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Is Apple Losing Its Consumer Marketing Touch?

CNBC’s Jessica Bursztynsky just wrote a nice piece,” Apple fails to market the iPhone 12 Pro to the average consumer

My take on the article: One of Apple’s traditional strengths has been translating technical capabilities into household tasks. This strength is what allowed the iPhone to take off in the first place when the initial iPhone hardware was inferior to its competitors. As an example, when the iPhone first came out, 3G networks had already been in the United States for five years, yet Apple started with a 2G phone.

The odd part is that the technical capabilities of the iPhone 12 do translate to a more personal phone: take the outdoors home with you, augment your world, get a smarter phone. 5 nm chips are much smarter than any other iPhone ever. But Apple didn’t find a way to bring the story together for the iPhone 12 despite having a more vivid, smarter, faster, and more networked phone. From a technical perspective, the iPhone 12 is a big upgrade, almost a generational improvement.

But Apple fell for the hype of its partners with 5G and 5nm rather than the personal, high-end, affordable luxury game changer branding that has made Apple a juggernaut. If there is anything that Apple should know by know, it is that all of these technical numbers are practically meaningless to its core audience. Although I’ve joked in the past that technology doesn’t seem to exist before Apple acknowledge that it exists, I don’t actually think that works for 5G, as both the infrastructure and use cases for 5G at the consumer level have not been fully figured out yet.

Just as Bose customers couldn’t have cared less about the audiophile’s perspective of Bose products, Apple customers couldn’t care less about the computing specs compared to the simple question of “Does it work?”

Some basic apps or features on the iPhone 12 taking advantage of the enhanced photos, LIDAR, and 5nm based processing in the background would have been great. If Apple can’t figure out how 40%+ faster helps you, how can anyone else?

It’s also interesting that there was little in the new phone regarding security or working from home. I guess Apple figured it has nailed Work and School from Home despite all the challenges that still exist. But for anybody who has either been moved to a work from home situation or has had the interminable experience of helping your kid with a remote schooling environment, you know there is a lot of work left. Some sort of example of how to make the iPhone a work hub would have been really interesting.

To me, the iPhone 12 launch felt like an old Nokia Symbian phone launch that always focused on specs and hardware superiority. Even BlackBerry, back in the day, had more appeal to the feel and UX of its devices. Ask Nokia how that technical superiority sale turned out in the late 2000s. 

I’m not saying Apple will disappear tomorrow. But the iPhone 12 launch looked like that of a mature technology waiting to be disrupted rather than a technology designed to further enhance your life. This is an interesting time to watch the evolution of the smartphone industry, as augmented reality devices are not ready for the mainstream yet, Huawei is dealing with geopolitical challenges, Samsung continues to produce a variety of smart devices, and Google has revived the Pixel brand with an impressive set of recent device models.

My recommendation: the iPhone 12 is an interesting set of functionalities that still lacks the infrastructure and apps to fully take advantage of what it does. I think this will be a great device to purchase around the same time that a COVID vaccine becomes generally available, probably around Summer of next year. Until then, if you want to get used to the photo and LIDAR capabilities of the phone or are in a city with good 5G coverage, the iPhone 12 is a good starting point.

For more context on 5G, please read our strategic guide on 5G or contact us at info@amalgaminsights.com to set up a strategic consulting session.

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Amazon Web Services Launches AWS Cost Anomaly Detection, in Beta

If you’re moving into cloud, Amazon launched a service on September 25th called AWS Cost Anomaly Detection within AWS Cost Management to find surges in spend. Part of the product is a machine learning algorithm that tracks your spend to ensure that spend peaks aren’t just part of a cyclical spend change and to detect anomalies. One of the interesting aspects of this product to me is the flexibility of monitoring spend based on service, account, category, or tag.

AWS Monitor Types for Cost Anomaly Detection

The tagging capability is the most interesting one to me, as tags are how cloud costs are effectively cross-charged to projects, cost centers, geographies, and the other financial categories that are most relevant from an IT expense and financial management perspective. Although the other spend monitoring categories are interesting from a practitioner level and obviously should be used to optimize spend, they will likely be less useful to share with your colleagues.

I’m especially interested in seeing more detail about how machine learning ends up tracking AWS service spend over time to correct its recommendations. One of the interesting aspects of this service is that you actually do not choose your parameters for which anomalies get tracked, as the algorithmic approach picks up every spike. Rather, the service focuses on when it should alert you to changes and anomalies based on the size of the spike. And then you can choose to be alerted in near-real time, daily, or weekly basis.

