Recently, Mike Gersten, Global Innovation and Strategy Leader at SoftwareONE, was interviewed by BFM 89.9 – the C-suite business radio station in Malaysia. He discussed how SoftwareONE takes a modern approach to Software Portfolio Management (SPM), in particular when moving applications to the cloud. You can listen to the full podcast here, and we will highlight the main points from the conversation below.

Moderated by Angeline Teh, she discussed five key topics with Mr. Gersten, including:

Are you paying too much for cloud?
The struggle to have a holistic view of your enterprise in a hybrid world
Why is cloud easy to buy, yet hard to control?
Clarity into overall cloud consumption
The IT leaders need for comprehensive portfolio management

Are you paying too much for cloud?

In response to, why are companies struggling with the costs around cloud, Gersten explained that Software Portfolio Management allows for a customer to view their entire software portfolio – both on premises and in the cloud. Software Portfolio Management lets the organization understand what they have purchased, through what is being retired. The challenge – and why many organizations might be paying too much for their cloud services – lies in the fact that companies are still used to measuring against the install base of a particular software. However, the cloud is no longer installed, it is consumed.

The cloud of course is not new, but what is new is the proliferation of applications across organizations being moved to the cloud. With nearly 15% of all applications now in the cloud, and that number expected to rise to 20% by 2020, consumption is one of the most important concerns around the globe for organizations today.

Is a Holistic View Possible?

Gersten went on to explain, that consumption – or your cloud spend management – is now its own category in terms of how you manage your overall cloud strategy. Part of the breakdown of the holistic view (that was more possible with on premises only) is due to the fact that the purchaser of these services is no longer a single individual. In the past it was the Chief Procurement Officer (CPO) that monitored the software purchases; today it could be the Chief Marketing Officer (CMO) or the Chief Information Officer (CIO) as well. In fact, Gersten has found that CMOs today typically have twice the budget of a CIO. The CPO is the one responsible for reporting on the cloud consumption, yet has little to no visibility from marketing as to what is being purchased, making a holistic view very difficult to achieve.

Why is Cloud easy to buy, yet hard to control?

Working off of the lack of a holistic view, it makes sense that controlling the overall purchasing of cloud related applications is nearly impossible to control. Gersten stated that the over spend on cloud across organizations is approximately 30% – 45%. Anyone with a credit card and purchasing rights over a certain amount can now buy their own cloud-based application. No approvals needed.

How do we find clarity in overall Cloud consumption?

This is a complicated problem, but one that needs attention. The major software publishers – Microsoft, IBM, Oracle, SAP – are not going to simply throw up their hands and say, “Oh, well. ABC Corp. used 20% more of our cloud services than we subscribed but we don’t mind.” No, organizations who do not find a way to manage and monitor their cloud consumption will either find themselves overpaying, or be hit with a major bill from the publishers.