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".