Given that it’s currently a beta product, I’m betting that the alerts and recommendations aren’t quite fully baked at this point. But even so, this optimization moves cloud towards the state of in-billing period monitoring and optimization that we’re used to doing in wireless and wired spend. Take a look and see how Cost Anomaly Detection starts to shape and optimize your AWS services’ spend.

Of course, this is an AWS-specific service, so there are still opportunities both for other cloud providers to provide similar services as well as for the leading third-party cloud service management providers such as Apptio Cloudability, Cloudcheckr, CloudHealth by VMware, Calero-MDSL, Flexera, Snow Software, Tangoe, and Upland Software to also develop similar capabilities for multi-cloud.

For now, Amalgam Insights recommends taking a look at the documentation and learning how the service works. We are starting to transform IT cost management from a practice of manually tracking cost data on our own to depending on algorithms and machine logic to do the hard number-crunching and swivel-chair work for use. Even if you’re not going back to school to learn the linear algebra, calculus, and neural net designs needed to do data science on your own, you need to have an idea of what can and can’t be done through algorithmic means.

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Motus Acquires Vision Wireless to Bolster Enterprise Mobility Support

On September 30th, 2020, workforce expense vendor Motus announced the acquisition of Vision Wireless, a wireless expense management company based in Augusta, Georgia in the United States. This purchase demonstrates Motus’ continued focus in enterprise mobility to add to its September 2019 purchase of Wireless Analytics.

Vision Wireless was founded in 2003 with a focus on wireless expense management and managed mobility services provided to Fortune 1000 and mid-sized enterprises. In recent years, Vision Wireless has taken a greater role in providing thought leadership to the industry at large, including its recent sponsorship of Amalgam Insights’ Technology Expense Management Expo.

Over the past decade, I’ve typically recommended Vision Wireless as an appropriate vendor for North American-based organizations over $1 billion in revenue. Vision Wireless is known for its strong managed service capabilities with white-glove service and a software solution that supports integration with a variety of accounts payable, general ledger, procurement, IT service management, human resources, and mobile device management solutions. Vision Wireless was also working on increasing its automation, self-service, and integration capabilities.

With the acquisition by Motus, Amalgam Insights expects that Vision Wireless’ platform development will accelerate to support Motus’ ambitions of becoming a full-service remote worker solution. Over the past year, Motus has brought its Fixed and Variable Rate methodology to mobile devices to help companies support Total Cost of Ownership and expense analysis across both business and personal (Bring Your Own Device) use cases.

What’s Next?

Vision Wireless customers should expect to see no significant changes in their support in the immediate future. Motus acquired Vision Wireless in no small part to acquire the quality and depth of service that Vision Wireless has provided to its clients for years. At the same time, Vision Wireless customers should also be aware that Motus also has a fleet management solution for organizations that conduct business activities with personal vehicles. For companies seeking to improve their remote worker expense management, this Motus solution may be an opportunity to help support both current working conditions as well as a post-COVID future that maintains a significant remote worker population.

Motus customers gain a high-quality mobility support and managed services team with experience supporting clients such as Aramark, ServiceMaster, and CVS Health. This acquisition will ease Motus’ ability to support integration with a variety of software solutions and platforms, such as ServiceNow, SAP Ariba, Coupa, and leading ERP solutions.

Amalgam Insights is also interested to see how this acquisition affects the market for remaining high-quality managed mobility services and wireless expense solutions that we track such as Advantix, GoExceed, ICOMM, Intratem, mindWireless, Mobichord, MobilSense, Mobile Solutions, Valicom, and vMox.

In the long term, as cars become increasingly connected, the Internet of Things become ubiquitous, and the need for remote mobility support only becomes greater over time, Amalgam Insights believes that Vision Wireless’ long-time expertise in supporting enterprise mobility support will prove to be a strong asset for Motus. Amalgam Insights also believes that this is not the end of Motus’ acquisition streak, as a Thoma Bravo portfolio company. For Motus to fully unleash its potential as a remote worker reimbursement vendor, Amalgam Insights believes that there is still room for Motus to expand into cloud management, security, home office expenses, and other business categories that are split between corporate and personal responsibilities.

Overall, Amalgam Insights believes that this acquisition represents a strong commitment by Motus to continue expanding its support of enterprise mobility, an acquisition of a strong enterprise client case, and an opportunity to use Vision Wireless’ managed services foundation and platform to help expand its remote work support. This acquisition is indicative of what should be happening in the wireless and telecom expense market: accretive acquisition to support a bigger picture, such as the future of remote work management, the future of IT management, and the future of employee management. Expect more acquisitions like this in the near future.

