What is Cloud Expense Report Tagging and Why Does it Matter?

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As workforce diversity intensifies and the global shift to hybrid and remote work models continues, more and more businesses are turning to cloud applications and services to empower and support employees, regardless of their geographical location. In 2020, Forbes declared, “The Cloud is the Backbone of Remote Work,” and that statement still rings true today. 

Just last month, HashiCorp-Forrester published its second annual State of Cloud Strategy Survey, which found, as expected, adoption and reliance on cloud applications is increasing. The study found that 90% of enterprises surveyed rely on a successful multi-cloud strategy. However, the rapid adoption and diversification of cloud services across enterprises has also led to a shocking percentage of businesses overspending on cloud services. Ninety-four percent (94%), to be precise. 

According to a report from CIO.com, of more than 1,000 IT decision-makers from North America, Europe, Middle East, and Asia-Pacific, “94% of respondents said their organizations had notable, avoidable cloud expenses due to a combination of factors including underused and overprovisioned resources, and lack of skills to utilize cloud infrastructure.” 

Cloud overspending is a potentially billion-dollar problem that threatens businesses of all sizes … but there is a simple solution: Cloud Expense Management (CEM)

A CEM solution is exactly what it sounds like: A solution that helps businesses manage and optimize cloud-related expenses by closely and intuitively monitoring usage and resource needs. CEM solutions help companies reduce waste by alerting users of lowered demand or automatically scaling usage to optimal rates; an effective CEM platform will identify savings opportunities and actively help businesses avoid unnecessary overspending. 

When it comes to CEM (which is also referred to as Cloud Cost Management or CCM), the proper expense report tagging methodology can mean the difference between financial operations efficiency or failure. Once a business has that in place, their Infrastructure-as-a-Service (IaaS) resources will fall into place, working smarter for the organization. Cloud expenses and assets will be managed and tracked on time, giving users better financial control; they will meet current compliance goals; and will ensure users are able to deliver more insightful, impactful executive-level reporting. Sounds great, right? Well, like most things, if not managed properly, even a solution designed to save time and money can become rather time-consuming and burdensome. 

Here are six finops best practices to consider that can help you avoid getting stuck in a continuous reconciliation cycle and  ensure you get the most out of your CEM solution: 

  1. Create an actionable and enforceable tagging governance policy. 
  1. Make sure that tags are correctly assigned and charged back to the right cost centers incurring the expenses. We recommend that tags are allocated with flexibility, allowing you to amortize large cloud financial investments. 
  1. Audit each invoice to ensure that you are no longer being billed for any resources that have been decommissioned. 
  1. Run daily exception reports with accurate validation and identification of missing, erroneous, or invalid tags. 
  1. Identify and assign resources to help make sense of all your data, usage, and expenses. 
  1. Use a generic tag to group and separate a service or resource for a distribution type chargeback where tags are not practical. 

Staying on top of usage and expenses to ensure you’re maximizing effectiveness across multiple providers can be a challenge, so let Tangoe One CEM do the work for you. 

Tangoe’s CEM and optimization solution helps businesses simplify, manage, and optimize their IaaS and Unified-Communications-as-a-Service (UCaaS) spend, assets, and license usage in one single platform – and can be made even more powerful when paired with Tangoe’s Advisory Services (TAS). Our end-to-end lifecycle management solution provides customers with the insights they need to scale (or right-size) their business and get the most out of their cloud investments. 

Are you ready to get your head out of the clouds and stop overspending? Contact us today to learn more about how Tangoe can help you simplify, manage, and optimize your cloud expenses