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The CIO’s Best Friend: An Accurate IT Inventory That Underpins Organizational Transformation

Key Stakeholders: Chief Information Officers, Chief Financial Officers, IT Finance Directors and Managers, IT Procurement Directors and Managers, Accounting Directors and Managers, Telecom Expense Directors and Managers, IT Operations, IT Strategy, FinOps Directors and Managers

Why It Matters: IT will bleed cash through incomplete inventory management. Organizations need liquidity to save jobs and to survive a recessionary environment.

Top Takeaway: IT has the tools, capabilities, and obligation to create a solid inventory practice that eliminates wasteful spending while providing employees with the right resources and preparing companies for a future of digital transformation

This blog marks the final installment in our series on managing IT in the Time of Corona with an intense focus on inventory, the foundational piece of a strong IT management practice. If IT does not have complete insight into the assets and services for which it is responsible, then everything – expenses, optimization activity, equipment assignments, etc. – is inaccurate and creates waste across the board. 

Right now, halfway through a year fraught with the impacts of COVID-19 and quarantine on a hobbled economy, cash flow is king. All organizations and departments are living or dying by this metric. As I’ve repeated in every blog and webinar since mid-April, IT holds the keys to freeing up cash for the rest of the business, but CIOs and CFOs ignoring the potential savings in IT are doing their organizations a disservice. IT has the ethical obligation to conduct the analyses that expose and correct financial waste, especially in light of the first stage of COVID IT, Survival, where corporate controls took a back seat to basic operations.

The IT Rule of 30 shows that every unmanaged IT spend category (network, cloud, telecom, mobility, SaaS, etc.) contains, on average, 30% in waste. March, April, and May were a perfect example of uncontrolled and unmanaged spend environments. Thirty percent of hundreds of thousands or even millions of dollars is a lot of money, more than enough to bolster cash flow and fund salaries. 

And while the pandemic has created the impetus for finding cash, it’s also bringing to light any aspects of IT that have gone unmanaged. Here’s why it matters.

Amalgam Insights estimates that three-quarters of organizations in the United States have frozen their IT budgets because of COVID.

At the same time, employees who started working from home with little notice and few resources bought applications and other tools, often consumer-grade, without IT’s knowledge – and charged the company. This shadow purchasing means IT has a lot of new inventory to account for and track, and even rein in wherever possible. Cleaning up known and shadow inventory will undoubtedly uncover significant amounts of unnecessary spending the organization can end or repurpose. With that in mind, let’s look at inventory through the lens of telecom, mobility, IaaS and SaaS.

The Nitty-Gritty of Managing IT Inventory

Remember, inventory is the bedrock of expense management. It supplies all the information that feeds into invoices, contracts, and services. Without thorough, transparent, and constantly maintained inventory, the rest of an expense management practice becomes an unreliable source of data and a money-squanderer. IT experts want to avoid this and want to be good stewards of the business, but they need to gain operational and financial control of their technology portfolios. Here’s how to get started:

  1. Centralize all service orders. There’s no way for IT to know what it owns unless it knows what has been ordered. The problem is, mobility, cloud, and bring-your-own everything has led to one-off, hidden, obscured, decentralized service ordering. It’s not just about the volume of orders – it’s the number of people who can submit orders using credit cards and corporate email addresses. IT must implement a single source of truth where employees place service requests or document orders so IT can track every inventory component.
  2. Align service orders to inventory. First, IT needs to figure out whether a service order actually got completed. That sounds basic but it is a shockingly common occurrence. Amalgam Insights finds that IT orders do not get completed for a variety of reasons including problems with billing systems, information getting lost in translation, and human mistakes. Before proceeding to step 3, make sure service orders and inventory match.
  3. Categorize and/or tag inventory. Assign what has been ordered to the appropriate business department and make sure that information lives in various systems throughout the organization. That way, all databases contain the same details. Repositories Amalgam Insights recommends linking to IT inventory include: HR systems, Active Directory, general ledger, single sign-on, IT asset and service management, project management, cloud management, and governance.

    IT can communicate with these systems either directly or through tagging. The overarching idea is that integration aligns inventory change and tags to employee and project changes – and nothing gets lost in the shuffle. We’re all aware of the example of an employee who leaves the organization and whose mobile phone ends up unused in a drawer, even while the cell phone carrier charges for data and service, or who sets up a processor-intensive job with five duplicate instances that never get turned off.
  4. Discover what is missing. To truly understand inventory, IT must understand who is creating the inventory. This is a constant challenge. Anyone with a credit card and an employee ID can place orders. To combat this, think not just about what you’re supporting but the roles that would order the technology you’re supporting. Inventory is a team effort. Knowing that, identify and speak with your key technology orderers to learn why they are ordering phones, SaaS, and other technology services. Find out why they are adding to the IT budget when IT is trying to control costs and how they are governing the services that are ordered. By doing so, IT will learn what tools it hasn’t been supplying to help employees with their productivity. Managing IT is not about stripping staff of resources – it’s about empowering them with the right platforms and equipment, while getting the most for the money spent.
  5. Track, track and track again. Breaking this down, this first means tracking all aspects of inventory features. It is not enough to know that IT has ordered a phone line or a cloud service or an application – you need to know the associated features.

    Second, IT must track logins and usage for all assets and services. Cloud invoicing is like call accounting on steroids for those with a telecom background. Eliminate any and all zombie services that drain resources long after the owner has left the company or project has been completed. In the time of COVID-19, organizations especially cannot afford to pay for something they do not use.
  6. Cross-check invoices with inventory. This one is pretty basic: Invoices and inventory must match. No exceptions. When it comes to telecom, Amalgam Insights sees 80% of bills with at least one error. There is a lot of room for mismatches between invoices and inventory with telecom. Technology vendor marketing and sales departments like to change service names, tiers, and features frequently to provide better deals. But these frequent customizations pave the way for wrong charges.

    IT needs to vet all of its large bills (all bills, really, but especially those most prone to problems) hawkishly each month. For its part, public cloud invoicing and inventory generally have few inventory errors. But the inventory problem for cloud comes into play with shadow IT, or employees placing orders outside of IT’s knowledge (but whose costs still end up on IT’s shoulders). SaaS products, like cloud, feature so much agility that tracking who is buying what and when is hard. At the same time, SaaS companies, like telecom suppliers, change pricing, features, and tiers often. A $10 plan can become a $50 plan, or vice versa, overnight.
  7. Prioritize contracts based on inventory portfolio. This essentially boils down to bringing together two worlds – that of inventory and that of sourcing/procurement. In an ideal scenario, the people in these departments will have a strong working relationship and pool their strengths for the good of the organization.

    Frankly, inventory folks do not care to negotiate contracts and sourcing/procurement managers do not want to track inventory. Melding certain aspects of each unit into the same set of priorities will create benefits including:
  • Replacing obsolete services with new ones
  • Showing where to prioritize negotiations and price discussions
  • Using monthly and quarterly inventory trends to negotiate better rates and services

The biggest takeaway from each of these steps is that inventory is not a standalone effort within IT. It is a team undertaking. Representatives from legal and finance might even need to get involved. So, maintain strong cross-departmental relationships. Keep tabs on who has been ordering, and whether or how ordering has fundamentally changed. Learn each spend subcategory to understand who IT may need to be talking with to pivot or put the kibosh on spending. 

Conclusion: Clean Up Inventories One Category at at Time

Do not tackle every inventory category at once. You’ll quickly become overwhelmed and miss critical details. Start with one bucket and figure out which stage it’s in: Prepare, Herd Cats, or Optimize. 

“Prepare” means getting the inventory across your IT subscriptions up to speed. This includes centralizing service order data, aligning the service orders to inventory, and then categorizing the inventory.

“Herd Cats,” the intermediate stage, requires doing discovery to understand how IT has changed since March, when most organizations in the United States started shifting to remote work. Knowing how resources have been reallocated, added or removed will contribute to contract renewal talks and/or any difficult discussions with vendors. Checking expense management, Single Sign-On, and invoice management solutions will provide guidance on what is missing from the IT view of inventory.

“Optimize” takes place after the first two phases, and ties back to the aforementioned notion of prioritizing contracts, vendors, and spend categories based on inventory portfolio.

This process needs to be conducted methodically, one IT category at a time. There’s a lot of cleanup to do as a result of all the changes caused by COVID. Give the IT department one to three months to accomplish this. I recommended starting this process back in early April to our advisory clients and in late April to our webinar attendees. If you haven’t started yet, clean up the inventory now to take advantage of COVID-related amnesty and goodwill that currently exists across IT vendors.

Get your inventory clean and you’ll save yourself, your colleagues, and the organization a lot of heartache as we all face some hard times. And cheers to you, IT, for doing so much to free up cash, and save and bring back jobs. In many ways, you are unsung heroes. 

***If you are seeking outside guidance on finding solutions to help manage your IT environment, Amalgam Insights is here to help. Click here to schedule a consultation.