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UPDATE – Quick Take: Is Oracle Buying Tiktok? (Hint: It’s all about the cloud)

Last Updated January 20th, 2021

(Update: As of January 20th, with the presidential inauguration of Joe Biden, it seems unlikely that the Biden administration will continue the pursuit of the US ban on Tiktok. This follows U.S. District Court Judge Carl Nichols Dec. 7 ruling that the Commerce Department had “likely overstepped” its authority in placing the ban. An earlier injunction on shutting down Tiktok services on October 30th in the United States Court of Appeals for the Third Circuit by Judge Wendy Beetlestone is currently scheduled to be appealed in February 2021.)

Key Takeaway: Master tactician Larry Ellison gains a feather in the Oracle Cloud by playing the long game and positioning Tiktok as a significant Oracle Cloud customer. Well played, Mr. Ellison.

As if 2020 hasn’t been weird enough, many of us are finding out that enterprise stalwart Oracle is apparently going to purchase Gen Z (born after 1995) and Gen Alpha (born 2010 or later) social media darling Tiktok.

What? Is this actually happening?

Well, not quite. But to explain, first we need to look at the context.

Last month, President Trump created an executive order to ban Tiktok in the United States based on security and censorship issues. This move was seen both as a move against the Chinese economy and to protect global social media platforms based in the United States such as Facebook and Twitter.

In response, a number of potential suitors showed up with either bids or proposals to support Tiktok in the United States. Microsoft showed interest in purchasing Tiktok to support its Azure cloud and gain a massive source of video content that would be useful across Microsoft’s marketing (Bing), gaming (XBox, Minecraft), augmented reality (Hololens), and artificial intelligence (Azure AI) businesses. And at one point, retail giant Walmart was associated with this bid, perhaps in an attempt to fend off Amazon in this digital path. But this bid was shut down was rejected on September 13.

Oracle came in after Microsoft, showing interest in Tiktok. At the time, there was massive confusion from the market at large on why Oracle would be interested. But, as someone who has written about the tight relationship between social technologies and the cloud for many years, my immediate thought was that it’s all about the cloud.

Oracle has been forcefully marketing Oracle Cloud Infrastructure as an enterprise solution after making significant investments to improve connectivity and usability. These recent changes have led to significant logo wins including Zoom and 8×8, both of which chose Oracle for its performance and 80% savings on outbound network traffic. The cost of connectivity has traditionally been a weak point for leading cloud providers, both due to a lack of focus on networking and because cloud vendors have wanted to gate data within their own platform and have little to no incentive to make inter-cloud transfers and migrations cheaper and easier. But Oracle’s current market position combined with its prior investments in high performance computing and network performance means that it makes good business sense for Oracle to be the most efficient cloud on a per-node and bandwidth perspective and to attack where other cloud vendors are weak.

Social media and communications vendors are massive cloud customers, in their own right. Pinterest has a 6 year, $750 million commitment with Amazon Web Services and is easily on pace to spend far more. Lyft has its own $300 million commitment wth AWS. And Citrix has a $1 billion commitment with its cloud vendor of choice, presumably Microsoft Azure. The cloud contract sizes of large and dynamic social and video-centric vendors is enormous. Every cloud provider would be glad to support the likes of Tiktok as a customer or potentially even as a massive operations writeoff that would be countered by the billions of dollars in revenue Tiktok provides.

And, of course, Tiktok creates a massive amount of data. Similar to Microsoft’s interest in Tiktok, Oracle obviously has both expertise and a large business focused on the storage and analysis of data. Managing Tiktok content, workloads, and infrastructure would provide Oracle with technical insights to video creation trends and management that no other company other than perhaps Alphabet’s Youtube could provide. Over the past couple of years, Oracle has put a lot of effort both into database automation and cloud administration with its Gen2 offering.

In addition to bolstering Oracle’s cloud, Tiktok also could make sense as a tie-in to Oracle’s Marketing Cloud. At a time when large marketing suites are struggling to support new platforms such as Tiktok, what better way to develop support than to own or to access the underlying technology? But wait, does Oracle have access to Tiktok’s code and algorithms?

