Each year, my employer sends an engagement survey to all the associates. One question that is always asked, despite the fact that it is universally acknowledged as a ridiculous question, is ‘Do you have a best friend at work?’ I check the yes box. I’m best friends with my procurement partners, Chris & Anne.
What is your procurement partner’s favorite lunch spot? Chris likes Jimmy Johns. What are your procurement partner’s favorite hobbies? Anne likes to make vendors cry and uses their tears to dress her salads.
Years ago, I would never imagine being so close to procurement. When I worked in an environment where all costs were fixed (except labor - always remember that labor is not a fixed cost), I would only talk to procurement once every few years when I needed a contract renewed.
Once, a procurement partner who was NOT my best friend, let's call him Walt, expressed his displeasure with me for engaging him late in a renewal process. I explained it wasn’t late, and that I planned time for him to join in and make us start all the paperwork over. I just wanted to do the fun part of negotiating. His response was classic: “Gee Joe, launching servers sure looks like fun. Mind if I launch a few hundred?” Walt turned out to be a jerk, but he had a point: he had a specialized job and I was blatantly leaving him and his experience out of it.
Later, in my first meeting with one of my new best friends, Anne, she brought the point home. “Joe, are you friends with your vendors?”
“Well, Anne, I like to think that I’m a friend to everyone.”
“Friends pay full price,” Anne explained, channeling her Alec Baldwin ‘PUT THAT COFFEE DOWN’ persona.
Yes, vendors can be partners, but in reality, they are not signing contracts with you in order to be besties. Ask yourself this: Do real friends' eyes turn yellow and red when you tell them you are migrating to the cloud? Vendors will act to protect their revenue and if you threaten it with a cloud migration, renewal terms start to change in front of your eyes.
Your procurement partner, who is not only your best friend, but your company's advocate, will help you navigate the impact of the cloud on contract renewals. This is critical because - again, besides labor expense - most on-prem infrastructure costs are contractual. If you reduce the revenue generated from one contract, the vendor is likely going to try to recoup it in another. Let’s say you want to reduce the size of a database contract. If you are successful there, you may land up paying more in an analytics system contract your company has with the same vendor. You need your Procurement BFF to help you understand the entire business impact of potential contract reduction. Cloud migrations are hard work to get right. You don’t want the value you generated bled out through contacts signed elsewhere in the enterprise.
Along these same lines, your Procurement BFF should help you prioritize your work. If you are trying to reduce migration bubble costs, most on-premise costs can’t actually be removed or reduced until the associated contract expires. You may be focused on a big spend reduction that you won’t be able to claim for a few years until you exit the contract. Instead, you may want to focus on smaller opportunities that you can claim sooner. Procurement will give you the visibility of contractual constraints that are likely out of your control. Do any of your contracts have true-down opportunities? It is extremely important to know where your fixed costs are and what levers and/or pressures impact them. Procurement BFFs can tell you this high-value info.
Likewise, your Procurement BFF needs you as well. The natural instinct when looking at contracts is to drive down rates. The trade-off for a low rate is high consumption commitments and/or longer term. There is also the siren call of unlimited consumption deals that can turn into contracts that are impossible to touch later because of the inevitable license audit if you ever want to change contract terms. This mindset needs to adjust as you move to a variable cost model of the cloud.
A major value of a variable cost model is flexibility. Treating the cloud like a utility requires flexibility so you need to negotiate contracts with that in mind. Dad analogy: imagine yelling at your kids for leaving all the lights on whenever they leave a room and those ungrateful little turds turn around and say ‘what does it matter? You’re on a fixed payment schedule!’ Is there anything worse than a child proving you wrong? Minimum consumption commitments that do not match what you actually use may give you a low rate but removes the flexibility and decision-making power that comes with a variable cost model.
If you aren’t already friends with your procurement partner, time to get smart. Start hanging around outside of Jimmy Johns and see what their favorite sandwich is. Together, you and your new BFF are a powerful FinOps force.
Marathon Playlist
Way back in January, we were still deep in lockdown mode with spiking covid numbers. Even in non-pandemic times, I get antsy in the winter. I knew for my own mental health I would need some sort of diversion to get me through the coming months. So I signed up for Grandma’s Marathon in Duluth, MN.
I didn’t actually think the marathon would happen, but I needed the excuse to get me outside in the cold and snow and run. It worked. I felt great and it turns out the marathon went on as scheduled. I went to Duluth, got on a bus, was driven 26.2 miles away, and then I ran back. At the end, they offered me a banana. It was nice.
To fill the space in my head all that time I ran, I made a playlist. This is the playlist I’ve listened to the most this year and considering 100% of that listening time was while in the physical act of running and I still love all of these songs, speaks to their quality and my admittedly weird acknowledgment that I like to run.
Midnight Rider - Sharon Jones & The Dap-Kings (You will refer to her as MISS Sharon Jones)
Orange Blossoms - JJ Grey & Mofro
Peach Fuzz - Caamp
Call Me The Breeze - J.J. Cale
So What’cha Want - The Record Company
Fun facts about this playlist:
2 cover songs
2 JJ’s
Some of the band members of Caamp live in a how just a few miles down the road from me
The ongoing playlist
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