***To continue your trek as an IT hero, join us at TEM Expo, which is still available at no cost until August 12 to learn more about how to prepare for COVID IT and take immediate action to cut costs. I especially recommend watching Andi Pringle’s session on The Art of Inventories, Robert Bracco and Dana Risley’s session on IT Financial Management, Shane Hansen’s session on Cash Management, Robert Lee Harris’ session on Cloud Savings Cost Management, and our Executive Panel on the Future of the Technology Expense Management Market.

***And if you’d like to learn more about this topic now, please watch our Amalgam Insights’ webinar on Inventory.

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Why CIOs and CFOs Are Wasting Money With Poor IT Service Order Management

Key Stakeholders: Chief Information Officers, Chief Financial Officers, IT Finance Directors and Managers, IT Procurement Directors and Managers, Accounting Directors and Managers, Telecom Expense Directors and Managers, IT Operations, IT Strategy, FinOps Directors and Managers

Why It Matters: Poorly managed ordering on IT subscription services leads to as much as 5% waste in the overall IT budget. During COVID-19, especially, this level of overspending cannot continue and can be quickly remedied.

Top Takeaway: Following Amalgam Insights’ recommendations for IT service orders provides a way for IT to bolster the organization’s overall cash position.


When it comes to reducing technology costs, service order management stands out as perhaps the most overlooked area. Few CIOs and CFOs consider their IT service order processes when trimming expenses, which is part of why Amalgam Insights estimates 90% of CIOs will end up missing opportunities to effectively cut costs without harming their environments. IT, finance, procurement, and operations must correct this unintentional neglect now. Analyzing and adjusting service order management practices will contribute significantly to trimming spending and saving jobs during the COVID-19 pandemic.

How Much Waste Results from IT Service Ordering Issues? 

On average, companies lose or waste IT subscription outlay to the tune of 2-5%, because of poor service order management. This blog delivers guidance to empower IT and its cohorts in attaining the strongest cash position possible for the organization. This will prove critical as the coronavirus crisis continues to generate uncertainty, fear and doubt.

A Quick Primer on IT Service Ordering

Most businesses remain in the second and third stages of COVID IT.

Amalgam Insights’ 6 Stages of Managing COVID IT

Acting on the insight here will assist in getting closer to Stage 4, where IT moves into more strategic activity. Reaching that phase, though, requires following the directions for controlling Corona and quarantine-related issues that Amalgam Insights has consistently laid out in our series of blogs and webinars.

There is a specific route that leads from procurement to payment. The nine steps comprise:

  1. Purchase identification
  2. Purchase request
  3. Purchase approval
  4. Service order or request creation
  5. Service order approval
  6. Service provisioning
  7. Service level agreements
  8. Invoice processing
  9. Payment processing

The biggest risk for leakage lies in steps 4, 5, and 6 – so that’s where this blog focuses. Before we go further, though, be aware that momentum on the third step, purchase approvals, is slowing. The deeper the United States gets into the pandemic and a recessionary environment, the harder it will become to obtain permission to buy resources. I expect companies to lock down any spending that exceeds .001% of total bookings in a billion dollar company, which equates to a $10,000 purchase. These are the purchases that will require C-level approvals. All in all, expect purchase approvals to remain tight for the rest of 2020, and probably into 2021.

Still, IT can pitch in to mitigate overspending by eliminating that 2-5% of losses and waste I mentioned, as it relates to poor IT service order management. Correcting that situation begins with acknowledging that IT service orders differ from standard service orders.

For instance, IT must verify the order has been placed correctly with each provider or vendor based on the vendor’s terminology and proper technical terms, then understand what service order approval status means, and then shift to handling the physical and virtual aspects of provisioning associated with each service order.

In other words, IT service orders demand technical skill, especially for subscription-based services, including IaaS, SaaS, enterprise mobility, and landline telecom and networks. The people with that expertise need to ensure the orders adhere to the ABCs: Active, Billed, Compliant.

What Does Active Service Ordering Mean?

Active service ordering means tracking the order to be certain that functionality, billing, and integration are all active and in place. This gets especially complicated with networking and cloud infrastructure services. Taking networking as an example, network service can be combined with ports, physical infrastructure, security, network management, and other components; each element needs to be tracked.

The same goes for cell phone service orders. IT needs to track not just the device itself but also rate plans, features, access permissions, and applications.

An active service, then, meets these criteria:

  • Technically functional
  • Physically deployed
  • Proper billing plan in place
  • Has the proper start date
  • Accounted for in all relevant systems

Functional checks require a holistic view as IT can’t verify a service’s functionality without also validating all integrations and billing plans. Determining functionality is easiest with a SaaS or mobile application – you just log in and work. With network and IaaS, this grows more complex. Network services have physicality – trenches to dig, cable to install, and extensions to wire and program. Each of these services needs a combination of functionalities to run for a service order to be completed. And this is why technical skill is needed: Tracking down all those functions is difficult if someone doesn’t know what the service entails or how it is implemented.

Make sure an active service fulfills the five benchmarks above before moving to the next step: Billing.

What Does Billing Mean in the Context of Service Ordering?

Here, IT must evaluate whether the service order is assigned to the right office, region, cost center, project, and stakeholder. If any of those points misses the mark, expect to waste or lose money. And since that is not an option, here’s how to accurately translate service orders into billed services:

  1. Check rate units. Whatever the unit is – kilobytes of data, minutes used, etc. – make sure it is correct.
  2. Check the time. For example, ensure a cloud service bills for 30 days or 720 hours (or 730 if dividing 365 days into 12 months). Amazon Web Services recently billed more than 1,000 hours per month for some services. A 30-day month does not contain 1,000 hours.
  3. Check service names. Companies change service names, rate plans, dimensions and features for services, and even do wholesale offering alterations. When this happens, confirm whether the services match contractual obligations, including discounts and service level agreements. Often when marketing makes a decision, the vendor does not update its systems or is unable to replicate marketing promises within its billing systems. And errors occur.
  4. Check cross-charging and tagging. Evaluate whether the charges and tags across departments align with the correct departments, users, locations, and projects. This data flows into cost and inventory management, too. Amalgam Insights highly recommends making those practices much simpler and smoother by doing things right the first time. This will avoid constant, retroactive cleanup.
  5. Check the start date. Compare the start date with the bill and actual activity. It’s not hard or uncommon for days and weeks to get messed up or to use an American date format rather than a global format (Does 11/7 mean July 11 or November 7?). Plus, a vendor might accidentally charge for a service that didn’t provide or that was supposed to be bundled into a package or a larger umbrella of services. 
  6. Check the taxes, tariffs, discounts and other surcharges. Our next blog goes into more detail on this topic. For now, make sure IT knows how service orders fit into the regulatory obligations for which it is responsible. 

The Importance of Compliance in Service Ordering

Finally, it is incumbent upon IT to ensure compliance – making sure each service is governed, compliant and secure.

This gets difficult. Each IT subscription service has its own set of governance, compliance and security tools. In addition, different states, countries and regions feature their own requirements. Naturally, all that – and, ultimately, compliance – looks different in the case of each technology type:

  • Network – Requires monitoring, security, project management, and telecom expense management. 
  • Enterprise mobility – Must have unified endpoint and wireless expense management as part of an enterprise mobility management program.
  • SaaS – Needs SaaS operations management, single sign-on.\, and software-asset management.
  • IaaS – Needs cloud access security broker protections and cloud service management.

Frankly, these considerations build a solid argument for centralizing order sourcing. Everyone who orders a service outside of corporate or IT policy will be liable for ensuring compliance – and no one truly wants that responsibility. IT must educate employees accordingly and enforce processes for service ordering. 

Conclusion: Bringing It All Together

IT must know the technical aspects of what makes a service active; the financial and accounting aspects of what makes a service billable; and the security and legal aspects that make it compliant. All these factors will vary across IT areas. Thus, some level of technical acumen is absolutely necessary. If operations handles service ordering, for instance, then have someone with the technical expertise review orders before proceeding. Abiding by all this advice will help IT drive its service orders to active, billed, and compliant end states and close that 2-5% waste gap.

This introductory blog is a starting point for managing service orders. If you are seeking outside guidance and a deeper dive on solutions and vendors that can help you manage your IT environment, Amalgam Insights is here to help. Click here to schedule a consultation.

***Join us at TEM Expo, available on-demand until August 13 at no cost, to learn more about how to prepare for COVID IT and take immediate action to cut costs. In context of this topic, Amalgam Insights recommends watching sessions by Denise Munro on Taxes, Fees, and Surcharges, Wayne Webers on The Trouble with Technology Expense Management, David Schofield on Maximizing Wired and Wireless Negotiations, Shane Hansen’s presentation on Cash Management, and Larry Foster’s presentation on Explaining the Value of Technology Expense Management.