Apparently not. Current stories suggest that Oracle will be the hosting partner or “Trusted Technology Provider” for Tiktok America while Tiktok parent company ByteDance still maintains a majority ownership of the company. It looks like Oracle has positioned itself to be the cloud provider for a massive social media platform, as the United States alone has over 100 million active users on Tiktok. And the speculation behind Microsoft’s rejected bid is that Microsoft sought to purchase the source code and algorithms of Tiktok, which ByteDance refused to provide.

So, the net-net appears to be that in response to Trump’s Executive Order, Oracle will gain an anchor client for Oracle Cloud Infrastructure while making some investment into the new Tiktok US organzation. Oracle’s reputation for security and tight US government relations are expected to paper over any current concerns about data sovreignty and governance, such as Chinese access to US user data. Current Tiktok investors, such as General Atlantic and Sequoia Capital, may also have stakes in the new US company. This activity effectively puts more money into a Chinese company. Most importantly, this action will allow Tiktok to remain operational in the United States after September 20th, the original due date of the executive order.

Congratulations to Oracle and Larry Ellison on a game well played.

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From BI to AI: The Evolutionary Path of Enterprise Analytics

As we progress along the road of this pandemic-driven recession, CIOs and IT departments need to keep a clear-eyed view of the future and the tasks that we are held to manage. Because even as we deal with all the challenges of remote work, distributed decisions, and uncertain economic environments, we are also held to the challenges of supporting future business needs and supporting the next generation of technology, which continues to be created and launched. 

This means that we need to follow the path of COVID IT

If you’ve followed the stages and actions we recommended in our webinar series or at our Technology Expense Management Expo, you’ve passed through the stage of pure survival, securing remote work, and auditing your environment. Now, we are at Stage 4, which is to gather best practices, celebrate successes, and train employees on the New Normal.

A key aspect of Stage 4 and Stage 5 is the use of data and analytics to support better decision making, improved forecasting, more nuanced automation, and more accurate models and workflows to make sense of complex business phenomena as your organization continues to move from BI (Business Intelligence) to AI (Artificial Intelligence).

To prepare business data for future needs, Amalgam Insights recommends the following steps:

First, improve data collection. This means treating all data in your business as something that will be reused to provide value and cleaning up all existing data through data prep, data quality, and data transformation tasks. It also means putting data into the right format: the age of the relational database as the only tool for analytics is disappearing as non-relational and NoSQL databases have come to the forefront and graph databases like Neo4j and Amazon Neptune finally start their ascendent rise as relationship analytics and semantic search start to eclipse standard Boolean AND, OR, NOT and SQL-based logic.

This isn’t to say that SQL is going anywhere. I still recommend that anybody using data start with a strong foundational knowledge of SQL, as this is probably the only skill I learned 20 years ago that I still use on a regular basis. Skilled relational data querying will always have an important role in the business world. But for business analytics and data managers trying to figure out what is next, consider how to expand your data sources, data quality, and data formats to fit what your company will ask for next.

Second, contextualize your data. One of my favorite sayings, first attributed to Jason Scott, is that “Metadata is a love note to the future.” The ability to prioritize, categorize, and contextualize data sources, fields, and relationships is vital to supporting the future of machine learning and natural language analysis. This means supporting data catalogs, data unification, and master data management tools to bring data together. This stage of data maturity is easy to ignore because it requires getting business context from relevant stakeholders to manage and define data. Given that it can be hard enough to get business users to simply enter data accurately and consistently, the effort to get data definitions and context can be intimidating. But this is a necessary precursor to having “smarter” data and to making the “smarter” decisions that businesses are promised by analytic and machine learning solutions. And the combination of data prep, cleansing, and context make up the majority of work that data scientists end up doing as they try to create relevant models. Solutions that Amalgam Insights recommends most often in this area include Alation, Atlan, Collibra, Informatica, Qlik, Talend, Unifi, and the offerings from megavendors SAP, Oracle, and IBM.

Third, make visualization tools and outputs ubiquitous. Every person in the company should have access to relevant metrics that drive the company. It’s 2020: we’re beyond the time of Skynet and the Terminator, Blade Runner, HAL, and other iconic cinematic visions of the future. The very least we can do is make basic charts and graphs available and accessible to all of our co-workers. Find out what prevents line-level employees from accessing and using data and break down those barriers. Amalgam Insights’ experience is that this challenge comes from a combination of not knowing how to find the right data and how to form the right charts. The answer will likely come from a combination of natural language enhancements driven by the likes of ThoughtSpot, Narrative Science, and Tellius as well as visualization and reporting specialists such as Yellowfin and Toucan Toco and embedded analytics specialists such as Logi Analytics and Izenda.

