Technology Value Optimization

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Application Readiness Cloud Management IT Asset Management IT Visibility Software Vulnerability Management Technology Value Optimization

Technology Value Optimization

Technology Value Optimization will be key as SAM programs expand to include SaaS and cloud

Kareen Tan

July 6, 2021

Change is never painful, only the resistance to change is painful – The Buddha.

Spring is upon us. Recently, our team was looking for inspirational photos to be shared in a contest for a spring theme. Originating from a hot and humid country, I’m still amazed by the change of seasons and all that comes with it. Just as we’re witnessing change around us and continue to embrace the changes life throws our way with the pandemic, it also gives me perspective that the obstacles of here and now are opportunities to do things right.

As an industry, we’ve observed exponential technology growth. Because of this growth, we’re experiencing  a learning curve to co-exist and collaborate during a rapid convergence of on-premises and cloud. Have we done it all and done it correctly? Probably not. The world is still catching up to these changes—ones that have fundamentally shifted the pace of work in IT as it evolves with the business while also running business services with a tighter budget.

Time to evaluate your SAM program, anyone?

As Gartner recently reported, there’s a huge shift in software industry transformation that coexists in a hybrid world. This shift has called upon stakeholders across vendor management (including SAM), sourcing and procurement to start looking at setting a baseline and obtaining value through a robust SAM program. Organizations are already experiencing high conversion into SaaS and struggle to balance the cost, risk and value through their existing investments. These investments are very important for driving growth and business continuity, and often get board-level attention.

Working in a hybrid world is not a walk in the park. Common questions surface when uncovering information around baseline data, true-ups and renewal opportunities, migration initiatives, technology debt assessment, resource optimization, etc.—why did this happen (why are we not aware of this)?; how do we solve this (do we have the right data to begin with)?; timing (when can this be realized or acted upon)?; what is the impact (doing something vs. doing nothing)?; how much effort (who needs to get involved and can we automate this)?

If you’re still working through all of this and trying out different ways to find the truth, or looking for answers from your existing resources (Gartner recommends looking beyond IT operations and service management tools) and you still find it difficult, you’re not alone.

Evolve and augment your SAM lens through Technology Value Optimization

Even if organizations are still adopting SAM programs on their own merits, there’s no shortage of demands and requests from the business wanting SAM capabilities to measure utilization, commitments, costs and risks to help meet business outcomes. Due to time pressure, budget constraint, skills or business direction, one may feel that actions are driven through intensity rather than consistency, and contribute to waste and moving of goal posts.

Let’s take an example of an upcoming Microsoft contract renewal. There’s a very long check list to start with (probably 6-12 months prior, if well planned), from collecting data to analyzing deployment and usage (on-prem and cloud), matching back to use rights, checking if the applications are serving business needs, finding ways to remediate compliance issues and, if there’s spare time, finding opportunities to rightsize, etc.

This is a segmented view in its simplest form and starts to build layers of challenges for SAM programs on which they must deliver.  Without having a modernized SAM capability that interacts with the greater technology ecosystem—to obtain the right data and contextualization to support these efforts—the potential to drive cost savings and optimize the use of Microsoft assets will be significantly limited.

Wait a minute–contextualization? How is this different from what we are used to in SAM?

We’ve used SAM to drive cost savings and remediate risks to a certain extent, but the new generation of SAM capability is looking to create meaningful, transparent and normalized services to help businesses forecast growth as technical debt is understood.

Going back to the Microsoft example above, let’s say you have a Microsoft EA renewal (or portfolio) of $22 million that you’re looking to optimize. Ideally, you’d see everything for Microsoft in one place and unpack that $22 million to get to all the questions you should be asking to effectively optimize, bringing together all the elements that have been analyzed, contextualized and modeled to your budget and business services needs.

The questions range from very basic to very complex:

• What does my full Microsoft estate consist of (on-prem, SaaS, cloud)?
• What is my total spend by category and how is it trending?
• How is my spend and technology roadmap aligned to transformation objectives?
• What can I optimize (on-prem, SaaS, cloud) and also apply toward AHUB?
• What is my total product footprint and rationalization opportunity?
• How am I exposed to currency risk and obsolescence (EOL)?
• What business services are consuming the most Microsoft assets? Are they trending well or at risk?
• What is my Microsoft effective license position (ELP)? Are we compliant?

Answering these questions is difficult because of the multiple touch points. You need to connect, research, augment, analyze, compile, validate and thoroughly model the data. In most cases, data gets stale, duplicated and missed due to a prolonged timeframe for reaching your target state. When you think it’s ready, there’s a high probability you’ll need to repeat everything. There’s often a lot of frustration when commitment from within the organization withers, or there’s a change of ownership and initiatives shift within your technology landscape. The  result is the need to revisit approaches.  Alarm bells ring as time is running out.

Let’s take a different look from a point of view when you’re armed with the right data and have a holistic view of the above to drive actions. This will turn things around.  Examples below (savings figures are for illustration purpose only):

• Microsoft Composition—#1 vendor consumption. Majority spend is on cloud ($10 million) followed by SaaS ($7 millon) and on-premises ($5 million).
• Products at risk increases technology debt—30 percent of software is out of extended support in the server estate. This impacts business service X, which is a critical, customer-facing service and not trending versus your migration planned view.  At the same time,  20 percent of the products are at risk and not supporting any business services, which you can investigate further to quantify potential cost and risks.
• Optimization opportunities—Holistically across O365 Ex/Fx/Office, you can start to reclaim 40 licenses upon confirmation with the assigned users/owners and potential savings of $60,000 in the next month.
• Compliance—Compliant but pointing out that 30 percent of the products are supporting a legacy business service that will be decommissioned in six months and offer advice to refocus on driving down technology debt in other areas.
• Spending trend on Azure—Majority on-demand ($3 million) with limited reserved instances ($200,000) and observed: there is vast compute spend on on-demand which is not using AHUB optimally. There is opportunity to use more AHUB and RI and drive cost efficiency.
• Cloud Consumption—Observed that a large sum is billed through engineering with stable consumption trend and not utilizing RI. This is an area you can act upon by checking with engineering to look at RI.  At the same time, you also found a category where a large sum is not allocated and bills are running. This triggers further action to find out who’s paying for this.

Whichever way you look at it, having trustworthy data and augmenting it with contextualization is an extremely powerful place to start driving modernization and normalization across your SAM and ITAM discipline; organically establish stronger engagement with your cloud team and senior leadership team to drive change.  In line with Gartner’s recommendation, technology value optimization is a natural extension of your SAM capabilities, adapting and applying a broader set of skills, processes, governance and solutions to manage the impact of a dynamic technology environment through actionable insights.

Start your journey today by developing your business case toward investment in modernizing your SAM capabilities to bridge IT service management and financial management toward delivering compounded business value.  When you know the world is fast advancing into SaaS and cloud, and that a change of SAM capability and purview is needed to keep pace, it becomes evident that the price of doing the same old thing is far higher than the price of change.

Spoiler:  I did not win the spring theme photo contest this round, but I will try again with an augmented lens for the next theme challenge!