In today's dynamic business landscape, many organizations are turning to zero-based budgeting (ZBB) as a strategic approach to financial management. This method requires that every expense be justified for each new budgeting period, starting from a "zero base."
For enterprises building on the Microsoft tech stack, a thorough Microsoft 365 governance strategy can help multiple departments across the organization reduce costs and enhance their zero-based budgeting.
Understanding Zero-Based Budgeting
Zero-based budgeting (ZBB) differs significantly from traditional budgeting methods, which often involve incremental adjustments based on previous budgets. Instead, ZBB compels managers to scrutinize all expenses, ensuring that resources are allocated efficiently and aligned with the organization’s strategic goals. This approach not only helps in identifying unnecessary expenditures but also fosters a culture of accountability and cost discipline.
Microsoft 365 hard cost overspending
As organizations increasingly adopt Microsoft 365, they face several challenges that can hinder effective cost management. Below are some examples of hard-cost overspending, but certainly not the only ones.
Over-licensing
Many businesses struggle with over-licensed accounts, where users have subscriptions that they don’t fully utilize. This leads to wasted resources and inflated costs that can easily go unnoticed without proper oversight.
Storage Inefficiencies
With the growth of data, organizations often find themselves paying for excess storage without fully understanding their actual needs. This can result in significant unnecessary expenses as businesses fail to optimize their storage solutions.
Expensive and unnecessary connectors
Failing to effectively manage classic and premium connectors in your Microsoft 365 tenant can lead to significant cost implications. Organizations that use premium connectors must ensure users have the appropriate licenses; otherwise, costs will increase automatically or solutions will fail to work.
The role of stakeholders in scrutinizing their budgets
In a zero-based budgeting environment, various stakeholders play crucial roles in scrutinizing their budgets. In this context, we refer to different departments as stakeholders. Each department must justify its expenses from scratch and ensure alignment with organizational goals. In some cases, their justifications can overlap between departments.
Procurement
The procurement department is essential for maintaining the organization's financial health. They evaluate all licensing and subscription costs associated with Microsoft 365 and identify unused or underutilized licenses for elimination. By conducting a thorough cost-benefit analysis, procurement ensures that only necessary expenses are included in the budget.
Security and compliance
Security teams are responsible for protecting organizational data and ensuring regulatory compliance. Their involvement is critical to justifying expenses for security measures and compliance tools. They assess whether current security investments are effective and necessary, providing detailed justifications for ongoing costs based on risk assessments.
Human resources (HR)
HR manages employee-related expenses, including onboarding and offboarding processes, which directly affect Microsoft 365 licensing. They analyze the number of licenses required based on current staffing levels and ensure each license is justified by the employee roles. Monitoring turnover rates also allows HR to advocate for adjustments to licensing budgets as needed.
Finance department
The finance team oversees the overall budgeting process and ensures alignment with strategic objectives. They critically review each department's budget submissions and engage with stakeholders to understand their needs, facilitating informed decisions about resource allocation.
IT department
The IT department manages Microsoft 365 services and evaluates technology-related expenses. They assess whether technology investments support operational efficiency and identify areas where technology can be streamlined or consolidated, proposing budget adjustments that lead to significant savings.
Analytics department
The analytics department ensures the organization remains data-driven. In many cases, technologies such as Power BI and other analytical tools are controlled and maintained separately from other collaboration technologies.
How Rencore Governance helps
Just as all Microsoft 365 apps and services are embedded across all aspects and departments of the business, Rencore Governance gives you the complete picture of how these technologies are working in your environment and automates your complete cloud collaboration governance lifecycle.
While the core principle is to keep you in control of your Microsoft cloud collaboration, cost control is a delightful by-product of keeping your organization secure. Therefore, tools like Rencore Governance can improve the cost spend across all parts of your business and help all stakeholders justify their budget allocation.
Let's review the hard-cost examples from earlier and apply Rencore Governance to the mix.
Licensing clean-up
Rencore Governance provides comprehensive insights into Microsoft 365 licensing usage. By identifying over-licensed accounts and inactive users, organizations can effectively clean up their licensing structure. This not only reduces unnecessary subscription costs but also ensures that every license is justified and utilized effectively. Many reduce their licenses by at least 15%.
Reducing Storage Use
Rencore Governance's ability to handle vast amounts of SharePoint and OneDrive data helps you monitor and manage storage utilization within Microsoft 365. Through prebuilt policies, the platform can identify storage limits, orphaned, outdated, and duplicate files, among other issues. You can minimize storage costs by aligning them with actual needs rather than estimates. Typically, organizations can decrease their storage consumption by 33%.
Optimize connectors
Rencore Governance can help you detect and clean up standard and premium components, including connectors, custom connectors, triggers in your automated workflows, apps, analytic reports, and dashboards, and custom agents. This will prevent you from having to purchase additional licenses, incur budget overruns, and suffer from inefficient resource allocation within the organization.
Benefits for enterprises using zero-based budgeting and Rencore Governance
Enhanced justification of expenses
With detailed insights into all areas, managers can more easily justify each expense during the budgeting process. This aligns perfectly with the ZBB philosophy of scrutinizing every dollar spent.
Improved resource allocation
By identifying underutilized licenses, optimizing storage and connectors, and mitigating compliance risks, organizations can reallocate funds to areas that drive growth and innovation.
Sustained cost management
The ongoing monitoring capabilities of Rencore Governance ensure that cost management is not a one-time effort but an integral part of the organization’s financial strategy.
Over to you
Rencore Governance not only simplifies Microsoft 365 management but also enhances the effectiveness of zero-based budgeting strategies within enterprises. By focusing on licensing cleanup, reducing storage inefficiencies, and engaging key stakeholders across departments to scrutinize their budgets, Rencore empowers organizations to optimize costs while ensuring every expenditure is justified and aligned with their strategic objectives.
These are only a select few examples of the quick hard-cost wins, though. The possibilities go far beyond as your cloud collaboration governance approach matures.
As businesses continue to navigate the complexities of cloud collaboration, leveraging tools like Rencore Governance will be essential in driving efficiency and cost savings as well as keeping your organization secure and under control.
Use our free cost-saving checklist and share it with your stakeholders. Start optimizing your zero-based budget strategy today.