***And if you’d like to learn more about this topic now, please watch our webinar on Service Order Enablement.

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Are You Benchmarking Your Technology Environment? If Not, Start Now

I’ve spent the past three months showing IT, finance and procurement leaders ways to think and act strategically during this unprecedented period of COVID IT management through our series of BrightTalk webinars, our 15-session virtual event Technology Expense Management Expo, and in discussions with many of Amalgam Insights’ subscribers.

In this blog, I am going to switch gears into some tactical guidance for overseeing technology on a day-to-day basis based on both my practitioner background and a set of interviews I conducted for a recent research initiative on benchmarketing technology management initiatives. This tactical advice is critical as IT does its part to eliminate as much spending waste as possible so the organization can save or bring back jobs. Within each enterprise, nonprofit, government agency, or other organization, IT has the power and the responsibility to cut IT costs and save jobs. Benchmarking technology environments will go a long way toward achieving that goal. 

A Quick Review on COVID IT

Amalgam Insights sees the IT department as a primary steward of the business with the tools, insights, and ability to save money that the organization may turn around and use to fund salaries or stockpile. When IT can find and remove $100,000 or more in unnecessary spending, it has conserved enough cash needed to bring back a job. Cash management and job creation are the crucial mandates in 2020. 

Getting to that point demands effort. Since April 2020 when COVID became a core driver for technology, I’ve been hosting webinars and writing blogs that give IT, finance, and procurement leaders a roadmap. As a short refresher, start by following the IT Rule of 30, which states that every unmanaged IT spend category (network, cloud, telecom, mobility, SaaS, etc.) contains, on average, 30% in waste. 

Make sure you have exited the survival stage of COVID IT and entered Stage 2 (securing the business) or Stage 3 (auditing the environment). At this point, savvy organizations have already benchmarked their current technology environment compared to their pre-COVID spend, as Amalgam Insights recommended completing this stage in the first three months of COVID quarantine to maximize savings. But if you haven’t started, the time to do this is now. Benchmarking will provide a clear picture of where the organization can get rid of waste and make sure that IT, finance, and accounting professionals are taking appropriate measures.

Making Technology Expense Management Productive: Start With the Invoice

Expense management practices start with invoice management. Approaching this domain with poor discipline and consistency results in immediate lack of control. As a starting point, the cost of processing technology invoices exceeds that of handling a standard invoice for almost any other part of the organization. Amalgam Insights estimates that the average IT subscription invoice costs between $35 and $95, which is far above what the average business invoice costs. Cloud, telecom, SaaS (Software as a Service), and mobility invoices come with an extreme amount of detail. Combing through these bills for inaccurate charges consumes time and attention. For the most part, organizations estimate the cost of standard invoice processing at $5-$10 per invoice; this accounts for labor, office supplies, and due diligence. The value for processing IT invoices, however, can run as much as ten times higher.

Why? IT invoices feature so many more line items, surcharges, taxes and fees than others. Amalgam Insights recently interviewed 17 organizations to better uncover the situation. We found that the base invoice processing cost stands at $10 and can go up to $20.

Then, there’s another $10-$30 for parsing, or digging into all the line items. (Incidentally, we discovered that telecom analysts managed an average of 645 line items per hour during manual audits. Within those records, our clients identified dispute points worth between $306 and $800. All this speaks to why parsing is so difficult and how it increases invoice-processing expenses.)

For various reasons, most of these businesses’ unmanaged bills had incurred late fees. That added $15-$45 per invoice. (More on late fees below.)

On top of all that, much of the technology billing world has no standardization, especially in the cloud world. So, confusion around naming conventions can contribute to delays in processing – which brings up another issue. Nobody spends all their time painstakingly reviewing every single line item on an IT invoice every single month. Such a task goes beyond the scope of peoples’ time and capability, especially when they oversee tens of thousands, or even hundreds of thousands, of line items each month.

(Pro tip: Amalgam Insights recommends organizations take advantage of automating technology expense processes or engaging managed services for spend over $1,000,000 per year. Use a solution, software, or service to automate and offload processes to interpret invoices and support data synchronization. This removes burden from the IT staff, and greatly improves accuracy and cost recovery.) 

When considering all factors, the cost of a single IT invoice can work out to anywhere between $35 and $95, or three to 10 times more than a standard invoice.

Invoice Management: A Note on Late Fees

The average IT bill amounts to between $1,000 and $4,000. Of course, there is a broad variation that can reach into the millions of dollars for large accounts. On the flip side, the IT department can receive small, one-off bills each month. Think of all this information from a late-fee perspective. Late fees inflate bills by 1.5-2%, which quickly adds up. Addressing this issue alone will save the organization a significant amount of money each month.

Pro tip: IT vendors often send bills late, which increases late charges. The technology invoicing world is notorious for being inconsistent in terms of quality and timeliness. Amalgam Insights recommends IT departments correct this problem through contract negotiations. Include invoice timeliness and thoroughness as requirements for doing business.

The Importance of Dispute Management, The Right Way

I briefly mentioned disputes earlier. Contesting charges can be a profitable exercise. In fact, recovering money that should not have been spent contributes to the IT department’s overarching benchmarking objectives. But this needs to be done with cost-effectiveness in mind. Going after small dispute amounts one at a time will squander time and expertise; it will add waste. Don’t try to chase down every little dollar when more meaningful ones lie in wait. Instead, create a process for small disputes. Identify buckets. In other words, look for similar issues on other bills. Then, group them all together. Once their dollar amounts reach a predetermined threshold, then it’s time to initiate disputes.

Consider this: Amalgam Insights found that one time-consuming dispute can eat up to $20,000 worth of internal labor. That’s because the process can take several months. We’ve seen spans of six months or longer. And, these disputes pulled in people from a variety of departments – accounting, IT, legal, tax, finance. Therefore, understand the resources needed for a dispute – and make sure the dispute matters.

Inventory: A Key Step in Benchmarking Technology Expense Management

The IT department must track inventory on a regular and frequent schedule. Performing a new audit every 18-24 months or leaving an inventory to become stale over multiple years only contributes to more problems and drives up expenses. Instead, institute monthly inventory management, preferably with the help of technology management software, to stay abreast of every device, service, service plan and assets within IT’s purview. 

Take mobility as a prime example. Keeping track of 10,000 devices each month runs about $8,100 without specialized software or services. This amount does not include costs associated with actually managing the devices from support, security, or other perspectives. This level of management accounts for knowing who has what, with no greater detail. However, IT resources require ongoing management to retain an accurate expense and inventory state. Sticking with mobility as our example, IT must tweak data plans and features often to prevent unnecessary spending. It also should examine upgrade cycles, and apps permissions. 

As I’ve stated, automated technology management is crucial here. Without it, IT is looking at even more complicated inventory and invoicing problems. Yes, IT could just have a vendor help with an audit now and then. But those audits will start at $20,000 or more when based on contingency pricing if you’re working with a qualified auditor. In most cases, technology expense management software pays for itself, and, when used properly, maintains up-to-date inventory to save money and imporve operational flexibility.

Pro Tip: Opt for Managed Mobility Services

Many organizations try to do their own mobility management. This can work out all right with only a few hundred or so devices. But when we’re talking a substantial number, 1,000 devices or more, it’s really time to use a vendor. Managed mobility services (MMS) providers have infrastructure, people and processes that individual IT departments cannot replicate or rival. And they can scale to meet demand in ways that IT units also cannot. Because of this, the cost of using an MMS vendor rather than an internal employee actually goes down. Amalgam Insights has found that core mobility management services of expense management and basic service order management done in-house ranges from $7-$10 per device, per month. Conversely, turning over that responsibility to an MMS provider reduces that amount, on average, to $3-$6 per device, per month. This saves money and frees staff to focus on much more strategic areas of IT. The decision is a no-brainer. 

Conclusion: Top Takeaways for Benchmarking

To recap:

Remember, IT invoices cost between three and 10 times more than standard invoices. Amalgam Insights states that IT subscription invoices cost between $35 – $95 per invoice to process. The accounting/accounts payable departments need to be very aware of this reality. And to be frank, IT organizations that do not take this time to process invoices are losing money as low IT invoice processing costs indicate failure to conduct important due diligence. 

Pursue single disputes worth $500 and up. Pool the small disputes until they add up to this amount, or more. Then go after recovery. Otherwise, they are not worth your time.

Look for late fees of $30 and higher per invoice. This will serve as an excellent starting point for getting unmanaged IT spend in line. Depending on how many invoices with late fees the IT department has, fixing late fees alone can turn into quite a slush fund.

Keep in mind: invoice management comes to about 40% the price of one-time audits. In other words, it is cheaper, and far more efficient and organized to maintain inventory management. Do this every month by making it a part of the expense management process and by obtaining or creating software tools to support your IT costs.

Consider outsourcing. Compare your current total cost of ownership on managing mobile, telecom, cloud, SaaS and other IT services in house to the cost of using a vendor. Chances are, the IT department will save a significant amount of money by using a partner that can scale and that knows service management inside and out.

Following each piece of this guidance will allow the IT department to benchmark the technology environment, and contribute to the organization’s aim of saving cash and jobs.


