Earlier this year, I challenged our Snow Software sellers to introduce a simple question into their conversations with senior IT and business leaders across the world. Short and simple, I tasked them to ask: “Is the cloud making your job simpler or more complicated?”
Unsurprisingly, business and IT leaders never give the response “simpler”.
Alongside a rolling of the eyes and a wry smile, sometimes even holding their heads in their hands, invariably they respond “more complicated”. Some provide a more qualified response: “well, it depends…” or “some things are simpler…”. But never just “simpler”.
This simple question has betrayed the truth of cloud adoption and the drive for digital transformation. While enabling advances in the ways that organisations operate, achieve target efficiencies and gain competitive advantage, cloud services are also making life more difficult for both IT and business leaders.
What’s the problem?
Business and IT leaders are conflicted. While they want to be at the forefront of digital transformation, driving their organisations forward, at the same time, these leaders also have financial obligations to the company. It’s’s not just about limiting costs (although that’s often a key duty), but ensuring that budget is being spent responsibly and eliminating any black holes in expenditure.
Therefore, it’s no surprise that analytics is moving up CIOs’ priority lists. IT is a little late to the party, with analytics playing an important role in many other parts of the organisation for a number of years now. The Business Intelligence and analytics market hasexploded in recent years, as businesses strive towards a data-driven model where data is clearly visualised and supports informed decision-making.
The cloud and business transformation now require CIOs and the IT office to have their own, similar quality of analytics.
Why doesn’t the cloud make things simpler?
For some people, it certainly does. For a developer, for instance, it has never been simpler to test a new piece of code or run an application to read customer data in a new way. You just need to arm yourself with a credit card and an account with Microsoft, Amazon or Google.
A director of a business unit or function may discover a new SaaS app that they believe will make the team more effective and help them achieve their targets. They could wait for IT to help or go it alone. And often, they can get it off the ground without even breaking their personal financial sign-off limits.
It’s also easier than ever to create cost without providing any indication to those who manage the organisation’s finances, until they get the bill. The CFO and other senior executives commonly see increasingly-large bills coming in for SaaS and IaaS investments that they simply can’t reconcile.
The CIO and CFO are in equally tough positions. Both understand that they need cloud to move the organisation forward. But neither can articulate if the spending is justified or delivering business value.
CIO in the hot seat
With more than 80 per cent of CIOs reporting directly to the CEO or the CFO, they tend to be the go-to person when the increase in cloud bills becomes alarming.
A common story from the business and IT leaders that we speak to is that the full 12 months’ cloud budget is frequently consumed in less than half that time. And the CIO often can’t articulate why the money got spent so quickly, or by whom.
One organisation I recently spoke to (and not a huge one at that) is currently spending $600,000 on cloud services every month. The CFO is frustratingly blind as to why the cost is so high. While he’s expected to approve the invoices, they don’t give him any insight into what it is that his organisation is doing or achieving with this investment.
For him and many others, cloud expenditure is reached a tipping point. The status quo can’t continue.
We’re already facing a Disruption Gap, where CIOs are left out of IT purchasing decisions across the organisation. The consumerisation of IT and the ease with which cloud services can be bought and run has triggered a shift whereby business units are becoming responsible for an increasing amount of IT spending, bypassing the IT office until they start receiving the bills.
One of the most effective ways for CIOs and CFOs to close this gap to achieve a full understanding of the IT environment, is to equip them with a common view of IT consumption and spend using analytics.
The issue with analytics
A number of popular analytics platforms have emerged in recent years, including Qlik, PowerBI and Tableau to name but a few. But while all are great platforms, they suffer from the same fundamental issue: crap in, crap out.
No matter how sophisticated their presentation capabilities, analytics platforms are predominantly reliant on external data sources. Any problems with the raw data means that the drill-downs and pretty graphs will be for nothing. Which rather defeats the purpose.
Even when the raw data is accurate, getting it to feed the analytics platform is no mean feat, with hard-to-explain discrepancies often creeping in between the input data and the shiny dashboards in the analytics platform.
But imagine an analytics platform that can really tell you what’s going on across the innumerable IT platforms that are being managed and consumed by an organisation – from mobile to desktop, datacentre to cloud – tracking applications both within and outside the network, no matter who commissioned them or is paying for them.
Imagine what the CIO and CFO could do with that information. With the right technologies in place, the CIO can have the advantage compared to other senior executive colleagues.
The CIO won’t need to rely on third-party sources to gain visibility of both the hardware and software inside and outside the organisation’s network. Instead, the CIO can choose a single-platform that will provide the majority of the data they want to analyse.
Not just another analytics platform
As Gartner says, “By 2020, for 40 per cent of software titles, the fundamental priority of software asset management (SAM) will shift from managing compliance with software publisher terms and conditions to eliminating unnecessary expenditure in "as a service" contracts”.
As the role of Software Asset Management changes to reflect the shift in IT consumption, so too will the ways that companies access and consume data and intelligence from SAM platforms change.
A number of IT resellers have already harnessed this potential by using third-party platforms to build an ‘analytics presentation layer’ on top of SAM data, allowing their customers to gain visibility across the entire cloud environment and making complex data easier for executives to digest and scrutinise.
Most organisations get compliance. Most are still working on it (compliance is rarely ‘done’). But as the pendulum swings and cloud accounts for an ever-growing portion of the company’s overall IT spend, so the senior executives in the organisation will need to diversify their practices to optimise software spend in all its forms.
For one example of how the cloud is changing how organisations need to manage software and IT consumption, read Gartner’s research paper “Software Asset Management Reaches a Tipping Point: SaaS Cost Management Eclipses License Compliance”.
Matt Fisher, VP at Snow Software
Image Credit: Everything Possible / Shutterstock