Thanks to technology, we’re able to store and retrieve copious amounts of data relating to all aspects of our businesses. In a perfect world, we’d be able to easily synthesize that data and use it to make informed decisions to better our companies’ financial and competitive positions.
But, the truth of the matter is our businesses are flooded with data. We have access to so much more information than ever before – information that is too comprehensive to be managed in a single worksheet. What good is having all of that data if you can’t make any sense of it?
Many businesses have already migrated to the cloud and yet, a majority of them are unable to manage the money they spend on public cloud services with the confidence they would like. The difficulty arises because cloud services are billed very differently from legacy data center cost.
In the legacy data center, costs are managed with an annual budget target dominated by CapEx. The majority of costs associated with on-premises technology are largely capital expenditures or long-term leases. Thus, a significant portion of the operations budget is viewed as “fixed” and frequently managed using allocations based on history. The information needed to manage costs on an allocation basis is significantly different from that of a public cloud. The financial analytics used by companies must change.
Public cloud costs can be highly variable expenses that are normally classified as OpEx. In the cloud, businesses only pay for the resources they need, meaning that those bills can change monthly. The invoice provided by the CSP (News - Alert) (Cloud Service Provider) is usually a summary of usage during the month. The CSP has detailed usage information that it will make available when requested. The usage used to calculate the monthly bill is captured at a very granular level, generating thousands of records. Those detailed records need to be reviewed, sorted, and aggregated to determine who is using the resources and what work is being supported in order to substantiate the bill. Pivot tables and spreadsheets can no longer support the volume and provide the needed results.
From an IT financial management perspective, decision makers need to be able to convert data into meaningful intelligence. They need solutions that collect granular consumption data and transform it into actionable intelligence that can be leveraged to enrich decisions. Without this granular consumption data, companies are hard-pressed to determine the base ways to lower computing costs while increasing functionality.
IT decision makers and finance managers should consider deploying IT financial management solutions that will provide the actionable data necessary to make informed decisions relating to cloud computing costs and services. These financial solutions must take advantage of the latest in data analytics to facilitate reporting and dashboards. IT management should exploit the same types of technologies they are so adept at providing their line of business users. Solutions must be capable of tracking IT usage across a new, hybrid IT enterprise, spanning public cloud and legacy costs, giving on-demand access to real-time consumption. Armed with detailed history by resource, user, and geography, the data can be used to more accurately predict future demand and allocate resources accordingly.
Not only do IT managers need to manage the monthly invoices, but there is also a need to balance capacity needs with the rapidly changing prices, offerings, and functionality the cloud offers. To put their businesses in the best position possible to remain competitive, IT decision makers must be able to change their computing infrastructure quickly. Business analytics enable IT to make informed decisions on change, whether that is switching vendors, migrating more resources to the cloud, or simply renegotiating a contract as cloud computing costs continue to decline. Using business analytics reduces the risk by incorporating massive amounts of data into the decisioning process in a timely manner.
The cost-effective nature of the cloud is one of the reasons it is so alluring but, in order to optimize the financial benefits, businesses must be able to track and understand their IT usage and associated costs at a granular level, which is where cloud financial management solutions come into play. By making use of such technology, businesses can leverage a single tool that brings all hybrid IT information under one roof. They can then use that information to suggest changes that will improve productivity, accessibility, efficiency and scalability while reducing operating costs.
Penny Collen is the Senior Financial Solutions Architect for Cloud Cruiser, Inc. The IT Financial Management Association recently named Ms. Collen IT Financial Educator of the Decade.
Edited by Maurice Nagle