If you are seeking outside guidance and a deeper dive on your IT environment, Amalgam Insights is here to help. Click here to schedule a consultation with our analysts.

Join us at TEM Expo, now available on-demand until August 13 to learn more about how to prepare for COVID IT and take immediate action to cut costs. Associated with this topic, we recommend watching sessions by Andi Pringle on the Art of Inventories as well as Denise Munro’s session on the challenges of taxes, surcharges, and fees. 

And if you’d like to learn more about this topic now, please watch our webinar on benchmarking your IT management practices.

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Why It’s Critical to Understand IT Finance – Not Expense Management – in the Time of Corona

As organizations throughout the United States look toward a third quarter of COVID-influenced operations, it’s imperative to keep considering all the ways IT can act as steward for the business. Over the past couple months, Amalgam Insights has provided guidance for moving from survival mode to functioning in ways that conserve cash and save jobs. We’ve hosted webinars and published blogs covering everything from adjusting network resources to managing the nitty-gritty of cloud expenses. 

Now we begin to pull all of that together for a bigger picture. IT must support all newly remote staff as well as all network, mobility, cloud and SaaS costs, and stand accountable for every decision. And because it appears COVID-19 will be around for some time, the pressure to perform is nowhere near close to relenting. With the reality of another 6-12 months of operational challenges similar to what we currently face in this pandemic recession, Amalgam Insights aims to help IT level up to best prepare for top-level financial discussions. IT already handles expense management. Now it’s time to elevate, and understand and speak the language of IT finance. 

Clearing up Confusion

Before we go too far, let me clarify the term “IT finance.” Just because someone touches IT costs or expense does not mean they do IT finance. Most expense analysts work either with accounting or sourcing personnel, but rarely speak with the planning and budgeting personnel who hold the power of the purse. Expenses are the tactical, day-to-day entries that finance uses to calculate more strategic business metrics, such as cash flow, income, and business projections.

IT finance cares about the expense manager’s role to cut unnecessary costs and improve the organization’s cash flow based on the IT Rule of 30. Every unmanaged IT spend category averages 30% in waste. Waste crops up in circumstances including mergers and acquisitions, layoffs, furloughs, project changes, shifts in technology commitments, and so on.

In general, and the following will vary depending on vertical and profit levels, IT can save around 1% of bookings, which is equivalent to 5-6% of payroll or 15% of operating margin in the average enterprise, by cleaning up technology across the organization. How do you do that?

Review our blog on the 6 Stages of Managing COVID IT, as well as the subsequent insight we’ve provided. The takeaway now is that everyone should at least be in Stage 2 or 3.

Stage 1, in April, was all about survival. End users did what they needed to make sure they could work from home. Much of this they accomplished without following company policy. That’s valid and it’s okay. Still, the time has come to clean up, and enable and empower everyone to make good decisions. Part of that mandate includes making sure IT delivers insightful, meaningful input to CFOs and controllers. That’s where IT finance comes in.

What Is IT Finance?

Simply put, IT finance creates a shared vision of corporate health among IT, finance, and the rest of the business by looking at the planning, budgeting, and forecasting activities that highlight how people are using IT. That translates into giving employees the tools they need and aligning IT with revenue and key business goals. IT finance includes the following metrics that demonstrate what is happening with the costs that are saved or controlled through expense management:

  • Income: This is actual profitability based on receipts, Cost of Good Sold (COGS), SGA (Selling, General, and Administrative) Expenses, debt interest, and other relevant inputs.
  • Cash management: This deals with monthly cash flows and reflects the company’s current cash position and ability to conduct day-to-day business. IT departments in touch with finance can ask if cash can be reallocated back to IT or to other parts of the corporate budget while IT departments who are not part of this discussion will simply be treated as cost centers to be slashed to the bone.
  • Business outcomes: This gets into return on investment and payback periods (more on these topics below). The information tied to business outcomes justifies IT’s investments. 
  • Budgeting and forecasting: These practices show how IT costs are measured, and how they reflect demand within the organization.

Further, IT finance looks at cross-charging for IT assets and services to create more granular business plans and forecasts. This plays into the point about how end users put IT to work. To assess this, IT finance pinpoints every user/owner, cost center, profit center, department, location and project tied to each asset and/or service.

(Pro tip: Waste easily occurs when a user/owner moves among departments or leaves the organization, or when someone else takes over a project or resource. IT must record all such changes as it exits survival mode. Doing so not only will eliminate unnecessary spending, it also will provide the details for tracking how each cost rolls into the organizations’ finances.)

Understanding IT Finance’s Key Metrics

To speak the language of IT finance, it’s critical to know and present the following key metrics:  

  1. IT as Percent of Revenue. This metric displays the IT budget as a percentage of the organization’s overall revenue – all sales, receipts, etc. It then looks at how much of that revenue goes toward IT. Core IT tends to rank around 3% of an organization’s revenue with a great deal of variability based on verticals, geography, and company size.
  2. Operating Margin. Next, analyze actual profitability. On average, US companies average a profit margin of about 7%. Whether your margin is 1% or 20% makes a huge difference in what needs to happen operationally in planning your IT budget. 
  3. Payroll as Percent of Revenue. Taking the IT Rule of 30 into account, this metric means there is a chance to affectds 5-6% of payroll, on average. Controllers, CFOs and their teams may not spot this as an obvious opportunity, so IT must point this out and speak the language of finance.
  4. Return on Investment. This metric presents the ratio between net profit and investment cost from a project perspective. Many IT departments only know how to present either raw cost or the Total Cost of Ownership to their leadership and are poorly equipped to demonstrate or articulate potential business opportunities in the language of finance.
  5. Cost of Capital. This is how much it really costs the organization to use money and is typically tied to a company’s realistic expectations for growth over the next year.
  6. Net Present Value. Your finance team uses this metric already (and the next one) to identify opportunities. Net present value essentially boils down to discounted cash flows associated with a project, portfolio, or use case. 
  7. Internal Rate of Return. This metric estimates the profitability of an investment and can be used by finance to list a variety of projects across all areas of the business to determine which are most profitable.

Finance experts rely on the last two, NPV and IRR, extensively. Therefore, IT must provide these metrics because they help CFOs to understand everything in front of them – all the finances related to IT, HR, operations, sales and marketing, and so on. If IT does not provide NPV and IRR, the department will fall a step behind all the other lines of business that are treating their outputs in language finance understands. IT has the immense power to save jobs, the ultimate goal of 2020, but needs to articulate these opportunities in mature business terms.

Exploring ROI and Payback Periods in More Depth

Return on Investment and payback periods justify IT investments. For IT to get new technology funded, IT has to convince executives to fund technology that will support remote work and employees’ subsequent productivity and, as a result, boost the organization’s profitability.

Off the bat, know that “ROI” often gets misused. What means most to finance is the net return on investment; this is always a percentage. ROI on a project, then, must tally higher than the cost of capital.

(Pro tip: If IT cannot speak to how the ROI is higher than the current profit margin/rate of return, then finance will not sign off on an initiative. Another pro tip: Do not stretch ROI over too much time (i.e., 3, 4, 5, years). In fact, in today’s environment, anything with a payback period over 90 days is suspect and any ROI calculated over more than two years is making assumptions that nobody can truly predict. Address this situation by providing information on payback period.)

To that point, the unique circumstances of 2020 mean it is easier to look at spending from the view of payback period, or the time needed to get money back. As of right now look for rapid payback of three months or less. Anything more than that for the foreseeable future will make it harder to gain leaders’ buy-in.

Ways to Contextualize IT

Finance professionals assess three different categories to contextualize money. Really grasping the difference among these will give IT the acumen to rise from an expense to a finance mindset. As such, they are:

  • Income statement
  • Balance sheet
  • Statement of cash flows

Income Statement

This is the income the company (or department) has. Make sure to parse the difference between gross and net income. The latter represents cost of goods sold, sales and administration, and research and development; the former shows what the organization brought home. Note, however, that at this moment in history, finance experts are not so wrapped up in income/profit as a key metric. That may sound counterintuitive from a common-sense perspective but profit does not indicate cash on hand. Yes, profit influences valuations and stock prices, but throughout 2020, cash is king. Net income will help IT to show how its savings support bottom-line results.

Balance Sheet

These are all the assets and liabilities within the company (or department). The most common metric for showing this is Capital Expenditures (CapEx) vs. Operational Expenses (OpEx). From an IT perspective, show how spend plays into the CapEx and OpEx budgets. In the era of digital transformation and cloud, much of an IT department’s outlay will fall under the OpEx umbrella – which finance leaders often prefer. There is no depreciation or amortization associated with OpEx spending. In many cases, OpEx spending lends itself more easily to return-on-asset discussions. Though OpEx IT spending amounts to renting a service or asset, OpEx avoids the depreciation and inevitable replacment costs that CapEx provides (although OpEx spending comes with its own risks, such as uncontrolled usage). At any rate, providing data about return on assets can help finance understand in even more detail what IT is doing.  

