What is tail spend?
Tail spend refers to the unmanaged purchases made within an organization that fail to pass through an official procurement process. On account of their low value, the costs incurred by these purchases are seldom monitored by financing teams as they are generally too small to be deemed “strategic”. The problem, however, is that they can make up as much as 20% of a business’ total spend.
Related Definitions
Cloud Unit Economics
What is cloud unit economics?
By definition, cloud unit economics refers to the financial analysis and evaluation of both the costs and revenue associated with operating a cloud-based business.
In other words, it’s a way of looking at how much it costs to run your business on the cloud, as well as how much it brings in.
Spot Instances
What are spot instances?
As with any cloud service provider, AWS will have spare capacity available to support surges in customer demand. To offset the loss, AWS offers this excess EC2 capacity – in other words, spot instances – at a heavily discounted rate.
To benefit from these spot instances, users must bid on this unused EC2 capacity in their desired region. The capacity is then allocated to the highest bidder. While it can be a great way to reduce costs by as much as 90%, it is only suitable for workloads that can tolerate interruptions and don’t require continuous availability. This is because AWS will terminate the instance after a two-minute notification in the event that it needs to reclaim the resources, or because the spot price exceeds the bid price. In other words, when other customers are willing to pay more.
Multi-Tenancy Environment
What is a multi-tenancy environment?
In cloud computing, a multi-tenancy environment refers to a situation where multiple users, also referred to as tenants, share the same physical infrastructure and resources. These resources, such as computing power, memory and storage are dynamically allocated based on the needs of each tenant. Each tenant’s data is, however, stored in separate databases to ensure both privacy and security.
Price Uplifts
What are price uplifts?
In the context of SaaS, price uplifts refer to an increase in the price of a software subscription. While many software providers will implement price uplifts on an annual basis, typically at the point of renewal, others may review and amend their pricing more frequently, for example on a quarterly basis. It is recommended that buyers negotiate a price uplift cap during the initial contract negotiation stage, placing a limit on the maximum amount the subscription can be increased by within a specified time period.
SaaS Sprawl
What is SaaS sprawl?
SaaS sprawl, also known as software sprawl, occurs when an organization’s SaaS stack consists of a large — and often unmanageable — number of applications.
Ultimately, as business needs grow, the number of digital tools required increases, which leads to new applications being subscribed to, be this through a centralized process or at the will of individual employees.
Auto-Scaling
What is auto-scaling?
Auto-scaling refers to the automatic adjustment of cloud computing resources based on an organization’s current demand and workload. It dynamically adjusts the allocation of resources to match the evolving requirements of an application or system without the need for manual intervention.
There are a number of benefits to using auto-scaling, the first being cost efficiency. By ensuring that resources are scaled up or down as and when needed, organizations can avoid over-provisioning and subsequently reduce unnecessary expenses. It also helps maintain consistent performance levels by automatically adding resources during peak demand periods.