How to Free Up 15% of Your IT Budget*
By Alex Sukennik
Most of the dollars allocated toward an IT budget are set before the fiscal year starts. Many benchmarks happen prior to the budget season. FP&A look at previous year, compare the overall expense as a percentage of total, possibly look at industry standards around percentage of revenue spent on IT and other various financial exercises. Traditionally 80%-90% of the IT budget is funding what I would call Keeping The Lights On (KTLO). That leaves very little money to do the next two buckets:
- Business Process Automation Investments (how can we optimize our infrastructure by making it automatic), which really helps the business run more efficiently and awards IT kudos for recognizing manual process and introducing elements of process automation.
- Next Generation IP or Critical Investments to drive innovation for the organization. This bucket usually gets very little funding, however this is where the company gets most of the value.
So how can CIO’s and CFO’s find more money to spend on the two critical projects? Usually everyone has to make some kind of a sacrifice and the most prioritized initiative is funded and that group now gets to spend a lot of the year looking for vendors to drive such initiatives. And very frequently the KTLO budget starts to grow, unbudgeted items around SaaS or untimely terminations of agreements manage to hit the budget. There are many give/takes throughout the year but if you are doing a major infrastructure project and there is a delay in migration, sometimes it is tens of thousands if not hundreds of thousands, this SaaS waste could make or break the success of timely completion.
It is clear that SaaS is the future and it is already the present for many organizations. With 34 applications on average in a company (Better Cloud), we know that how we procure, consume, deploy, secure, monitor and manage those platforms is the next wave of issue from an expense management perspective. Thus we at SaaSLicense setup to solve the problem around visibility, management, utilization analytics, predictive analysis, forecasting and budgeting among our other solutions to help organizations eliminate waste from the 80%-90% of their budget in place today.
“If SaaSLicense can find a way to help organizations get back budget from the 80-90% by 10-30% due to waste, that budget can be put towards the areas where IT is needed the most: Business Process Automations and Next Generation IP“
SaaSLicense also sees all of the applications an organization has and can help track renewal timelines and provide action items to the procurement team on what contracts to negotiate hard on and focus on the one’s where there is the highest opportunity for savings. The collaboration between procurement and IT has never been closer as procurement is tasked with eliminating waste from an organization and IT being the Trusted Advisor for all related to technology. We want to take what we do best and apply it to every organization who has SaaS applications so we can identify, save, optimize and manage to lower your overall KTLO burden so you can spend more time on driving what your core actually is.
If SaaSLicense can find a way to help organizations get back budget from the 80-90%, by 10-30%, due to waste, that budget can be put towards the areas where IT is needed the most: Business Process Automations and Next Generation IP. IT can self fund such initiatives. Many CIO’s look to self fund what is needed to advance their vision and we look for things like cell phone expense or internet expense and most recently inefficiency of IaaS at cloud providers like Azure, AWS and Google. When in reality the problem with SaaS waste is sitting right in the KTLO budget with 10-39% of the tools purchased and delivered to users being completely unused. *This could help organization recoup anywhere from 5% – 20% of their IT budget.