Statement of Cash Flows

Cash flows show what is coming into the company (or department) and leaving it. 

This is the most essential context finance needs in 2020.

I cannot overstate this.

Organizations are living and dying by cash on hand. Do not just talk about cost optimization and moving CapEx expenses to OpEx. IT must know how all spending affects cash flow and be able to discuss that coherently and clearly with finance leaders.

Immediate opportunities to improve cash flow can be as extreme as paying bills late or asking for a bill “holiday” from vendors to keep cash in the interim. This is an artificial solution for maintaining cash in the short term if needed, and this level of cash management must be set up delicately with both executive approval and prior communications with vendors.  

Conclusion: Top Takeaways for IT Finance in 2020

To prepare for fruitful IT discuusions with the office of the CFO, address on the items on this checklist:

Act on the IT Rule of 30: This is the primary way to reduce costs in unmanaged areas. It’s especially important to apply this rule to cloud IaaS and SaaS because those are the two IT areas growing in 2020; all else will shrink by 5% or more.

Define ownership for all assets and services. Again, this is a clean-up exercise. Accept that shadow IT ran rampant throughout March and April and get to work fixing the mess.

Remember that finance amounts to more than cost management. Finance entails planning, income, cash flow and understanding how money is used in the organization. This goes far beyond basic costs and billing management.

Create a shared vision for corporate health. Now is the time to figure out what it means to cut costs responsibly to save and bring back jobs. IT and finance professionals need to work together on this. Be proactive, not reactive. 

Know how IT costs can affect key statements – income statement, balance sheet, and statement of cash flows. IT must understand how IT costs affect the business as a whole and when IT investments can exceed the value of their cost. This will make a big difference in discussions with finance professionals and allow IT to understand its impact on the company. IT professionals who just talk about costs and expenses without any context of potential value and business growth reduce their impact on the business because they position IT as a commoditized cost center. Basically, they sell their departments short. Provide context for what you’re doing.

Finally, provide the relevant metrics to justify IT investment. Right now everything has to be about cash management and saving jobs. Anything beyond that is nice if you’re one of the few companies going like gangbusters. But for most organizations, immediate payback period and cash are indispensable. Think about what will make an impact in 2020.


If you are seeking outside guidance and a deeper dive on IT Finance, Return on Investment, and making the IT case to Finance, Amalgam Insights is here to help. Click here to schedule a consultation.

Join us at TEM Expo available on demand until August 13 at no cost to learn more about how to prepare for COVID IT and take immediate action to cut costs. In context of this topic, we recommend the following sessions: Robert Bracco and Dana Risley of MobiChord speak on the role of IT Financial Management, Planful CFO Shane Hansen speaks on the importance of cash management, and our Executive Panel digs into the IT Finance as a strategic tool for escalating the IT professional.

And if you’d like to learn more about this topic now, please watch our webinar on IT Finance.

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Executing the IT Rule of 30 Through Invoice and Payment Processing

COVID-19 and the worldwide shift to remote work has, perhaps irrevocably, changed IT. Before the pandemic, the IT department may have let some costs and shadow technologies slide. But now, there just isn’t room for slack. 

In this installment in our series on COVID IT, Amalgam Insights looks at payment and invoice processing issues. This is a key area for IT, finance and sourcing/procurement to clean up together. The more waste the organization eliminates, the more cash it can save and the more jobs it an bring back – two main goals for any business in a recessionary environment. With that in mind, read on for more best practices that will help IT and its line-of-business counterparts navigate rough waters and steer toward recovery.

‘Normal’ No Longer Cuts Muster

Even in “normal” times (remember those?), IT lost a lot of money through inaccurate and unchecked invoices. Now, though, the situation has worsened. Since March, when the coronavirus pandemic started affecting most of the United States, IT experts found themselves adding and removing accounts galore. Either people had been laid off and IT needed to make the resulting changes, or people required more technology to support productive work-from-home experiences (and some of these extras slipped past IT’s notice – i.e., shadow IT). Either way, the chaos intensified. 

Speaking of remote work, Amalgam Insights estimates that 42% of employees (over 60 million workers) in the United States no longer go to an office. That’s compared to an estimated 8% at the end of 2019. Clearly, COVID-19 has changed the nature of work for months or years to come. 

For IT, the trickle-down effect comes in the form of shifting technologies to accommodate secure remote access, while simultaneously devoting attention to stringent expense management. This blog focuses on the latter issue; go here to read about the former. So, the best way to start paring and streamlining costs? Act on the IT Rule of 30.

The IT Rule of 30

The IT Rule of 30, based on our experience and research, states that every unmanaged IT subscription spend category – mobility, telecom, cloud, SaaS, you name it – averages 30% in waste. If your organization spends, say, $1 million a year on technology subscriptions, odds are that $300,000 is unnecessarily going out the door. Across all IT spend categories, this waste typically makes up 1% of bookings or 6% of payroll. In other words, that money amounts to salaries and/or cash that could (should) have been conserved. 

Consider this, too. Every time a new technology or configuration of a technology (Bring Your Own Device for mobility, for example) enters the organization, the IT Rule of 30 comes back into play – even if expense managers have addressed existing spend categories. The work is never really done.

A Refresher: Where Are You in the 6 Stages of COVID IT Management?

Let’s step back a little. Before you can make much more progress, it’s important to know where your organization stands in the 6 Stages of COVID IT Management. In theory, by mid-May, the business would have just finished up Step 1, or Survivor: Shadow IT Edition, as we like to call it. By mid-June, organizations really should have reached Stages 2 and 3 – securing the business and auditing the environment.

The bills IT received in May will reflect the first full month of COVID-based charges. And that’s where up to half of your savings may be hiding, in plain sight. If you’re conducting month-over-month invoice reviews (which most IT departments are unless they’re just super disciplined), follow the guidance below for uncovering a whole slew of savings opportunities.

  1. Compare February, March and April invoices. Spending amounts will have fluctuated. Some areas will show increases while others will have gone down. Take note of the spending variances across these three months. 
  2. Check changes in accounts, features, and usage. Here, for instance, cloud resources dedicated to the headquarters office may show precipitous declines in usage because nearly everyone, is working off-premises. Conversely, as another example, you likely have a leap in mobility and SaaS accounts, features, and consumption that needs to be reconciled.
  3. Identify abandoned technologies. “Abandoned” often translates into what is commonly known as “zombie” services, features and devices. Look for zero-usage services and equipment and any associated features. Typical suspects include old projects that have long ago wrapped up or devices assigned to an employee no longer with the company.

    On a granular level, zero usage is harder to detect when employees have more than one device. And from a cloud perspective, the sheer amount of invoice detail can stymie even the most attentive IT expense expert. Automation and other tools come in very handy – but more on that in a bit. In terms of technology substitutions, employees may have swapped out one SaaS platform for another, but the organization continues to pay for the old one. In fact, this situation helps create an environment of duplicate types of services.

    For example, organizations are supporting more video conferencing platforms than they need. Survey your internal end-users to understand which services are most useful and functional and then narrow down options based on true employee need. Invest the most with the most useful platform and then use that as an opportunity to boost contract-term negotiations with the chosen vendor.
  4. Detect duplicate services: On a similar note, regarding duplicate services, explore what’s hiding in the IT shadows. During the scramble to remote work, a lot of staff brought their own apps to the corporate environment. Either security measures barred their accesses or they just couldn’t use the organization’s required counterpart for some reason, so they made sure they could perform their jobs by introducing their own technologies. The organization may be paying for some or all of these shadow IT resources. Determine what can be eliminated or condensed.

    And use this time as a chance to build teamwork among expense-management colleagues as well as at-home employees. The idea is not to alienate anyone or make their jobs more difficult. IT must do what’s best for the organization all around. Pro tip: If you find a zero-usage service or device on April invoices, that’s a big sign the asset needs to go. If no one capitalized on it mid-quarantine, it’s unnecessary. Do not wait for three months of zero usage on invoices to get rid of these money drains. Make a difference in the organization’s cash position now. There is no place for complacency amid this pandemic.  
  5. Assess usage issues in greater detail. With zero-usage considerations out of the way, next look for overages. These will mainly show up in the mobility, SaaS, and cloud categories. Check out categories of usage that are typically either capped at a low amount of usage or priced at an exorbitant rate compared to normal services. For instance, that $10 base monthly charge may sound like a great deal for a mobile phone plan, but if it only comes with two gigabytes of data and your employee is using 100, that deal is likely to hurt your budget. Also look for geographic usage costs associated with roaming, transfer, and multi-region service usage.
  6. Analyze Your Usage Data. If the IT department doesn’t already have a way to analyze data without overloading a person or a team, it’s past time to get one. This can be a system, a detailed algorithm, or a managed service provider with the requisite capabilities. There’s so much information to cull through and decipher – and then there’s the important follow-up work, including sharing results and strategies with procurement, finance, and other colleagues. Implement automation that scales alongside your needs because the amount of data to analyze will only keep growing. 
  7. Don’t overlook taxes, surcharges, fees, and discounts. If cash becomes a real issue for the organization, these areas will prove crucial to evaluate. And even if your cash position is stable, there is no reason to pay for something you shouldn’t. First, check the accuracy, validity, and consistency of taxes and surcharges. Respond accordingly to clean up where necessary. A $5 charge 5,000 times adds up to a big deal. Then get with the account manager for each major vendor to find out what flexibility there may be for late fees.

