Combating Inflation’s Impact On IT Spend

Innovation Combating Inflation’s Impact On IT Spend Uri Haramati Forbes Councils Member Forbes Technology Council COUNCIL POST Expertise from Forbes Councils members, operated under license. Opinions expressed are those of the author. | Membership (fee-based) Aug 11, 2022, 07:45am EDT | Share to Facebook Share to Twitter Share to Linkedin Uri Haramati, cofounder and CEO of Torii , a leading SaaS management platform.

Founded and led Life on Air (Meerkat, Houseparty) and Skedook. getty Have you been asked to cut your technology budget yet? With costs rising, inflation hitting a 40-year high and a global recession taking hold, IT teams are increasingly tasked with evaluating, justifying and reducing their company’s spend. That’s not an easy job in any world.

But now, as cloud applications flood businesses and workforces become increasingly remote and decentralized, getting a handle on true spend is elusive. And determining how to cut costs without sacrificing innovation or agility can be even harder. How Did We Get Here? When the world first locked down due to Covid-19 and organizations began to scramble to function remotely, IT spend skyrocketed.

In January 2021, when the pandemic was well underway, Gartner analysts projected IT spending would reach a staggering $3. 9 trillion in 2021 . It didn’t.

It reached $4. 2 trillion instead. Cloud, or software as a service (SaaS), applications drove a huge part of that growth, overtaking on-premises applications for the first time.

As watercoolers moved to Slack channels, whiteboards evolved to Miro boards and the workplace itself moved to the cloud, the “digital workplace” became a reality. Businesses needed to be cloud compatible, and IT teams needed to ensure employees could work from anywhere. MORE FOR YOU Google Issues Warning For 2 Billion Chrome Users Forget The MacBook Pro, Apple Has Bigger Plans Google Discounts Pixel 6, Nest & Pixel Buds In Limited-Time Sale Event Meanwhile, SaaS applications exacerbated the spending challenge.

They’re incredibly easy for employees to acquire, expense and use on their own, without the knowledge of IT, finance or procurement teams. This may be one reason that, by 2025, Gartner analysts expect the cloud application market to be twice the size of the noncloud market. These unsanctioned applications—which, according to Torii’s customer data, account for more than 50% of a company’s cloud ecosystem—are commonly called “shadow IT.

” The fact that they’re so prevalent is a constant surprise to IT, finance and procurement professionals. The Genie Is Out Of The Bottle Employees have stopped asking for permission to test and adopt new tools. They’re actively researching and implementing anything that can help them work more efficiently and effectively.

This isn’t going to stop. Shadow IT is the norm in the decentralized cloud world. And it quickly bloats technology spend without anyone realizing it.

This mountain of costs is hidden right under our noses. But, on the positive side, it makes shadow IT apps a great source for cost-cutting if you know where to look and what to look for. What You Need To Know Looking at price alone isn’t the answer.

You need to understand the value of every application. Otherwise, along with costs, you might reduce your ability to innovate and grow. What does this entail? It means assessing which apps are worth keeping and renewing, uncovering overspending, understanding which license quantities and tiers can be lowered and doing so across an enormous, decentralized stack of SaaS applications.

It means answering these questions: What are all your cloud applications in your ecosystem? Who are they owned and used by? How often are they accessed and by whom? How much does each application cost per user and per department? Are any applications redundant or have overlapping functionality? When are subscriptions up for renewal? Keep in mind that because shadow IT applications are continually added by end users—and application usage continually changes—this isn’t a one-and-done task. It must be an ongoing process, with real-time data driving answers. You Can’t Know What You Don’t See To address these questions, you need one superpower: complete visibility into every cloud app in every corner of your organization—including shadow IT.

This is virtually impossible to do by traditional means, such as asking users to submit forms when subscribing to new apps. Instead, organizations must find ways to uncover new apps as they’re used on endpoints, connected with known apps and submitted for expense reimbursement. Visibility doesn’t end there, though.

You need to see into all the application-related data mentioned above and more. This will help, for instance, if you uncover three project management applications. To evaluate cost-cutting opportunities, you need to know why such similar tools are being used.

Is it feature-based or perhaps a lack of communication between people who purchased them? You also need to know how many licenses per duplicate app are actively used, whether users and frequency are trending down or up and whether the applications expose your company to security risks. Understanding the value of every application requires accurate data. Only then can you make smart decisions and take actions like eliminating the right applications, resizing licenses, suspending access to underutilized licenses, eliminating surprise renewals, reclaiming rather than purchasing licenses and changing tiers for specific users, such as from Zoom Pro to Zoom Basic.

All of this is only possible if your organization is properly focused on SaaS management. This means dedicating people to manage cloud applications and user life cycles. It also means equipping them with tools that automatically uncover all your cloud apps and associated data, making it easy for all stakeholders—IT, finance, procurement and application owners—to see and gain the insights they need, and saving time by automating actions like reclamations and user offboarding.

Tools such as SaaS management platforms can help enable that level of discovery, providing the data and automation needed to build better, cost-effective digital workplaces without stifling ingenuity and growth. Recessions And The Future of Work Cloud applications are the new workplace. Organizations can’t skimp on the latest and greatest ones—employees expect them.

In fact, they’ve vowed to leave companies that don’t allow them . And company success depends on them, even—and perhaps especially—in a recession. But the hidden costs are orders of magnitude more than almost everyone realizes.

And they can’t continue to run rampant. It’s time to cut waste, intelligently. As inflation creates volatility in the economy, IT and procurement leaders must optimize spending and resiliency now.

The good news is that there’s a mountain of cloud apps for you to dive into. Just beware of cutting costs in a vacuum or you may pay for it in more substantial ways. Forbes Technology Council is an invitation-only community for world-class CIOs, CTOs and technology executives.

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