Fourth, shift from reporting and discovery to predictive analytics. Over the past decade, Tableau has been a fantastic tool for data discovery and continues to lead the market in helping companies to find out what is in their data. However, companies must start thinking of data not only in terms of what it tells us about the present, but how it helps to structure our work and forecast what is next. Data can be used to structure descriptive and predictive models through iterative and guided machine learning. Google’s work with Tensorflow stands out as an end-to-end machine learning solution. During Amalgam Insights’ short existence, DataRobot has quickly risen to become a leader in automated machine learning and its acquisitions of Nexosis for accessibility, ParallelM for MLOps, and Paxata for data prep help have stood out. Microsoft Azure, Amazon Web Services, and IBM Watson also have their own services as well: there are a variety of options for modeling data.

By taking these steps, you can ensure that your data does not fall prey to a premature death as it is rendered obsolete or surrounded by enough technical debt to become functionally useless. If you have any questions on how to better support your data from a future-facing perspective, please contact us at research @ amalgaminsights.com to set up a consultation.

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Career Advice for the Technology Expense Analyst

I was recently chatting with Andi “TEMGirl” Pringle on LinkedIn about career options and skills for the telecom and technology expense analysts. Given that most of my jobs over the past 20 years have been related to telecom billing and expenses, I have a few opinions on this topic. So, to start with…

First, here’s the reality. Telecom expense management is a commoditized job. Telecom spend is not growing, on a global basis, from year to year and CIOs don’t think of telecom as one of their top priorities compared to digital transformation, cybersecurity, process automation, artificial intelligence, or customer experience.

So, where can you go from here? For now, if you’re managing $10 million or more a year in spend, then your efforts should be preventing enough to justify your salary on a revenue per employee basis. Part of your job is to show your manager that your efforts are saving several hundred thousand dollars a year or more by finding those Zero use circuits and phones, optimizing services, and keeping people up and running because nobody will do it for you.

But you also need to upgrade your skills for the long run. Telecom will continue to become just another app running on the network and cloud computing has already eclipsed telecom as being more strategic in importance even though the global market for cloud computing is still only about $250 billion compared to the $1.4 trillion on telecom.

So, there’s a few different directions you can go in depending on whether you want to focus more on the data, finance, technology, project management, strategy, or consulting aspects of the job.

Data Science/Analyst: If you want to dig deeper into the data, you need to understand relational databases and then how to deal with the statistical modeling and analysis of data. Start by learning SQL, the lingua franca of data and the one technical skill that I’ve used consistently over the last 20 years. Then you’ll need to use Python, and/or R along with statistics and calculus classes to understand modeling and to know what you’re doing with your statistical and modeling libraries. The data science role is all about fitting the right algorithms and statistical models to your data, but it all starts with the database and setting up queries. This is actually where I started when I got into telecom, as I had both a computational chemistry and a competitive fantasy baseball background where I’d work on tweaking player forecasts and performance variances. Back then, we used SAS and SPSS rather than R, but tools change over time.

Accounting: Learn some basic financial and managerial accounting as well as micro and macroeconomics. These classes will help you to track costs more effectively, get some business context for costs, and to broaden your skills from telecom-specific cost management to business-wide cost management. The differences aren’t enormous and, frankly, I think telecom expense is one of the hardest costs to manage. A project management or operations management course doesn’t hurt either, as a lot of this role is understanding costs, resources, and business drivers for planning and forecasting. But having an accounting and basic finance background will allow you to translate IT cost management to a broader planning and budgeting capability. This was what Planful CFO Shane Hansen spoke about at our recent Technology Expense Management Expo.

IT Management: Amazon is the new Cisco and there is more new cloud spend this year than telecom spend. It all goes back to tracking storage, network, and compute units across every service, but dig into the service types and learn about cloud services just as you’ve learned about USOCs, FIDs, and service order fields. Cloud providers are the new telcos in terms of being the providers that power IT. Interestingly, a lot of these cloud bills are in the hands of cloud architects and developers who are learning to manage cloud costs from scratch. This management practice is often not called Cloud Cost or Cloud Expense Management (because that would be too easy) but is also called FinOps or a section of Cloud Service Management. We had multiple sessions on cloud infrastructure and software management at the TEM Expo from Corey Quinn, Robert Lee Harris, and Lukas Smith.

