How CIOs Can Solve Cloud Expense Management Challenges

How CIOs Can Solve Cloud Expense Management Challenges

It’s every technology provider’s dream: the successful launch of a software-as-a-service (SaaS) solution brings an influx of new customers. This in turn spurs rapid growth that helps the company achieve — or even blow past — business goals. But there can be a dark side to such explosive growth. IT departments must meet this increased demand while staying within budget. Meanwhile, CIOs can be hard-pressed to accurately track and forecast public cloud expenses, allocate resources, and reduce costs while expanding infrastructure. Cloud expense management brings…challenges.

How do I know all of this? Because it happened to us at Tangoe.

What are the Challenges of Cloud Expense Management?

Tangoe manages $40 billion in technology expenses and 10 million technology devices across the globe. We continuously onboard new customers eager to use our SaaS solution, the Tangoe Platform. Like most enterprises, we shifted to public cloud services like Amazon Web Services (AWS) and Microsoft Azure to host our solution. As a result of this move, we gained the agility and speed to market we needed.

However, it also added challenges around cloud cost management.  

As CIO, I had one option to gain visibility: a summary account-level AWS monthly invoice. This wasn’t enough. To accurately manage  IT infrastructure spend, we needed usage-based reporting, which was unavailable within the current AWS billing model. There was no link between the AWS product and the Tangoe project, region or department. For example, the AWS bill showed one line item for all Elastic Cloud Compute (EC2) activity, but not specific projects under that line item.

Manually itemizing costs with a spreadsheet wasn’t sustainable, either. It was incredibly labor intensive. Breaking down each AWS invoice could take up to 24 hours every month, and results could be inaccurate. It was definitely not a worthwhile use of our resources.

Another challenge was AWS’ monthly billing cycle. By the time an invoice was received, it was too late for IT to take corrective action. Our department would have to make real-time adjustments to computing or storage use to lessen month-end sticker shock.

Occam’s Razor states that sometimes the simplest solution is the best one. It became clear we already knew the simplest (and best) way to manage cloud computing usage and expenses: our own solution.

How Tangoe’s Cloud Solution Reduces IT Budgets

Using Tangoe’s cloud solution allows quick cost breakdowns by individual projects and departments. Now, we can review resource usage and charges in near-real time. This allows teams to quickly address unexpected spikes detected during the month. For example, Pulse Alerts immediately identify and validate usage spikes and trends, so our cloud analysts can reallocate resources.

Additionally, Tangoe’s Advisory Services team conducts regular cost optimization analyses to help our IT department identify additional cost-reduction opportunities. Based on their counsel, the IT department implemented several recommendations, including weekly usage reviews that help us manage our growth. Our department purchases the exact amount of resources we need, but we can still scale up as projects progress and systems grow, and as we bring on new customers.

The Big Win

Between Tangoe’s cloud solution and expert advice from Tangoe’s Advisory Services team, we have reduced our overall IT budget by 29%. What’s more, with this new visibility and ability to forecast, I was able to negotiate a better deal with AWS. Tangoe got onto AWS’ special Enterprise Discount Program (EDP) by committing to a certain three-year growth rate. We now get a fixed discount from Amazon. Imagine having that as a consumer!

The holistic view into our AWS and Azure usage and spend helps our team work smarter. Plus, I can better plan my budget for the next year. If one project is growing to keep up with migrations or business demand, I can see that expected growth in a particular line item for that project. Thanks to our management and optimization solution, I can feel confident there won’t be any unpleasant surprises.

If your IT department is facing the challenges we experienced, Tangoe’s Cloud Expense Management platform is here to help.