    Next, determine whether any minimum annual revenue commitments are at risk because corporate assets went underused in March and April. Chances are, shadow IT compromised these contractual obligations. When talking with the vendor, you may be able to invoice “acts of god” circumstances that will alleviate fines or fees. Finally, make sure discounts match agreements made with vendors. Discounts can show at the line item, service, or account level, and therefore be hard to pinpoint. Expense and sourcing/procurement should work together to make sure discounts are showing up as expected. If they are not, initiate the dispute process. Above all, be proactive, not reactive.

If Your IT Organization Is Mature, Do This

The previous recommendations mostly apply to departments that need to refine their operations or that spend most of their money in an ad hoc manner; as a result, they review invoices each month. If your organization does not fit into that profile, it’s probably pretty mature. This means all IT services, devices, and other assets already are cross-tagged across categories including geography, cost center, project, and so on. It further means you can then talk with the assigned owner about the necessity of the service or asset with the goal of helping to drive IT strategy and working with your finance team on zero-based budgeting exercises and continuous planning exercises.

If All Else Fails, Go to Extremes

Finally, IT may need to resort to some extreme tactics during this recessionary environment, especially if the financials for the second half of 2020 are looking more dire than the first. If matters get worse, IT may need to do some or all of the following:

  • Reduce payments or pay late. This could go one of two ways. Say you reduce payments by $10,000 per month, but make a deal with the vendor that it will get that money at some point in the future. This may not be possible. However, if there is a way to balance the scale later, as it were, once revenue returns, the vendor could view this as a somewhat palatable option. If not, you may need to exert brute force by either reducing payments without vendor approval or stop paying altogether.

    The caveat is that these approaches must first be set up with criteria that are provided to all of your vendors on the current state of the company’s finances and your organization’s needs. And this also requires the CFO’s support – and possibly the buy-in of other executives as well. These are draconian measures and top brass must know about and stand behind them. But this stance requires prior preparation: asking for reduced payments without transparency or executive backing is unlikely to work.
  • Review contractual obligations to pay. Look at escape clauses, contractual duties, and service-level agreements. Assess whether each of these has been met or whether the contract has been breached in some form. If anything sticks out as a way to void the contract, proceed as it makes sense. 

Amalgam Insights does not present these recommendations lightly or cavalierly. The vendor ecosystem is critical to the IT environment and the relationships are vital. Ideally, IT and vendors will collaborate to find outcomes that work for both parties. The last thing anyone needs or wants right now is more strife. 

Conclusion: Key Takeaways for IT Invoice and Payment Management in 2020

There is no doubt about it: the IT environment has undergone sudden and perhaps permanent shifts to COVID-19. Because of that, IT must know how and where to cut costs to ensure responsibility throughout the rest of the year (and probably beyond). To do that, keep the following in mind:

  • Remember the IT Rule of 30
  • Understand that the IT organization should at least be in the second and third stages of COVID IT by now
  • Identify new usage patterns, products, and vendors
  • Optimize usage based on the “new normal”
  • Be prepared to get tough with payment terms

And if you need any unbiased help with these actions, call on us. Click here to schedule a consultation.

Plus, join us at TEM Expo, available until August 13 at no cost to learn more about how to prepare for COVID IT and take immediate action to cut costs. In particular, Amalgam Insights advises sessions by Denise Munro on taxes, fees, and surcharges as well as David Schofield on contract negotiations for wired and wireless spend.

To learn more about invoice payment and processing and the tips and tricks that you may need in a pandemic recession, we’ve also recorded this recent webinar.

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The Complexities of Managing Cloud Spend

COVID-19 shows no signs of letting up in the United States. For IT, finance and procurement professionals supporting remote staff, this continues to present expense management challenges. In recent blogs and webinars, Amalgam Insights showcases ways to maneuver these issues as they relate to telecom and networking, mobility, SaaS; we’ve also provided in-depth recommendations for understanding the six stages of COVID IT.

Now we go into detail about a particularly difficult, yet critical, area to assess: cloud IaaS. Even if you have decades of experience evaluating telecommunications and IT invoices, cloud is a whole different animal. And I say “critical” because of all IT categories, cloud IaaS stands out as the one that will experience spending growth in 2020, given that it best meets the needs of a distributed workforce. Both of these realities add pressure to the expense management team’s responsibility to uncover and control costs tied to the organization’s technology environment. 

Managing IaaS: 3 Core Challenges and Their Solutions

The influx of cloud services during the COVID-19 pandemic is highlighting issues that already existed but that expense managers may not have yet tackled. Takeaway? In a recessionary climate, you can’t put off addressing these challenges.

1. Huge Growth

Again, cloud spending will soar this year. Amalgam Insights expects public cloud spend to increase by an average of 30% across all enterprises. This may cause problems, if it hasn’t already, with budgets. But operating according to the IT Rule of 30 should help. That’s our calculation that any unmanaged category of IT contains about 30% waste.

So even though you’ll see about 30% growth in cloud, you may be able to reduce spending by the same amount with mature oversight.

2. Extremely Detailed Billing  

Compared to telecom, cloud features even more granular invoicing. This applies to every cloud service or component the organization uses. Expense managers have to scour and inspect cloud invoices line by line to avoid missing anything, ideally with programmatic tools or algorithms to help manage the Brobdingnagian challenges of cloud bills.

3. Lack of Standardization

Cloud is no Ma Bell. The various vendors have never worked together and do not plan to work together. This means there is no standardization for billing terminology or structure. Your enterprise may benefit by creating or obtaining a glossary and ontology that brings together, correlates and defines the providers’ different references.

Spotting Opportunities for Cloud Cost Management

Organizations must get a handle on their 2020 cloud expenses now. COVID-19 has upended budgets, forecasts and consumption. Following these near-term suggestions will help IT, finance, and procurement regain control.

Identify the Cloud Boss(es). When it comes to the business side of cloud computing, most environments don’t have someone in charge. Now is the time to designate a person or team – executive and managerial stakeholders in charge of planning and budgeting – to oversee the business of cloud. Amalgam Insights has noticed cloud expense and planning tends to be a hybrid role. The ideal candidates usually have expertise in IT, finance/accounting, and procurement. Knowing that, some titles to consider are: Chief Information Officer; Controller; Chief Digital Officer; Vice President of Cloud; Chief Architect. By identifying an executive responsible for cloud and gaining the attention of this champion, cloud accountability becomes a bigger deal.

Analyze Service Usage. Cloud features myriad buckets and use cases. Therefore, IT has to pinpoint what goes where, why, and whether to tweak any ancillary resources (networking, as the primary example). As an example of the latter statement, consider Zoom’s recent partnership with Oracle Cloud. Since the beginning of COVID-19, demand for Zoom has rocketed into the hundreds of millions of users. Service degradation was inevitable. Zoom needed help and turning to Oracle helped it save what we estimate to be over 80% on its cloud networking costs, while achieving necessary failover and business continuity requirements. But speaking to our assertion that IT has to figure out how cloud resources are allocated, the answer isn’t always “off premises.” If you’re archiving core applications on-site, and even with legacy tools, you can probably keep operating that way. Financially and otherwise, this may still be the wisest choice.

Optimize Cloud Services. Businesses adopted a lot of cloud services between March and June of this year, often without realizing it as staff scrambled to work from home (shadow IT, anyone?). That created a situation ripe for optimization. Here are our top recommendations for saving money on cloud spend:

  • Check bills for duplicate resources and eliminate any that are doing the same job (if doing so won’t impact workflows).
  • Rationalize, and potentially turn off, idle services.
  • Right-size resources. In other words, understand how the cloud environment will change as the organization grows or shrinks. Pro Tip: Have a contingency plan and a backup vendor in case usage doubles or triples. The goal isn’t to wholesale migrate all your services to a new vendor, but to be able to add overflow or additional computing and services that may be more cost-efficient or agile onto another vendor.
  • Review discounts to make sure they are actually showing up on the bill. Cloud pricing is almost always accurate but providers do seem to have issues getting the agreed-upon discounts right. 
  • Look at workload times. Turn off workloads when employees aren’t using them or at least turn them down during non-peak times.
  • Assess expiration dates. Which cloud resources have an expiration date and which don’t? Find out whether any cloud platforms are used for testing or development. Wherever it makes sense, ask cloud providers to remove expiration dates. 

