We’ve all heard about things “moving to the cloud” but what does that really mean? Essentially, if the “brains” of a service exist on the internet and not at your physical location, it’s in the cloud. (If there is hardware involved, it’s probably telecom services, instead.)
This growing category of expenses includes license-based services such as Microsoft 365, Zoom, telephone services, email, data storage services, virtual devices (VDI), and security services. Simply put, it is most of our technology.
Since IT is often one of the top expenses in a long-term care organization, why wouldn’t you want to try to save money? The issue is that most organizations don’t even realize there is a problem. Here are 4 reasons you’re probably overpaying on your cloud services – and what you can do about it.
1 - You’re Duplicating Services or Oversubscribed
The most common issue we see in organizations is simply having too much. Whether it’s duplicative services or paying for ten licenses when only 5 are needed, it’s almost impossible to not overpay. Afterall, it’s so easy to upgrade.
During the pandemic, many administrative and support staff worked from home and needed all the perks of their offices at their dining room table. The industry was in crisis mode, and decisions were made quickly without thought to cost – it just needed to happen. But when everyone returned to the office, many of the duplicates – like firewalls needed to stay HIPAA-compliant – remained.
Another prime example is something referred to as “shadow IT” which is essentially due to departments not always talking to each other. This doesn’t mean there is tension, or a bad work environment, it just means no one asked the right question at the right time. For instance, if the marketing department buys a service without realizing that something similar already exists in-house, the organization is double paying.
BONUS: the security and policy angle. Let’s go back to the scenario where employees work from home and need cloud services to do their job. The immediacy of the crisis is over, so if you haven’t evaluated your policy on work from home and what services will be paid for or reimbursed, now is the time.
Pro Tip:
Know what you really need, and know what services you already have. Cloud services are so easy to sign up for, and many seem like nominal expenses. But that means you might be paying more than you need to.
2 - You aren’t’ Reading the Fine Print on Your Contracts
If there is one resounding theme we see with operating expenses it’s that contracts are difficult to understand. Cloud services are no exception.
Those who actually read the fine print might find some real “gotchas.” For instance, there might be an acceptable use policy that leaves you vulnerable, or you might discover they are re-selling your information.
But many of the issues we see are related to auto-renewing of contracts or extra fees being added. Some DevOps services can be billed either by monthly subscription or by consumption, but it’s not always clear which is happening or how it is measured. In other words, it can be hard to determine whether a bill is accurate.
BONUS: the security and policy angle. At the end of the day, security and compliance are the biggest risks here. An internal audit of policies is truly needed to evaluate how employees store files, and how they use company-owned computing devices, and whether it is all HIPAA-compliant.
Pro Tip:
Have a contractor lawyer review your contracts for any tricky language that you don’t understand or could put you at risk. Consider a mobile-device management solution, which monitors every computing device for compliance and only allows authorized applications.
3 - You Haven’t Factored in the Federal Infrastructure Bill (or Other Legislation)
Is your organization in a remote or rural area? It can be hard to get quality internet in many of these locations. However, with the recent Federal Infrastructure Bill there are lots of opportunities for rural, underserved entities. There are fiber rollouts happening to the tune of billions of dollars. In other words, now is a great time to review your contracts because there may be incentives that allow you to save money and improve your service.
Just like on telecom services, there are certain legislation and tax structure realities that impact charges and taxes on your bill. In regards to taxes, consider sales tax, tax exempt status, and industry-specific taxes that come into play. Some areas are regulated, while others are free market. It’s important to have someone who understands this area take a look at your bill.
Pro Tip:
Look into how the Federal Infrastructure Bill could impact what services are available to you, and if there are any credits or incentives for making a switch.
4 - You Don’t Know How to Do an RFP in Cloud Services
If cloud services feel like a totally overwhelming space to do an RFP, you’re not alone. In fact, most clients we speak with have no idea how to do an RFP in this area. Some common questions to consider if you’re looking to evaluate your contacts include:
- What do you currently have?
- What do you actually need? (do you know what your options are??)
- How much flexibility do you want? (think number of licenses, duration of contract, etc)
- What is your strategy for using cloud services?
Even if you’ve taken the time to answer these questions and feel confident about your needs, cloud services is one of the fastest growing – and fastest changing – areas. Organizations often add on new services one at a time that end up providing overlapping services. It’s helpful to regularly evaluate whether you’re paying for 2 services when 1 would do.
Pro Tip:
Don’t go it alone! Let HMS help with an RFP for cloud services – even if you use a GPO or buying consortium. They may offer pre-negotiated rates, but they aren’t always the best rates. Bonus: even if we can negotiate a better deal, you can still work with them if you prefer to streamline vendors.
Recently, we worked with a client to evaluate their managed-services provider. We knew right away they were probably overpaying, and based on our benchmarking, we were able to bring their prices down. By right-sizing their internet (and then renegotiating their contract with current rates), we saved them close to $200k per year. And that was just one of the biggest line-items on their IT bill!
Imagine what we could do for you! Ready to get started? Schedule a FREE Revenue and Margin Assessment Call with our team or email us at getstarted@hmspecialists.com and see how we can save on your cloud services – and more.