Project Management: The PMP is the key certification here. Even if you don’t work on getting the certificate, since some of their materials are starting to get dated, their recommended topics and PMBOK are a helpful starting point. One of the reasons I was glad that Upland Software was an exhibitor at the TEM Expo is that they provide both technology expense and project management software together. I think it’s fundamentally important to have a single toolset to manage projects and cost structures. This is actually a trend in the telecom expense world as a number of solutions start to have SD-WAN or network project management modules as a part of their solution. I think the TEM players will be pushed to go farther.

Managed Service Providers: Being on the vendor side can be an interesting way to work with multiple organizations, sometimes at once, to figure out what similarities and differences exist beween organizations. It can be easy to get stuck in the specificities of your own organization and miss out on some of the best practices and innovations that exist in the market at large because they don’t align with your own organization’s specific governance and compliance issues. Also, being on the vendor side can be a gateway into learning how the management of TEM as a business works and can be a gateway either into moving to service, product, and consulting roles or to become a manager or to learn how to be a full-time consultant on your own.

And finally, if you enjoy either teaching the topic or solving a specific type of TEM problem, you may be better off either as a consultant or industry analyst. (Note: this step requires you to be part of the front office and to either develop or hone your sales chops!) This is the leap I took 12 years ago when I became an industry analyst and I’m always glad to discuss how I did it and where you can learn this craft.

If you’re currently a telecom expense analyst or manager, I highly encourage you to go in one or more of these directions to upskill yourself and continue moving up in your career. If you have any questions about any of these paths, please don’t hesitate to ask me at hyoun @ amalgaminsights. com.

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Quick Thoughts on Cloud Cost and Cloud FinOps Tagging

One of the tactical problems I get asked about most often is how to manage cloud Infrastructure as a Service within an IT cost management environment. As someone who recommends boh telecom expense management and cloud cost management solutions, I’ve seen that the paradigm typically used for telecom, servers, on-prem software, and other traditional IT assets and services doesn’t work as well for cloud both because of the transient nature of cloud services and that public cloud is often purchased solely by technical buyers, with professional sourcing and finance professionals being left out entirely.

This has led to a new practice that has been called Cloud Cost Management or, alternatively, FinOps (even though the abbreviation FinOps does not refer to the Operations of Finance or the CFO office, but that’s a debate for another time…)

In practice, this means that even the most basic general ledger or Active Directory taxonomy used for the vast majority of business costs is not used for the cloud because the people involved don’t know where to start. From a practical perspective, this means that cloud buyers often don’t get to take advantage of the business structure that most of the rest of IT purchasing has and end up having to recreate basic business categories from scratch.

As you start managing cloud services, you will most likely have to tag your resources within your management solution of choice because of the relative financial immaturity of cloud management solutions.

(There are exceptions: Apptio Cloudability, Calero-MDSL, CloudHealth by VMware, and Tangoe being the best examples)

The basic starting point for tagging is to look both at financial management and operational management.

For financial management, ask your controller or accounting team how they break down IT costs, then use the same categories for your tags. It’s usually some combo of employee ID, cost center, profit center, geography, project ID, General Ledger ID, but every company does its books a little differently.

Then the operational management is based on your IT org’s view of technology management, which could include applications, projects, technologies, staging environments and software supported, cloud service categories, functional IT tasks. This process is well-aligned to an IT Finance or Technology Business Management approach where technology is aligned to specific operational and functional tasks and responsibilities. But you may also need more granular tags that assign each resource to automated governance, security, data transfer or architecturally defined tasks. Each task or function should roll up to a functional manager, project manager, or stakeholder.

In thinking about the operational side of tagging, we recommend looking at Apptio Cloudability, CloudHealth by VMware, CloudCheckr, and Replex as starting points.

These tags end up being the taxonomy for your cloud environment and should ideally match up with existing IT taxonomies across IT asset management, project management, service management, and financial management. Otherwise, you risk reinventing the wheel and using up tags on categorization that only makes sense for yourself or your immediate team.

In addition, after creating these tags, you may also want to group these tags into larger dimensions that are associated with a specific use case, solution, or output with the goal of having shortcuts to manage what can be an intimidating number of services, resources, and tag combinations.

Over the next couple of months, Amalgam Insights will be providing more guidance in this space both with our SmartLists on Kubernetes Cost Management and Market Leaders in Technology Expense as well as releasing our videos on managing cloud costs from our recently completed Technology Expense Management Expo. If you have any suggestions for key issues we should include in these reports, please let us know at research@amalgaminsights.com.

And in case you missed it, here’s our recommendations for managing cloud cost from earlier this year.

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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.

Introduction

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.