Ensure Project Governance. Don’t just bring in more cloud resources on a whim. This will create more mess. Instead, take a step back. You want to do right by the organization, avoiding waste rather than adding to it. The goal is to “measure twice, cut once.” Start by tagging and categorizing all existing cloud services, tracking both technical details as well as relevant business categories based on the general ledger and project management solutions. Tagging will enable essential tracking capabilities, and we explore this idea in greater depth below. Then assign expiration dates and vendor commitments – this is also where having a cloud boss comes in handy. After that, conduct a thorough review before launching any new cloud service into production mode. Turn off all test platforms so the organization does not keep paying for them. 

Tag Categories. This practice is vital to cloud expense management best practices. How well the organization tags and categorizes cloud services plays directly into the efficacy and clarity of IT spending. IT needs to know why things happen in the cloud environment, and that won’t be apparent without tagging.

Here are the areas Amalgam Insights has identified as the most useful for tagging and categorizing:

  • Cross-charging: Link all cloud spending to the general ledger.
  • Project ownership: Every project and resource should have an owner and be assigned to that person. This works out most optimally if that person holds some level of IT responsibility with the business. Be sure to link this information to the human resources system, too.
  • Service priority: Make sure all cloud platforms used for testing and production are identified and have the appropriate service prioritization in place.
  • Region: Follow all cloud governance risk management best practices for every geography in which the organization operates. You don’t want to breach any compliance requirements.

Study Contractual Commitments. There are six main buckets to review for opportunities to save money on cloud expenses:

  1. Time commitments: Cloud vendors often extend more discounts or more flexible terms to organizations that agree to use their services for multiple years.
  2. Payment terms: Will paying upfront or over time serve the best interests of the business? It may be time to negotiate some flexibility depending upon the answer.
  3. Potential growth or reduction: Build a number of scenarios based on different expectations; for example, operational usage may stay the same but software development or research teams may need to add machine learning workloads. That will affect pricing. Make contractual agreements based on those changes.
  4. Potential investment in apps: What cloud usage is projected for the new apps being created? What data will they create and what services will they need to access? Although developers cannot fully predict usage patterns, the business needs to have a basic idea of potential cloud cost impacts and how app demand will change cloud costs.
  5. Regional concerns:  Figure out which regions need most access to the cloud, as regional pricing for services can vary significantly, leading to potential arbitrage opportunities.
  6. Discounts: As discussed already, cloud vendors often get the pricing right yet omit the discounts or tiering changes. Make sure the organization gets the agreed-upon concessions.

Conclusion: Recommendations for the Future

Think about managing cloud expenses, especially during COVID-19, as doing your part to act as a steward of the business. As we’ve said before, every $100,000-$200,000 in IT expenses saved equates to a job saved or reinstated. When it comes to the cloud side of the house, introducing automation and reducing total cost of ownership are two additional ways to achieve that goal. Remember, cloud itself doesn’t just represent a cost-cutting measure compared to on-premises data centers, it’s also a tool that saves labor and provides for ongoing business agility and access to services that are more resilient to technical debt. The current economic climate is tough. People have a lot less time (and patience) for activities such as setup, administration, business continuity/disaster recovery, upgrades and performance tuning. Automate as many of these tasks as possible. Sure, that might mean opting for a more expensive cloud that comes with better Key Performance Indicators and Service Level Agreements. Incrementally, though, this will provide more value than a cheaper counterpart.

Alongside automation and the Total Cost of Ownership, don’t overlook the benefits of data and application development. As cloud vendors show their reluctance to hedge on discounts or payment terms, companies with skills in writing more optimized code and supporting better data management will have advantages in optimizing and cleaning up the cloud environment. 

Above all, you don’t have to do all this alone. There are a number of vendors Amalgam Insights recommends that specialize in cloud expense management. Here they are, in alphabetical order:

  • Apptio Cloudability
  • BMC
  • Calero-MDSL
  • CloudCheckr
  • CloudHealth by VMware
  • Flexera
  • MobiChord
  • Snow Software
  • Tangoe
  • Upland Software
  • vCom

Keep in mind, each vendor takes different approaches and has different areas of strength. We recommend investigating each one to see how it fits your environment and needs. If you need unbiased help assessing the options, call on Amalgam Insights. 


If you are seeking outside guidance and a deeper dive on your IT environment, Amalgam Insights is here to help. Click here to schedule a consultation.

Join us at TEM Expo, currently available on-demand until August 13 at no cost, to learn more about how to prepare for COVID IT and take immediate action to cut costs. In particular, check out sessions by Robert Lee Harris and Corey Quinn on managing cloud costs and avoiding the biggest mistakes that cloud vendors won’t tell you about.

And if you’d like to learn more about this topic now, please watch our webinar.

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The IP Perspective on Why Open Usage Common is Just Wrong

I have to admit, that’s I’ve been brooding about this for two days now. On July 9, 2020, Google announced the creation of the Open Usage Commons organization. On the surface, the OUC (pronounced “uc”? Ooc?) seems like just another one of the many not-for-profits formed to assist an open source community to develop and license software created by many companies together. They announced three projects would be part of OUC: Istio, Angular, and Gerrit. So far. pretty normal for moving open core to real open-source with independent governance.

Except it’s not. What seemed redundant at best is much more nefarious. The OUC (oh you cee? It’s a bad name…) only holds the trademarks of these open source projects. The copyrights and, potentially, patents are held elsewhere. It’s like owning a car but someone else owns the paint. Why would anyone want this?

To get to why this is so odd, we need to talk about intellectual property. There are three main types of intellectual property (IP) in the US system, trademarks, copyrights, and patents. All three are meant to protect a different form of intellectual output or ‘art”. A software product may be protected by a patent but it’s not that common. Patents need to be unique inventions and are typically physical products. There is a type of patent, a process patent, that applies to some software, but it is not how the majority of software is protected. This has been an ongoing issue with software for 30+ years. Patents don’t really work for software.

Copyrights protect artistic works such as art and writing. Software is typically protected by copyrights since it is an ephemeral “written” work. The ability to use a copyrighted work, including open-source software, is controlled by licenses. In fact, what differentiates open-source from proprietary software is the license, which grants the right to use and modify the software for free as long as you follow the license. A typical component of an open-source license is the requirement to submit changes made to the software to the community to see if they can benefit everyone.

Finally, trademark protections are for the outward identification of an entity or product within a domain. Logos, names, graphics that identify something, these are trademarks. This blog is protected by copyright, as a written work, and the site name and logos via trademarks.

Software as a product is protected primarily by copyrights and trademarks. The code is protected by copyright and the name and accompanying identifying graphics via trademarks.

Now this is where things get weird. The OUC (Oh oo cay? I really hate the name…) exists to manage only the trademarks of open source projects. This means that the copyrights for Istio, Gerrit, and Angular are held by some other organization or company, and the trademarks by OUC (I’ve run out of jokes about the name). Separating the IP into multiple organizations, and hence multiple licenses, seems confusing at best. This is like financial derivatives where mortgage interest and principle are stripped apart from each other and sold separately. We remember how well that worked in the 2000s.

At worst, this is a way to control who can actually use open source software without actually saying so publicly. You may have the right to use and productize software such as Istio, as Red Hat, Rancher, and others have done, but not be given the rights to use the name without a second license. That has two effects.

First, it requires separate licenses and hence negotiations for different parts of the total IP. The open-source license will give the licensee rights to the copyright but the OUC can refuse the trademark license.  

Second, it creates a situation where licenses may not always agree and could hinder the ability to market the software. You could then have your open-source ducks in a row but be stuck in negotiations with OUC. While all of that is possible, that’s not even the worst part. What’s worse is that it allows Google through the OUC to claim independent governance for the projects when it’s really only the trademarks.

Istio is a prime example of this problem. The cloud-native community has, for some time, been expecting that the Istio software would be given to the CNCF, just like Kubernetes.  The fact that this hasn’t happened yet has been a drag on Istio’s adoption and called into question its future viability. Needless to say, the cloud-native community is perplexed and annoyed by this move. CNCF is very much capable of managing both the copyrights and trademarks of Istio, along with the project itself. Even if the copyrights for Istio eventually end up with the CNCF or Apache Software Foundation or some other established foundation, the OUC will have the trademarks. That means two licenses for anyone trying to productize Istio, something CNCF can accomplish with one. At best, it’s needless complexity.

So, here’s my advice to the communities that have been working on these projects. If at all possible, immediately fork the software into another project and join an established not-for-profit. If that’s not possible then abandon it. Vendors will have to create new distributions. While that’s lousy, it’s worse to be a part of something as suspicious and with such a monumentally bad name as OUC. You know, maybe the name is code for Owned Universally by Corporations.

If you are considering an Istio, Angular, or Gerrit-based project and would like to work with Amalgam Insights on due diligence of the project, please contact us at to learn how to work with us. And please read Petrocelli’s prior research on repositories, microservices, CI/CD, Service Mesh, and other DevOps topics at

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Bob Irwin Leaves Tangoe as CEO – Amalgam Insights’ Analysis

Key Stakeholders: CIO, CFO, Chief Digital Officer, Chief Technology Officer, Chief Mobility Officer, Mobility Directors and Managers, Procurement Directors and Managers, Accounting Directors and Managers

On July 15, 2020, Tangoe announced that Chairman Dave Hansen was appointed as the interim CEO of the company, replacing Bob Irwin, who had been the CEO for the past three years. Amalgam Insights analyzes this change in terms of what Bob Irwin accomplished at Tangoe, what this change means for Tangoe as a company, Tangoe’s customers, and the Technology Expense Management market at large.

