How Rogue Spend can kill your business?
Rogue spend: it sounds ominous, and it is. It can suck your company’s money right from under your nose, and you may not even know about it. What’s more, rogue spend or rogue spending often occurs in software and through areas such as the cloud, which can mean a big headache for those who are working to keep costs down.
What is Rogue Spend or Rogue Spending?
Rogue spend or rogue spending is where you have a list of suppliers and vendors that are not being used through normal procurement channels. Employees purchase products without “being on the books.” It may seem small and simple, such as piece of cloud software, but the costs add up quickly and can seriously affect your bottom line. According to ITBusinessEdge, some 54 percent of those who answered the survey admitted to purchasing software “rogue.”
The more obscure the product is, such as software, the more likely there is to have rogue spend occur. In fact, when it comes to places such as the cloud, it’s likely that people will purchase software and packages they do not need, thus wasting the company’s money.
Clouds and Software
While companies have procurement in place, many employees feel as though the policies and procedures can be difficult to follow. In some cases, this is correct, but the policies and procedures are there for a reason: to prevent overspend. But what if the employee needs the product now? There are many cloud companies out there that offer free trials of their products, hoping to lure customers who can use their product. Their product soon becomes indispensable and they run into problems when they go beyond the “free trial.” It’s quite simple to pay for a single license with the department budget. But what if everyone is using it? Or enough people are using it to where it makes sense to have a company license? The company license could save hundreds, or even thousands of dollars each year.
Are You Using What You’re Paying For?
Suppose your marketing people want to use cloud services instead of in-house software. They recommend a package. This is everything and the kitchen sink. Is all the software within the package being used? Is using the cloud a good advantage or are you wasting money on services that are underutilized? What is the cost to benefit ratio? Would it be better to use on-site software or is the cloud really necessary? Are there risks associated with IP or sharing other sensitive data?
You Need Answers
Procurement is an important part of the business which shouldn’t be ignored. This is why you need to have policies and procedures in place that are simple to follow. But that alone won’t stop the rogue spending. Software such as SpendAgent can help you locate software in the cloud that your company is using rogue. That and manual audits will help keep the rogue spend in check.