Partner Pro Tip: Help Your Customers Avoid Unnecessary Cloud Costs
"Don't pay over the odds" was a line I used in the mid-1990s in reference to advertising. Paying over the odds is the most common problem for customers in IT today and many of them are unaware of it. They pay a lot and get far less than they should -- or deserve.
The easiest thing for a cloud customer to do (most of the time) is to look at their Microsoft Azure, AWS or Google Cloud spend and implement a few changes to reduce their monthly bill significantly. If a customer is unoptimized, doing this can often slash costs by as much as a third, and sometimes as much as two-thirds. I will never understand why some customers just let it slide and choose to pay the highest price available by being passive.
However, here's where there's plenty of room for any partner to step in and become a hero.
The biggest reason a customer pays over the odds is not cloud subscription fees; it's the number of hours involved managing their cloud and the associated cost for these hours. The first thing that you as a partner should do is determine what cost your customer actually got today. This can be a difficult task as people might have mixed roles.
My approach is to look at the big picture because the exact number of today's cost might be hard to determine. If your customer has X number of people at an average annual cost of Y dollars who are working Z percent of their time managing their IT, that gives you a pretty good idea of cost. It's the big picture that is important here; your cost-saving efforts should be huge and not just marginal, so the details are less important. (Just bear in mind that people often downplay how many hours they actually spend running IT, or forget the number of hours spent on incidents outside normal office hours.)
There are two main reasons your customers use up so many hours:
- Their methods and processes are manual and not updated to the cloud era. That means they're using plenty of hours taking care of tasks that are no longer necessary as they're handled by Microsoft, AWS or Google.
- Sometimes a customer uses too many tools from too many vendors with little or no integration between them. Using tools is good, but customers shouldn't go out and buy every single one.
No. 2 is a less obvious driver of cost. My preferred approach is to reduce the number of vendors if they're not integrated with each other. For that reason, I'm opposed to the "best of breed" approach to buying because that just drives unnecessary cost and seldom leads to higher-quality service. Other cost drivers are outdated outsourcing agreements -- for instance, agreements where the customer pays for people's time, not for outcomes. Sometimes these agreements are multiyear and adjusted according to inflation, which gives vendors little incentive to make improvements.
Customers are better off finding a partner that can provide these services at scale. They can purchase a distinct set of services from someone that provides tangible ROI and measurable outcomes (SLA), and keeps uptime and security top of mind, at a much more competitive cost than they're getting today. Approach running your customer's IT as a utility service. To round out your portfolio, find a channel partner that works with resellers or referrers.
As Microsoft partners, we often would rather talk about providing excellent service and highly innovative solutions over cutting cost. But sometimes, it's wise to focus on how customers spend their budgets and help them redistribute their funds so they don't spend too much just running IT. It's good business practice to make sure your customers don't spend too much in any area -- especially areas that don't give them a competitive edge or build the business. A modern partner can help customers cut costs so they can spend more on areas with great ROI, like AI solutions, business applications, automation and dashboards. You won't win any industry awards by reducing cost, but you'll create huge customer satisfaction, and that's probably the best prize you can ever win. You will not only benefit your customer, but also your business.
Customer satisfaction is what drives longstanding relationships, and that's what all partners are striving for. So let's embrace cost-cutting the smart way and help our customers to not pay over the odds.
Posted by Per Werngren on January 22, 2025