Small Business and Business Software

Selling Cloud Services To Small Business

Selling Cloud Services To Small Business – Although it may seem counterintuitive, the best way to manage cloud usage may be to spend money on the use of control tools.

The rise of the cloud has made businesses faster, faster and faster. But it created a new problem: Usage-based billing models for cloud providers like Amazon AWS, Microsoft Azure and Google Cloud Platform have made it easier than ever for businesses to lose control of computing costs.

Selling Cloud Services To Small Business

Selling Cloud Services To Small Business

There is a strong assumption that moving from on-premises servers to the cloud will help companies save money, said German Bertot, vice president and general manager of IT asset management at ServiceNow. But this is not always the case. “The promise is there, and it’s good. But companies are finding it difficult to see the money they have saved,” he said.

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“People are very surprised at how much computers are costing [them] over traditional computers,” said David Linthicum, Deloitte’s cloud leader. While some of this is simply the cost of accessing computing power, most of it is due to inefficiencies in spending, he said.

That’s why SaaS companies like Flexera, Apptio and ServiceNow are helping companies reduce cloud subscription costs – as long as you subscribe to their services, which, of course, aren’t free.

The reason annual costs can rise so quickly is that managing the costs associated with computer hardware is much more difficult in an economy than it was when companies purchased and managed their own servers. .

With data centers, it was common for CIOs to only purchase new technology every few years or so, said Flexera Senior Director Brian Adler. In response, IT staff wanted as many resources as they could get, especially since many companies were providing more computing power than they needed at the time. “But this was the way to do it; that’s the character we had because I hoped to grow in it,” said Adler.

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Because it took a long time to purchase and deploy infrastructure for operating on-premises data centers, this was a common practice, said Forrester Senior Analyst Tracy Woo. The difference with the cloud is that it offers “something you can request and get online in minutes.”

However, when many customers started moving from on-premise operations to the cloud, they often brought the old data center mindset with them. Instead of adding resources as needed, for example, many companies still feel the need to overstock up front. But with the cloud, “I don’t buy a peak, I can rent a peak. So it’s a new process that people have to learn,” Adler said.

At times, because there was no need to block applications in data centers, customers would leave virtual machines in the cloud running. In data centers “it doesn’t matter if I shut down my virtual machine, the physical host was still running and chewing money; there was no help,” Adler said. But in a year, if you let things go, you have to pay.

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Selling Cloud Services To Small Business

Another factor that makes managing annual costs difficult is that IT costs are not centralized as they once were.

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On the other hand, the simplicity of the first annual means that it is easy to register, use and then connect large accounts. “You don’t have to take a purchase order to your hardware vendor, bring them in, pay up front, get the hardware in your data center, install and so on,” Bertot said. In fact, almost any employee with a company credit card can sign up for a SaaS application and pay for the service.

The fact that many offer cloud billing based on usage also means that it’s easy to increase costs if companies aren’t paying attention. Even getting visibility of where the money is coming from can be a problem, because a company can have hundreds of engineers using resources, but only have access to one account. And those accounts are so complex that no one can look at all the data and see if they’re being billed, said Adler, who has seen Flexera customers have 12 million lines in a single account every month.

That’s why software is so important to understand cloud usage at the business level, said Apptio vice president Eugene Khvostov. “By the second of the month, you’re getting so much data that you can’t handle it without software,” he said. “So you have to build or buy specialized software.”

Although it may seem counterintuitive, the best way to manage cloud usage may be to spend money on the use of control tools. That’s why big cloud providers AWS, Azure and Google as well as SaaS companies like Flexera, Apptio and ServiceNow all offer services to help companies reduce their annual costs.

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Although many of these services require additional subscriptions, according to industry experts and researchers, the cost savings can be significant.

How do third-party software providers like Flexera, Apptio or ServiceNow really help reduce cloud costs? There are many different techniques, from reducing registration levels based on usage to turning off devices when not in use or saving events in advance.

At the end of the SaaS application, understanding which users are using the licenses, and how much they are using, can help determine which part of the application to buy or who to license. If a user is taking out a license but not using it, “are there ways to monitor usage and suggest a lower subscription rate … and earn money in the process?” said Bertot.

Selling Cloud Services To Small Business

Sometimes savings can come from managing a SaaS application. “How many different communication platforms do I have? I have Zoom and GoToMeeting and Teams and Citrix? What if I combine them?” Khvostov said.

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At Deloitte, Linthicum has seen clients save up to 200% on their annual accounts after using the tool. Although this is an outlier, “in most cases it will be a 30% to 50% savings,” at least, he said. And “there will always be some kind of security 100% of the time in my experience.”

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At Apptio, which has a Cloudability application management tool, Khvostov saw similar results. “When we usually enter a customer we get anywhere from 10% to 30% savings there.”

Even the added savings on annual property costs can add up to significant savings. While a handful of companies spend a million a month on cloud services — Woo calls them power users — many companies still spend hundreds of thousands a month, he said.

And because most of the tools used are affordable – typically, 1% to 3% of what customers spend on cloud services in a month – the return on investment exceeds the cost of the subscription. “You usually see an ROI on this within two weeks to three months,” Woo said.

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Although the major cloud providers all offer tools that can help customers monitor their accounts, they have limitations.

While cloud service providers provide visibility into how a company is using them, they cannot do the same between other cloud providers or with SaaS applications, for example.

If a company analyzes its usage with a single provider, it will create a silo, Linthicum said. “You understand everything about a particular cloud provider, but not the whole thing,” he said.

Selling Cloud Services To Small Business

If a company starts covering at scale, for example, it can use a multicloud or hybrid approach. “So I would probably want to deal with detection in multiple years and put that into one gate or one control plane,” Woo said.

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At ServiceNow, for example, the company’s application management tool connects directly with SaaS providers and also monitors on-premise deployments. “This is something that no cloud provider will ever be able to do,” Bertot said.

While customers who are new to the cloud will experience many of these challenges, over time they will become better at understanding how to spend their money. “In the beginning, it’s usually good for money, and then it wears off over time,” Adler said.

But what does this mean for utility companies? As consumers become more able to manage their spending, will the demand for these services decrease? For some the answer is no, because cloud management requires continuous monitoring.

In the cloud, cost control is about being able to “not only be visible so that you can see where the money is going, but to have a look around the interaction, to be aware of how things will be paid for.” to go forward, and to do it at all. platforms,” ​​said Linthicum.

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Without using tools, companies had to build their own internal processes and software to have that level of visibility over their cloud usage. Although this is possible, it is much easier to buy a subscription.

Aisha Counts (@aishacounts) is a journalist who covers business software. Previously, he was a management at EY. He lives in Los Angeles and can be reached at [email protected]

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Selling Cloud Services To Small Business

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