Power Platform IT budget | A paradigm shift needed to be compliant with SaaS? (2/4)

Today, I am going to enhance the change of IT departments ongoing with a topic that I came across quite often. In many of my customer talks, in every other hackathon where everyone feels enthusiastic around the capabilities and someone stands up and ask the tough question of „How much will all of this cost us?“

Power Platform components

It obviously is a topic I´ve seen many people struggle with in my career as there´re many facettes to it. Some complain about complexity, some about the fact of thinks should be way easier, like a flat fee – of course I am talking about the licensing of the Power Platform and therefore budgeting.

As you can see in the visual to the right, we do have many components that all make the Power Platform. Power Apps, Power Automate, Power Virtual Agent and Power BI to name the most obvious and then the various add-ons like RPA with UI Flows or AI Builder as a capacity add-on.

But let´s not forget the Office 365 seeded licensing as many customers do mention these as a perfect example of a flat fee and they wished it would be as easy as this to license the Power Platform.

Let´s run through some facts: First and foremost, Office 365 licenses doesn´t come for free, so talking about „free“ services vs. premium services is worth calling this fake news. Yes, those Office 365 licenses do come with some Power Apps and Power Automate as well as Power BI licensing which are referred to as „seeded licensing“.
Neither free vs. premium is helpful when thinking about and debating the real issue, which I call out as demand forecast, shrinking or to be optimized IT budgets and an operating model designed to avoid unaccountable licensing spent during a fiscal (budgeting) year.

Diving into this, what I´ve observed in many customer talks and social media discussions is our issue is multiple folded. One layer is around IT- and business folks being in the need of budget planning accordingly, meaning IT to meat the goal of shrinking and optimizing IT budget year over year and business being in the need of forecasting and reporting their demand. This is where time is needed as many use-cases cannot be foreseen, forecasted or planned for. The more business is able to articulate their actual forecast, the more accurate the IT budget forecast could look like, but instead of planning for agility and flexibility during the year, this budget gets optimized. The result, inaccurate forecast and demand planning leads to difficulties in agility during a financial year. Some companies overcome this issue by shifting budgets around – some fail.

Could better education lead to a better forecast in terms of business being able to articulate their demand?
We currently do see an answer to this in terms of the current ongoing pandemic. The amount of respirators and surgery masks needed doesn´t match the current planning – though scientists early in 2015 already published their studies to being in need for a certain amount of those in an ongoing pandemic. But in all honesty, who wants to plan for something that might happen, could occur in a maybe and oh… those costs, sorry that´s simply a no go. The consequences, I don´t need to mention them as we´ve all seen them.
So does better education and forecast lead to better budgeting? Certainly not. It can make a difference, but didn´t I mention an even more complex level of this ongoing layer?

Watch out for the next article covering more details and another add to this problem statement to discuss a possible solution afterwards.

See ya next time. Stay healthy.