Is unified billing the elephant in the room when it comes to SaaS? Credit: Christina MorilloCreative Commons
Business Management

Is unified billing the elephant in the room when it comes to SaaS?

According to its 2019 Business @ Work report, identity management platform Okta found that large enterprises have on average of 163 enterprise applications in their estate. This highlights the prevalence of a culture shift over the past decade away from monolithic license agreements with vendors like Oracle, SAP and Microsoft, towards the adoption of a plethora of best-of-breed software as a service (SaaS) tools.

While this no-doubt brings huge advantages in terms of capability, employee satisfaction and collaboration, it does create a set of headaches for IT when it comes to access management and security, compliance and cost. Where there used to be one hand to shake there are now 163, and that creates a billing and compliance headache that many are still grappling with.

Speaking during a roundtable event at content specialist Box's UK HQ last week the UK heads of SaaS giants Box, Slack and Okta all discussed the challenges that arise as enterprises adopt more and more best of breed tools.

One topic that came up was the added complexity this footprint brings from a billing and compliance perspective.

"You've got 163 apps, and now you're getting 163 bills, is that really efficient? As opposed to getting three bills from SAP, Oracle and Microsoft?" asked Jesper Frederiksen, vice president and general manager for EMEA at Okta.

"I think what's happened is people have moved from capital expenditure purchases for IT, over the last 10 to 15 years, towards software as a service, and it adds up, right? We all charge per user or per transaction," said Chris Baker, GM EMEA at Box.

Where larger organisations can set up entire internal teams to manage their software assets, or join the technology business management (TBM) school of thought, or even hire a consultancy to unify everything for them, some smaller businesses might not be able to do that.

"I think what I've seen, in the very low end, you are seeing people like BT and Deutsche Telekom trying to aggregate this for SMBs, and really do self-service portals and so on where you combine multiple services," Frederiksen said.

"Then I think what we've seen in the other end of the market is actually people like Capgemini, Accenture and Deloitte, some of the large system integrators that are starting to do this on behalf of their customers, where they are building pre-packaged solutions and saying, 'we're going to run it for you, and we're going to procure it for you, and we're going to do all of these things'. So instead of getting 15 different invoices for this complete stack, you're buying a sort of an out of the box service from them."

He went on to predict that a new breed of managed service provider will emerge for the SaaS world, with companies like Apptio and Zylo surfacing ing to take this pain away from CIOs.

Zylo for example is a SaaS company for SaaS billing. It provides a platform for cataloging your entire SaaS stack to work towards unified billing and a single view of your estate for more effective compliance.

Apptio takes a broader approach to IT financial management across cloud and on-premise, promising IT leaders a more transparent view of all of their spending, underpinned by TBM practices.

Read next: Lloyds looks to rationalise its IT estate with help from Apptio

"This new world does introduce friction in some areas, and then innovative people create a new company and a new business model and go solve that," Frederiksen added.

It's not all negative though, as Stuart Templeton, head of UK at Slack was keen to point out. "The exposure to on-premise software license audits ... it's not trivial and we've all heard horror stories," he said, indirectly referring to the SAP/Diageo indirect licensing fiasco.

"The nice thing about cloud services is it is manageable. You get great transparency into who's using what and where," he added.

"It's not just about the billing, it's about being compliant," Baker added. "I remember Salesforce once, about 10 years ago, saying: 'We're going to take away software asset management as an issue for you with software as a service'. Of course, what's happened now is it's actually far more complex than just having a bunch of licenses."

"What [customers] would love is an economy of scale across all of the best of breed [vendors]," Baker said, "which of course commercially is very hard to get done."

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