was Gartner’s July 2014 prediction that total IT spending would “rebound and grow until it reaches a new equilibrium.” One year later Gartner has adjusted their 2015 IT spend growth in constant currency to 2.5% – down somewhat from the 3.7% – 3.9% 2015 projections made in the last two quarters of 2014. A closer look shows us that the changes are not organizational belt tightening, but more a result of where budget is being allocated. There is a spending shift underway from hardware to software and services, and from infrastructure to the cloud. Rather than buying six new servers and an application to upgrade an existing HR system, organizations are investing in SaaS and cloud solutions. “As business solutions age, organizations are interested in the cloud and services for their updates,” says Larry Velez, CTO and founder of Sinu, a New York-based IT Managed Service Provider. “Just a few years ago, no one even considered SaaS solutions for things like hedge fund and portfolio management, but they do now.” The growth of cloud computing in 2015 has been significant. IDC recently reported that total cloud IT infrastructure spending has grown by 40 percent in 2015. This growth accounts for one-third of all IT infrastructure spending with that percentage expected to grow to nearly 50 percent by 2017. Hand-in-hand with cloud computing’s 2015 growth is an impressive 46 percent growth in IT security spending. Robert Westervelt, IDC Security Products Research Manager confirmed that...
