Are There
I.T. Skeletons Lurking in Your Closet?
Technology
is costly enough. But many companies are paying for software, cloud access and
SaaS subscriptions they no longer use.
Executive director, Ed Kaplan Family Institute for Innovation
and Tech Entrepreneurship, Illinois Institute of Technology
There
isn't a CEO anywhere today who has a clue about what his or her company is
actually spending on I.T. We're talking hardware, software licenses, SaaS
services and the cloud--and this is true even before you consider the
accelerating costs of qualified managerial and technical personnel. Most of
them are afraid to ask or don't really even know who would have the answers if
they did ask. This is a much bigger concern than anyone seems interested in
admitting because there are so few suggestions and even fewer solutions
available to address the problem. One lesson that's critical for startups is
that you need to get a handle on all of this information from the beginning and
before it gets entirely out of control.
Companies
like Chicago's home-grown Flexera serve mainly big firms who
are already stuck in the swamp, but its offerings are great guidelines and
provide some important illustrations of the kinds of questions every business
needs to be asking early on about their I.T. investments. Flexera grew out of a
company started in a basement by two Northwestern University computer science
students whose InstallShield product was officially launched in 1990. For
anyone who grew up in tech, watching the InstallShield bar load your new
program was just as common an experience as hearing the screechy static sounds
from your 28.8 modem or the AOL "You've Got Mail" alert. Today the
company's global with more than 1,300 employees and more than 51,000
customers.
Is cost
monitoring the job of the CFO, the CTO, the CIO, various contract
administrators, project consultants, outside vendors, or the accountants,
bookkeepers and auditors? The answer is yes; and no, because software today is
absolutely everywhere and everyone in the organization owns a piece of the
puzzle and is part of the problem. Worse yet, there are so many holes in the
accounting and auditing functions and so many indirect and obscure ways that
money gets spent on this stuff that even the most conscientious comptrollers
can't keep up with the outflows. And, just to be clear, none of the software
sellers are likely to become Good Samaritans any time soon and tell you that
you're still paying for seats and licenses for long-gone employees, for excess
cloud storage, capacity and instances belonging to projects killed years ago,
and for auto-renew subscriptions that may well outlast your business.
You'd
think you'd need an authorization and maybe a P.O. to buy a lot of these apps,
programs, services, storage plans, and subscriptions, but you can find millions
of dollars of these kinds of charges at large and small companies buried in
expense accounts, bundled into other purchases of equipment and hard goods, and
otherwise hidden in unmanaged and unsupervised disbursements. On a monthly
basis, in most cases, these kinds of charges often fall below the minimum
review and documentation thresholds-- just like all those "urgent"
Uber and Lyft trips. And so they slip regularly right under the wire. In other
cases, no one wants to ask the tough questions because the answers are both
unpleasant and expensive.
Software
in particular is an increasingly important part of our lives and our
businesses. It's as essential as electricity and just as ubiquitous, but,
because it's largely virtual rather than physical and because it operates
mainly in the background, it's far more difficult to track and measure usage,
seats, licenses, costs, etc. By comparison, we have plenty of meters to measure
our power consumption and nice Nest thermostats and other systems to try to
manage and control our HVAC costs. And we know (or at least we should)
how many widgets or wagons we bought this week. But the only time we
really pay attention to our software, equipment and infrastructure, and the
systems that run our businesses is when they stop running. Basically, in most
cases we're paying whatever we're asked to pay because we're not really buying
services as much as we're buying peace and insurance. No one wants to be the
guy who tried to save a few shekels and had the system shut down during rush
hour.
I'm
convinced that Maslow's hierarchy of needs is
going to require radical revision any day now because power, software and the
connectivity they enable are no less critical to our lives and our business
operations than oxygen is to our bodies. And we know the moment they're missing
because we hear about it from everyone and their brother - inside the business
and outside as well. No one really appreciates the fact that our day-to-day
operations hang on such a thin thread until the screens go dark or the cloud
bursts and won't respond. I've said before that SaaS services are a very mixed blessing and
the cloud, if anything, is actually worse, because we have even less of an idea
of just how much and how often our people are using these resources, how
dependent they've become upon them, and exactly what we are spending every day.
But
there are some helpful solutions out there. I wrote a while ago about Knowledge Hound, which helps companies track
and find materials, prior projects, and other resources that they have
somewhere in house but have lost track of, in order to avoid paying
unnecessarily for re-dos, redundant research or other wasted effort We're also
seeing new entrants like Ocient addressing the need to have better
analytical tools to help us intelligently manage the overwhelming flow and size
of today's largest datasets, so we can turn the data glut back into good and
useful information. In the specific area of I.T. tracking, the best solution
I've seen lately is Flexera, which helps companies of every size
get a handle on their hardware, understand their ongoing operations and
exposures, and then figure out what needs to be done to rationalize and
ultimately optimize the whole messy I.T. sprawl. Think of their overall
offering as a virtual software utility meter.
Flexera's
software and systems let you see what you have (discovery), figure out what you
need (inventory) and then use that information and those insights to take
appropriate action to control your spend. There seem to be some quick saves and
some pretty low-hanging fruit (since most companies have someone with a red
stapler and last year's Excel spreadsheet trying to keep track of this stuff)
and then there are the more interesting and challenging issues. As I noted
above, the controls are so porous in most businesses and the reporting is so
delayed and incomplete that Flexera has determined that the only way to get
ahead of the curve is by adopting, implementing and enforcing governance rules
and algorithmic programs that provide real-time measurement and guard rails and
prevent run-away (and often inadvertent) expenditures from blowing up your
budgets. No one likes to talk about how badly their best customers businesses
used to be run, but based on conversations with a few of their happy customers,
it's clear that the implemented saves and catches make a demonstrable net
difference in no time at all for their bottom lines.
In
addition, it's pretty clear that most businesses have no idea of what their
actual rights, secondary uses and other entitlements and permissions are under
the I.T. contracts that they have signed. Certainly no one in senior management
has any idea about any of this. And so, another critical function that Flexera
brings to the process is that their teams have actually read and evaluated
these torturous tomes (and all the T's & C's) and built programs to help
the end users make sense out of them and to ensure they secure all the benefits
and value they've paid for. If you don't know your rights, you can't do much
about insisting on and enforcing them. Needless to say, while it's a little
awkward to tell your clients how much they've been wasting, these contract
review procedures also quickly pay for themselves.
And
finally, Flexera seems to be the only one-stop shop that I've come across in a
world where you need to be on top of everything at the same time. The range,
scope and sprawl has never been greater - desktops, laptops, phones, data
centers, SaaS services and the cloud are all now part of the equation.
Certainly, there may be smaller players with piecemeal offerings. The problem
is that, if you aren't working with someone who can help you visualize the
entire I.T. forest as well as all of the trees, you're going to be coming up
with partial solutions and trying to put out the most pressing fires without
addressing the long term needs of your business and the best ways to meet them.
The
bottom line is simple. If you can't see and scope all this stuff, there's no
way you can manage and control it. As they say at my favorite burger joint,
Steak 'n Shake, "In Sight It Must be Right".
PUBLISHED
ON: APR 23, 2019
