Improving Costs and Agility: Expert Insights for a Cloud Cost Optimization Strategy
What does your organization need to navigate the unexpected and emerge victoriously? The pandemic was an ad hoc testing ground for this question. Among the findings were that digital transformation and cloud services are potent drivers in agility and innovation.
So it’s really no surprise that organizations continue to invest in cloud solutions and services. In fact, Gartner forecasts the worldwide public cloud services market to grow an additional 23.1% in 2021 to $332.3 billion, up from 270 billion in 2020. But is all this cloud spending necessary? Maybe not.
While there’s no denying the value of cloud services, the truth is that much of cloud spending currently goes to waste. The challenge for organizations is to optimize cloud costs while retaining — or even improving — recognized benefits of digital transformation efforts. But how can organizations get there?
For answers, we spoke to some of the brightest minds in digital transformation and cloud services. Read on for their actionable insights.
Boosting Business Outcomes with a Cloud Service Strategy
If your organization doesn’t have a cloud strategy — or if yours is a couple of years out-of-date — it’s time to map out the future of cloud services within your organization. In building out your cloud strategy, consider how it will allow you to innovate, scale for success, and contain costs. How can you do this? Learn more from top industry experts.
Shifting Focus to Innovation
Chief Revenue Officer, OneUp Sales
Cloud can transform a business, its customer and internal efficiencies and its agility to change. During COVID, the need to pivot for many was key, and already cloud-committed firms were able to do so effectively and with immediacy. A key value of cloud is to allow a business to focus on innovation and process — and leave keeping the lights on to the cloud provider.
A key value of cloud is to allow a business to focus on innovation and process — and leave keeping the lights on to the cloud provider. @imoyse Click to Tweet
Agility to Scale for Success
The biggest impact of effective cloud cost optimization is creating the 1:1 relationship between resources required and resources acquired — and those resources are priced on consumption or capacity in low increments.
Scale and agility now become the central consideration of cloud adoption. Resources will scale in direct alignment with business cycles, scaling resources up and down in exact alignment with business demands.
Business agility increases dramatically as resources can be created on-demand, without timing considerations of on-premise procurement and logistics of rack, stack, and configuration of real equipment.
The biggest impact of effective cloud cost optimization is creating the 1:1 relationship between resources required and resources acquired. @paullewiscto Click to Tweet
Drivers in Bloated Cloud Cost Spending
So, why is cloud cost containment worth the effort? After all, you have millions of other priorities, especially in the wake of COVID-19. But the truth is that most organizations are drastically overspending on cloud services. Our latest whitepaper notes that 30% of cloud cost spending goes to waste because of over-provisioning, orphaned resources, and lack of transparency. Our experts share explanations for inflated cloud costs.
Duplicated and Uncoordinated Resources
Chief Revenue Officer, OneUp Sales
I would expect that cloud spending waste comes from a mix of duplication and inefficiencies of spend from uncoordinated line-of-business acquisitions of the cloud in the enterprise. This combined with utilization of incorrect licensing options and lack of management of spun-up public computing power from the likes of Amazon and Microsoft causes duplicated efforts. Introducing coordinated procurement processes and cloud management disciplines can reduce or remove this [cost containment] issue.
Introducing coordinated procurement processes and cloud management disciplines can reduce or remove cost containment issues. @imoyse Click to Tweet
Lack of Governance and Accountability
With the lack of a governing model and responsibility, waste was inevitable and it’s easy to overbuy. That overspend undercuts the business case and ROI for moving to the cloud and ruins the appreciable difference in IT agility obtained.
With cloud, the assumption was a 1:1 ratio between utilization and consumption, but it’s not that simple. Some services consume resources when not in use, some are priced by capacity, and some are simply left “on” running in the background without providing any business value. These items contribute to missing ROI goals of cloud adoption, and eliminate “cloud only” and “cloud first” infrastructure and operations strategies. Unfortunately, that will lead to less agility within IT, and less of the digital transformation program will be delivered.
With cloud, the assumption was a 1:1 ratio between utilization and consumption. However, some services consume resources when not in use, some are priced by capacity & some are left “on” running in the background. @paullewisctoClick to Tweet
Moving towards cloud cost optimization
There’s no question that most organizations can cut their cloud costs, and it’s not hard to do. So what’s the hold-up? Cloud cost optimization requires a shift in mindset — something that’s often easier said than done. It starts with leaders deciding to make cloud spend a priority and holding themselves and their teams to a higher level of financial accountability. Below our experts share what this might look like in practice.
Centralizing Decisions to Rein in the Wild, Wild West
Principal Analyst & Founding Partner, Futurum Research
Lack of oversight throughout the organization can impact cloud costs spiraling out of control. When decisions are siloed, and there’s no centralized oversight of which cloud platforms are being used where — and what resources are required to facilitate cloud consumption, it leads to a Wild, Wild West situation that is very much not ideal. Centralizing decisions around cloud strategy, adoption, management, etc., is the smart path to best manage cloud services and costs.
When decisions are siloed, and there’s no centralized oversight of which cloud platforms are being used where. @ ShellyKramer Click to Tweet
Abstracting for Agility
Chief Revenue Officer, OneUp Sales
Efficiently managing cloud costs means exactly that: Managing it. For many, spinning up cloud quickly is attractive, as are the big brands of AWS, Microsoft and Google. However, as many have found, it is easy to tie an application into a specific cloud partner — and unexpected costs that are hard to move away from. Abstracting your cloud application from tie-in can be achieved with the likes of IBM Redshift and portable cloud storage options, leaving you the agility to change if or when required.
Abstracting your cloud application from tie-in can be achieved with the likes of IBM Redshift and portable cloud storage options, leaving you the agility to change if or when required. @imoyse Click to Tweet
Financial Accountability in FinOps
The implementation of cloud governance in people, process and technology deliverables will help optimize cloud resources. A new governing model is needed that helps assess what the “real” application costs might be when implemented and adds the appropriate business thresholds to meet ROI. The governing model and process can add limiters, timelines and financial control to running services that turn off/on when needed and remove data when used.
Technologically this is implemented with FinOps models by adding financial accountability to the variable spend cloud within a Cloud Management Platform (CMP), enabling distributed teams to make business trade-offs between speed, cost, and quality.
The implementation of cloud governance in people, process and technology deliverables will help optimize cloud resources. @paullewiscto Click to Tweet
Achieve Better Organizational Outcomes with Better Cloud Cost Containment
There’s no benefit to overfunding cloud services — your money is better spent on delivering innovations to fuel company growth. The good news is that it’s possible to cut cloud costs by 30-40% with a comprehensive cloud cost optimization program. If you’d like to learn more about expanding capabilities while controlling cloud costs, check out our white paper: An Introduction to Cloud Cost Optimization.
Also, make sure you check out Ian, Shelly, and Paul on LinkedIn and Twitter to learn about the latest innovations and trends in digital transformation and cloud services.