What ISVs Should Know Part 4 - Procurement

2023-09-30

Table of Contents

Embarking on the cloud migration journey is a significant step for any company, and for software companies, getting Procurement involved is not just a suggestion; it’s a strategic imperative. The implications of this move are broad, and while they aren’t exclusive to software companies, the unique nature of their operations makes their involvement in cloud migration particularly critical.

Why Software Companies Stand Out

Software companies are known for drawing a distinct line between what they prefer to build internally and what they opt to procure externally. The rationale behind this approach is straightforward yet profound – they want to channel their efforts into differentiating themselves in the market. This means steering clear of investing time and resources in tools that don’t directly contribute to their business value. As a result, they heavily rely on third-party software solutions to enhance their product offerings.

Cloud Migration: A Paradigm Shift

As software companies transition to the cloud, Procurement finds itself at the heart of the action, requiring a deep understanding of the implications and a redefined role in the new infrastructure.

Still skeptical about their new role? Consider a scenario where a software company sells systems to customers. The procurement expert knows the ins and outs of purchasing NAS storage – which one to buy, necessary features, contacts, and negotiation strategies. Fast forward to the cloud era, and that NAS storage transforms into cloud-native services like FSx or EFS, or it’s directly purchased through AWS Marketplace by developers, bypassing traditional procurement channels.

Gone are the days when Procurement was the go-to for a simple box of pens. Now, developers can snag reserved instances with a commitment for three years without breaking a sweat or involving Procurement.

The Role of Procurement in the Cloud

Before/During the Migration

A crucial phase involves reviewing the third-party inventory slated for migration. Attention to details like operating system licenses, support for older operating systems, and licenses tied to specific IP or MAC addresses is paramount. These considerations ensure a smooth transition, particularly in the dynamic cloud environment.

After the migration

A few services to note to govern and manage the 3rd party procurement in the cloud.

AWS Private Marketplace

AWS Private marketplace allows you to govern and control what services are purchased in AWS Marketplace. It would allow you to define a list of allowed products and if the users wish to purchase a product that is not on the list, they would need to get approval from the procurement department. You can also decide to block specific products to avoid getting repeating request on a product that was already denied.

AWS License Manager

AWS License Manager enables you to track licenses and govern the distribution of licenses in your organization. You can do the following:

• See the licenses granted in the AWS Organizations organization in a centralized location. • Add tracking to licenses that you want to monitor the activity on • Decide how to distribute the licenses across the organization to linked accounts

AWS Systems Manager Inventory

I get a lot of questions from procurement around- how can I tell what 3rd party software is running in our environments. Other than the services acquired in AWS Marketplace, there might be software running on the instances. Once way to get a report is through AWS systems Manager inventory. You can get a full report on the all the software running in all the accounts. This requires the instances to run an agent of Systems manager, but this is something that can be enforces using tools like AWS Config.

AWS Marketplace Private offers

Once you know which services in AWs Marketplace are in high demand in your organization you can use that knowledge and get a discount from the vendor. it’s called AWS private offers, and once price and terms are agreed with the vendor, you give the vendor your account ID and they add it to a private offer that is then available to your organization on AWS Marketplace with the revised terms and prices.

In Conclusion

While these highlighted services play a crucial role, it’s essential to note that they represent just the tip of the iceberg. Numerous other services are available, and continuous learning on managing and governing procurement in the cloud is highly recommended. As technology evolves, so does the landscape of cloud services, and staying informed is key to making the most of the cloud migration journey.