Recent AWS Billing Error Points to Need for Partner-Led Cloud Management

Telecom expense management has been a familiar part of the indirect channel landscape for at least a dozen years. But the need for its more evolved counterpart, cloud management, provisioned through partners, is becoming more apparent.

In late September, word quickly spread that Amazon Web Services had overbilled a number of customers throughout the world. It was an accident, and one that AWS caught and corrected right away. Nonetheless, the incident made clear that channel partners can, and should, play a larger role in their enterprise clients’ cloud management efforts.

First, a little clarification: the recent AWS invoicing errors were an anomaly.

ServerCentral Turing Group’s Eric Dynowski

“We’ve been an Amazon managed service partner and reseller for about a half-dozen years now and this is kind of the first time we’ve seen what I would call significant billing errors as a result of Amazon,” Eric Dynowski, CTO at ServerCentral Turing Group, told Channel Futures. “In most cases, Amazon billing is just fine.”

Tim Meng, CEO of managed service provider One Source Communications, agreed.

“I think the markets generally like to bash Amazon, Spectrum or whoever when it comes to billing,” he said. “But this one’s a false equivalency. This is the first time in seven years. The reality is this: It’s far less likely for Amazon to miscalculate invoices than it is for a customer of Amazon to spin up an instance of AWS and forget about it.”

And therein lies the real opportunity for channel partners. While there is legitimate reason to track and monitor cloud expenses for organizations, there is even more call to ensure they use what they buy, and control consumption.

Here are some of the most common scenarios that lead to overblown cloud payments: CIO changes, full regime changes, mergers and acquisitions, shadow IT, and forgotten cloud infrastructure.

One Source Communications’ Tim Meng

“When knowledge evaporates, these things keep spinning until someone looks into the invoice,” Meng said.

Meng recommends fellow channel partners ask their customers the tough questions. Is there a business case for the cloud instance that’s being billed? If there’s no good answer, try turning off the cloud instance for a month and see whether anyone complains. Did the enterprise technically consume the services? If the answer is yes, the organization still must pay the invoice.

“That’s where we and other partners come in — to analyze spend and usage, and come up with strategies for optimizing [cloud usage],” Dynowski said.

The goal is to get enterprises to a steady state, through audits and reviews, and prevent billing errors to the extent possible in the first place, Meng added.

Another aspect to consider is that enterprises require more guidance overall when it comes to cloud. Partners should provide this expertise in the form of contract negotiations and by encouraging clients to think about what they really need.

“Cloud services, just like telecom services contracts, are negotiable,” Meng said.

While enterprises likely need to have major buying power to sway AWS, more than any other cloud provider, there can be wiggle room.

“Any organization of any significant size should negotiate,” Meng said. “On the cloud side, enterprises spending five or six figures have plenty of power.”

Channel partners are key to assisting in those efforts.

Partners further should work with clients to make sure they take a different view when it comes to cloud services: “Don’t pay for what you use, pay for what you need,” Meng said.

Dynowski concurred, noting that the approach will help avoid perceived errors. Sometimes customers accidentally consume services, he said, and then think a programming mistake or hack occurred. Setting up cloud management and expectations should circumvent these misunderstandings.

Overall, both Meng and Dynowski recommend provisioning cloud management, which includes everything from procurement and implementation to overseeing the associated licenses and providing reports, for customers. This makes the partner even more valuable to the client and takes load off the enterprise.

And don’t expect to see a repeat of the AWS billing snafu any time soon.

“The next time this happens will be many years in the future,” Meng said.