What would you do if your CEO dropped a last minute due date on you for a project that the R&D team thought wouldn’t start for another six months? Turning to the cloud for quick resource provisioning may solve their time constraint, but what about their IT budget? Who will manage and control the added computing resources? Where are your organization’s applications and data hosted? And as your company’s IT leader, are you the one who needs to govern these types of last minute events? Below, we will look at the ins and outs of shadow IT when it comes to IaaS: including how to deal with it, and how you should embrace it.
Whether you like it or not, situations similar to the one outlined above happen more often than you think. They’re known as ‘Shadow IT’, and essentially result in employees using various IT solutions and resources without any regulation or official approval from the IT department. Shadow IT stems from the combination of your overwhelmed staff and the online availability of a wide variety of cloud services. Recognizing that your organization’s cloud environment is still your responsibility, Shadow IT offers you a clear option: either eliminate the use of unregulated IT services, or accept Shadow IT as a strategic role within your organization. CIOs who choose to fight against this trend face an uphill and endless struggle.
Cloud Financial Management
When you help out your organization’s R&D leader by purchasing additional cloud resources that are meant to support your organization’s test lab, you take on the role of the enabler and accelerate your organization’s pace of innovation. However, with this great deal of flexibility comes significant challenges in terms of visibility and governance.
A broad-minded approach would allow an enterprise CIO to apply regulations and governance (tools) that actually support Shadow IT initiatives. Essentially, these tools can help IT teams better understand the desires that employees have to meet business needs. IT teams should develop and implement new internal methods and tools to support ‘showback’ and ‘chargeback’ and allow business units (BUs) to purchase on‑demand cloud resources and services directly from their individual IT budgets.
However, due to the cloud’s dynamic environment, allocating costs per BU or line of business (LOB) and running chargeback activities can be complicated, requiring financial analysts to manually collect information and analyze invoices in order to identify the sources of organizational expenses. What’s more, while monitoring SaaS usage (e.g., Salesforce) is straightforward, being able to learn how cloud infrastructure is utilized across your organization is impractical if monitoring inventory is done manually (e.g., using Excel spreadsheets). It is not feasible to correlate between resource usage, storage usage and their costs, as well as clearly understand the manually calculated underlying infrastructure ROI.
In order to successfully govern your organization’s IaaS activities in a multi-cloud or hybrid cloud environment, you need to use a cloud financial management tool that can provide you with a comprehensive and in depth view of your IaaS deployment usage, utilization and costs across your organization. In addition, with complete visibility and control over your cloud’s inventory, costs and usage, your enterprise cloud financial management solution should look at each BU separately as well as find optimization opportunities across the organization. This will allow your organization to leverage capacity consolidation opportunities as well as make better decisions when it comes to making long term commitments (e.g., AWS Reserved Instances). Additionally, being able to provide BU managers with access to this type of system will help them better understand their usage and will naturally hold them accountable for resulting costs.
Final Note: Become an IT Broker
As an enterprise CIO, you need to collaborate with peers across your organization in order to understand each department’s requirements and support each department’s autonomy. However, allowing cloud operational efficiencies should not compromise the control that IT and finance need to maintain over the business as a whole. In effect, as CIOs and IT financial analysts, you should look at your roles as brokers, enabling BUs with complete independence while tightly monitoring usage and costs. As experts, IT teams are the only ones who can find cross-organizational optimization opportunities. Once these opportunities are found, you need to enforce rules and budgets that will keep the environment under control. At the end of day, it is still your responsibility.
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