Leaving Money on the Table

How do you know if your organization is leaving cloud money on the table?

It’s a question that many IT leaders and managers are asking themselves
these days. They want to be sure they’re getting the most out of their cloud contract, but tracking broken SLAs can be difficult. And as much as cloud
computing has helped organizations save money and operate more
efficiently. Unfortunately, the savings may not always be passed along to
the customer — leaving a lot of money on the table.

The reason for this? Many companies fail to track and claim their credits when their SLAs are broken. This blog post will focus on how organizations track broken Service Level Agreements (SLA) and how many organizations are not following up on cloud credits due to broken SLAs.

How are organizations tracking broken Service Level
Agreements (SLA)

Here are three common ways organizations are tracking broken SLAs.

1. Manual tracking

Some organizations use a manual spreadsheet or list of incidents and
credits owed to the cloud provider, including dates and what was promised
by both parties. This method has the advantage of being very flexible, but it
is tedious and error-prone.

Another problem with the manual tracking method is that it’s challenging to get an accurate, timely view of how your organization is doing when you have a lot of different service providers and contracts in play at once. This can be difficult as you have to track your different accounts with multiple providers in one document for each month. It would also be very time- consuming.

2. Use of cloud provider

The second method is using a cloud provider’s native reporting tools to
track broken SLAs; this can be helpful if you are only responsible for one or
two accounts with the same cloud providers, but what if your organization is spread across multiple clouds?

It would not be easy to track all your different versions with various providers in one cloud portal. The cloud provider might have its system track SLAs, automatically updates based on the number of incidents reported by customers or monthly billing data. Some providers will share this information with their customers upon request to reconcile reports from both parties.

3. Use of a SaaS service

Other organizations use the SaaS service to keep their SLAs status updated
and know how many credits are owed for broken contracts. This option
allows you to be notified quickly when something changes in order to
investigate if there is an issue.

This is the best option for organizations looking to track broken SLAs
because it allows them to have a clear view of their cloud spend, spot
issues before they become too costly, and stay on top of new services
being added. Some SaaS providers can even offer reconciliation reports
that compare your organization’s usage with what was promised by the
service provider making tracking broken SLAs much easier and more
efficient.

How many organizations are not following up on cloud credits due for broken SLAs?

It’s hard to know how many organizations are not following up on cloud
credits due to broken SLAs. But we know that up to one-third of cloud computing is not tracked-Its wasted.

Most organizations spend more than a million dollars on cloud services,
and they actually struggle to handle their cloud spend. For example, in
2020, 36 percent of enterprises reported to have spent over $12 million (for
the year), and 83 percent admitted that cloud spends exceeded $1.2 million
per year. This is a huge difference compared to the previous year, where 20
percent of enterprises reported to have spent $12 million for the year, and
74 percent admitted that cloud spends exceeded $1.2 million.

According to another study, public cloud customers in 2020 spent over $50
billion on infrastructure as a service (IaaS) from providers like Google,

Azure, and AWS. The growth in spending has been seen to exceed the
growth in business mainly because a huge part of what organizations are
spending on the cloud is wasted.

Two main reasons why there’s wasted cloud spending

1. Waste due to idle resources

These are resources that are paid for every minute or hour but are not
being used. This is mostly seen in non-production environments such as
development, testing, staging, and QA that only function 40 hours a week.
The rest of 128 hours a week goes to waste, whereas it's already paid for.

2. Waste due to oversized resources

This is where you pay for resources at a larger capacity than what’s
needed. According to a recent study, about 40 percent of instances were
one size larger than needed. If the size is reduced by one size, the cost
could be reduced by 50 percent and by 75 percent if reduced by two sizes.
The top four reasons why companies don't follow through
on getting credit:

1. They don’t know how or where to look
2. Their contract is too vague and difficult to understand, making it hard for
the customer service team to accurately report what was promised by both
parties.
3. There are so many different cloud providers that there isn’t a clear way to
consolidate and track credits.
4. They don’t know whether their cloud provider has a process for getting
those credits back or not.

Conclusion

It’s essential to follow up on broken SLAs and get credit for items that
weren’t delivered as promised. Not taking part in this process leaves money
on the table, costing your organization millions of dollars each year. To
ensure you’re getting what was promised by service providers, start
tracking credits with SaaS tools or another service desk solution that can
provide accurate reports on how many credits are due.

If you’re already suspecting that you’ve been leaving money on the table
and would want to determine if you are owed cloud credits, contact
Innovation20. They will help you know how much cloud credit you should
own and therefore help you get value for your remaining credits.