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Cloud licensing and procurement: what does good look like?

Livingstone is a proud member of Innovation Martlesham, a network of innovative tech companies of all sizes and maturity, based at BT’s world-renowned Adastral Park in Suffolk.

At the end of 2020, a couple of the Livingstone team were invited to talk to other members – from start-ups right up to the giants of the industry – about the accelerated adoption of cloud and subscription-based services, and the significant impact this is having on the way organizations manage their IT assets.

The discussion centred on what good ITAM looks like in today’s ‘as-a-Service’ era.


Wider trends impacting ITAM

While the rate of innovation in the technology industry has always been fast, in 2020, digital transformation programs hit full throttle, with companies forced to digitize their processes and operations almost overnight. This rapid mobilization was only possible because of the widescale availability of cloud-based services, but there are some knock-on effects to consider.

In-house IT teams have been required to shift their focus from procuring, integrating and managing technologies to procuring, integrating and managing services. They find themselves fulfilling the role of service provider, where they oversee cloud-based subscriptions, often selected by colleagues in other business divisions, who sanctioned the purchase of these services in the moment, in order to keep the own teams working efficiently, but with little awareness of the commercial consequences.

This means that IT and procurement departments have – at least in part – lost control over their estates and licensing spend. A situation that introduces new risks.


Heightened risks

Perhaps the most obvious risk associated with subscription-based services is overspend. An organization may have entered into a contract which offered poor commercial terms so is paying over the odds from day one. Even if the IT and procurement teams were involved in the purchasing decision from the outset, if their expertise lies in CAPEX-based legacy contracts for on-premise equipment, there’s always a chance that something important could have been missed.

Without visibility and careful management of both cloud deployments and usage, organizations could also find their bills increasing over time. Indeed, unfettered consumption also raises additional, interconnected risks: the risks of non-compliance, audits fines and back payments for previous, unauthorized usage.


Defining what good looks like through best practice IT governance

While the shift from CAPEX and technology to OPEX and services isn’t straightforward from a licensing perspective, there are best practices that organizations can follow to reduce the dual risks of overspend and non-compliance.

The first step is to collect Trustworthy Data about what services have been deployed, what is being used and to accurately forecast how this will change in the future.

Not only will this help pinpoint overspend, it also provides leverage when negotiating future commercial terms and will help stave off any nasty audit surprises. Tough conversations may be required to establish what services are needed. Divisional heads must clearly understand the true cost impact of their tactical purchasing decisions so the organization as a whole can select the services that deliver the most overall value.

Best-practice Lifecycle management is also vital. This will both cut out waste and support the rationalization of licenses, both of which should lead to lower bills and fewer commercial risks.

Finally, it is imperative that organizations proactively manage their portfolio of cloud-based services so it is continually optimized. Optimization processes deliver an average of 38 percent cost savings to organizations, making them perhaps the most effective method to remove unnecessary costs and risk. To find out more about best practice ITAM Governance in the cloud age, and the central role that optimization plays, please take a look at our recent eGuide.

Otherwise, you can hear more about the cloud’s impact on ITAM – and what good looks like – on Innovation Martlesham’s YouTube Channel. Alternatively, please visit the dedicated cloud optimization pages on the Livingstone website.


Chris Lewis, Head of Group Marketing




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