Bob Irwin was brought into Tangoe in June of 2017 when private investment firm Marlin Equity Partners completed the acquisition of Asentinel. Irwin replaced Jim Foy, who had a long history managing technology companies and served as a bridge between Founder Al Subbloie and Irwin. Irwin came into Tangoe with a record of success in sales and management at Sterling Commerce, TDCI, and EMS Software, all of which managed complex processes associated with suppliers, supply chains, and resource management. At the time, Tangoe faced the challenges of integrating functionalities from over 20 platforms into a more manageable portfolio, an employee count that could not be supported by Tangoe’s existing revenue, and financial challenges resulting from a history of improperly recognizing earnings as a public company.

The highlights of Irwin’s tenure were in the acquisition of MOBI and the focus on customer service and retention. Tangoe’s acquisition of MOBI in December 2018 followed an intense bidding war for the managed mobility services provider and resulted in an upgrade in Tangoe’s ability to execute on managed mobility services, the ability to consolidate mobility operations in Indianapolis, and an upgrade to Tangoe’s process automation capabilities that have since been integrated into Tangoe’s overall roadmap. In addition, Tangoe’s focus on customer retention during this time allowed Tangoe to at least partially stem the bleeding that allowed competitors to poach Tangoe accounts.

Over his three year tenure, Irwin headed a product consolidation to move the majority of Tangoe’s customers to one of three platforms: Tangoe Fixed (based on the Asentinel acquisition), Tangoe Mobile (based on the MOBI acquisition) and Tangoe Rivermine to support customers on this highly customized platform. This consolidation was choppy at times, as it was originally positioned as the development of a single platform, Tangoe Atlas, which was then changed in mid-stream to the current three-pronged strategy that exists today.

Irwin also reduced Tangoe headcount to a more manageable level that was consistent with Tangoe’s estimated $200 million+ annual revenue rather than a staffing that had been more suitable for a company twice its size. At the same time, Irwin worked on an internal culture that celebrated employee success and included public adulation across email, social media, videos, podcasts, and other customer-facing communications.

However, Tangoe still faced a number of challenges during Irwin’s management. As the market leader in Technology Expense Management with approximately $40 billion under management, Tangoe did not successfully grow at a time when its smaller competitors were regularly growing 20% or more per year. From a practical perspective, Amalgam Insights saw that much of the growth of Tangoe’s biggest competitors, which were between 5-25% of Tangoe’s size from a spend management perspective, came from acquiring Tangoe customers rather than expanding the breadth of the market. Why was this the case?

Amalgam Insights has long taken the stance that TEM is most accurately an acronym for Technology Expense Management and best suited to manage the $1.6 trillion market associated with IT subscriptions (landline telecom and network, mobility, Infrastructure as a Service, Software as a Service, and related connectivity and public cloud subscriptions). However, even at a time when the $200 billion public cloud market was growing faster than the $1.3 trillion+ telecom market, TEM providers were slow to support the cloud.

A second challenge for Tangoe was that it held massive amounts of spend under management as well as CIO relationships, but lacked the products to take advantage of those strategic relationships. Tangoe’s move to cloud expense management was a good start, albeit somewhat belated. And Tangoe’s move to create the Tangoe for Apple solution for fully managing i-Everythings was also a good move.

But Tangoe had the opportunity (and still does) to support IT planning, budgeting, and forecasting to take on vendors like Apptio, ServiceNow, Upland Software, Digital Fuel, and Nicus as well as supporting closer relationships with the likes of Dell, HPE, Cisco, and VMware in supporting multi-vendor and comparative sourcing or to create more customer-friendly leasing and subscription options. The latter suggestion is increasingly viable today as Cisco provides Catalyst and its DNA on a subscription basis and HPE Greenlake will cover all of HPE’s portfolio (including virtual machines, Nimble-based storage, and Aruba networking).

Amalgam Insights posits that there may be an additional challenge associated with the sales culture, where the aggressive product-based sales and marketing culture that built Tangoe was largely replaced as Tangoe went private and brought in a group of experienced solutions-based executives. To some extent, Amalgam Insights believes this challenge is related to the prior product development challenge, as Tangoe still lacks the breadth of portfolio to support the executive-focused enterprise solution selling approach that it both has the expertise and relationships to execute upon.

In theory, Tangoe could also acquire additional solutions to fill out its portfolio of operational and financial capabilities, but the relative lack of acquisition activity outside of MOBI seems to indicate Tangoe’s unwillingness to take on additional acquisitions after its lengthy streak of purchases over the past decade (including Traq Wireless, ISG, Internoded, Telwares, Profitline, HCL (Control Point Solutions), Symphony, Anomalous Networks, ttMobiles, Rivermine, Vodafone Global, Asentinel, and MOBI).

So, what does this all mean for Tangoe, Tangoe’s customers, and the rest of the market? Let’s break it down.

First, this isn’t Dave Hansen’s first run at being an interim CEO, as he served as the interim CEO of OnX Enterprise Solutions in 2016 after the prior CEO retired. In that run, Hansen held the role for roughly three months before turning over the reins (reigns?) to veteran tech executive Tom Signorello. Amalgam Insights would expect that Hansen would serve a similar placeholder role here for the next several months, similar to Jim Foy’s tenure, as Tangoe seeks a permanent CEO.

However, given Hansen’s previous experience with CA Technologies, BMC Numara, and Dell, we wonder if Hansen might be able to build some relationships more directly in his role as CEO that would be accretive to Tangoe. For example, Tangoe could use Numara-like service and asset management capabilities to help Tangoe become a more holistic Management-in-a-box or Management-as-a-service offering for IT managers who want to align technology management to business demand and cost management.

[Analyst’s Note: When I first wrote about the potential for Information Technology Expense Management back in my Aberdeen days in 2009, I thought that the telecom expense management players would be best positioned to support a future of IT as a Service and the breadth of IT expenses that would emerge as what we then called SoMoClo (Social, Mobile, Cloud)  evolved into a dominant platform. Although that platform has matured, financial and accounting management across collaboration, APIs, mobile devices and services, cloud infrastructure, and cloud-based software is still largely a siloed mess for the CIO, CTO, Chief Architect, or IT strategist to traverse.]

Although this would be interesting and in line with a growth-oriented company, Amalgam expects that Hansen’s top goal will be to maintain Tangoe’s existing structure and operations and to focus on current customers rather than aggressively pursue opportunities for improvement or growth. This should be good news for Tangoe customers seeking stability and directional progress towards a more standardized Tangoe and the completion of short-term projects.

For the rest of the Technology Expense Management industry across telecom expense, cloud cost, and enterprise mobility management markets, be aware that you likely have several more months to execute on the “Tangoe playbook” currently being used to sell against them before that book starts to change. At the same time, this is not a time for vendors to measure up against Tangoe, but rather an opportunity to evolve into the aspects of TEM where the vendor provides best-in-breed capabilities.

For instance, just as a partial sampling of solutions:

  • AMI Strategies has developed an smart AI-powered invoice processing engine
  • Asignet has its deep automation capabilities associated with its Wayfast platform
  • Calero-MDSL has strong data services and asset management capabilities
  • Cass has a variety of spend management solutions that should be bundled
  • CloudCheckr has its API-driven CMx Platform for managing cloud services
  • CloudHealth by VMWare has to be considered in context of the larger picture of vRealize Operations Cloud and Tanzu Portfolio
  • GoExceed has superior process and machine learning capabilities for cellular management
  • MobiChord is built on the ServiceNow platform
  • Upland Cimpl is part of Upland’s broad portfolio of software solutions
  • vMOX has its intellectual property to support its cost optimization approach
  • Vision Wireless has its focus on enterprise mobility, and
  • WidePoint has its government and security backgrounds

just to name a few quick examples of some of the solutions Amalgam Insights has recommended over the past month. Each vendor is different enough in this space to find greenfield opportunities in the technology expense management space.

Overall, Amalgam Insights believes that Irwin’s tenure at Tangoe will be remembered as a time of significant operational consolidation and optimization at a time when the company needed to create stability after a roller-coaster and alphabet soup filled era of growth, M&A, IPO, and SEC financial issues. For the next CEO, Amalgam Insights expects that there will need to be an emphasis on sales and external outreach that has not been seen in recent times. But for now, Tangoe remains the sleeping tiger of the TEM industry and Irwin leaves having righted the ship for the next captain.

If you’re interested in more information on the Technology Expense Management industry, please visit our free 15-session event, Technology Expense Management Expo, which is now available on-demand and at no cost until August 13, 2020.