What are overages in SaaS?
In SaaS, overages refer to the additional costs or fees that are incurred when a user exceeds the contracted usage limits or terms of their plan. Examples of overages include user overages, storage overages, API usage overages, feature overages and support overages.
Related Definitions
Cloud Cost Optimization
What is Cloud Cost Optimization?
Cloud cost optimization refers to the process of reducing and optimizing cloud spending, while ensuring optimal resource utilization and maintaining desired performance levels. It ultimately involves managing cloud costs without compromising business objectives or user experience.
Centralized Procurement
What is centralized procurement in SaaS?
Centralized SaaS procurement is a model in which all software purchasing decisions are made or approved by a single department, often either IT, procurement or finance. By having a streamlined process for purchasing and renewing software solutions, organizations can ensure they have total visibility of their SaaS apps, prevent wasted spend and maximize purchasing power.
Service Level Agreement (SLA)
What is a service level agreement in SaaS?
A Service Level Agreement (SLA) is a subset of a Master Service Agreement (MSA) and contains specific details about the level of service that will be provided by the SaaS vendor. This agreement will specifically define the performance metrics, responsibilities, and expectations of both parties.
An SLA is likely to include uptime guarantees, the level of support that will be provided to the customer, response times for any support requests, information on how these requests will be managed and escalated, information on how the vendor will protect the customer’s data and ensure the security of its systems and networks, as well as details on how it will compensate the customer if it fails to meet the agreed-upon service levels.
Tail Spend
What is tail spend?
Tail spend refers to the unmanaged purchases made within an organization that fail to pass through an official procurement process. On account of their low value, the costs incurred by these purchases are seldom monitored by financing teams as they are generally too small to be deemed “strategic”. The problem, however, is that they can make up as much as 20% of a business’ total spend.
Spot Instances
What are spot instances?
As with any cloud service provider, AWS will have spare capacity available to support surges in customer demand. To offset the loss, AWS offers this excess EC2 capacity – in other words, spot instances – at a heavily discounted rate.
To benefit from these spot instances, users must bid on this unused EC2 capacity in their desired region. The capacity is then allocated to the highest bidder. While it can be a great way to reduce costs by as much as 90%, it is only suitable for workloads that can tolerate interruptions and don’t require continuous availability. This is because AWS will terminate the instance after a two-minute notification in the event that it needs to reclaim the resources, or because the spot price exceeds the bid price. In other words, when other customers are willing to pay more.
Outsourced Procurement
What is meant by outsourced SaaS procurement?
Outsourced procurement in SaaS refers to the process of hiring a third-party vendor to manage some or all aspects of a company’s procurement process. This can involve negotiating with vendors on your behalf to secure the best possible price and terms on any SaaS contract, while also refining, implementing and enforcing procurement processes that ultimately protect your business.