Written by Servaas Verbiest, Lead Cloud Evangelist at Sungard Availability Services
Cloud computing has underpinned the world’s remote workforces and critical supply chains as government’s and organisations continue to try to avoid economic disaster during the pandemic. Most organisations operate in the cloud in some way or another, and the digital transformation brought on by the pandemic challenges has only increased this trend. According to IDC, by 2022, over 90 percent of enterprises worldwide will be relying on a mix of on-premises/dedicated private clouds, multiple public clouds, and legacy platforms to meet their infrastructure needs.
The benefits are clear by now, but this doesn’t mean that organisations should carelessly throw money at the technology. Some organisations continue to spend their cloud budget inefficiently.
This is supported by Flexera’s 2021 State of the Cloud Report, which revealed 79 percent of businesses struggle with managing cloud spend. In a business environment where many are dealing with reduced revenues, increased capital expenditures and rapidly changing operational needs, enterprises don’t need another budgeting headache.
To take full advantage of the cloud’s benefits, companies must first learn how to balance cloud performance and spend. Below is a breakdown of where many companies go wrong when managing their cloud budgets, along with steps on how to optimise both spending and usage.
Where are companies wasting money
According to Flexera’s survey, organisations self-estimate that they waste 30 percent of their cloud spend on average. However, Flexera found that companies’ actual waste is 35 percent or higher on average.
This can happen for a variety of reasons. Firstly, they might not fully understand their workloads’ utilisation and requirements before putting them in the cloud, or they may not be familiar with the cost-control mechanisms available from many cloud providers.
In addition, too many companies neglect to develop governance for cloud deployments to keep cloud sprawl in check, and some companies integrate different platforms and applications without first considering the downstream implications that can cause costly headaches.
How to optimise cloud spend from the start
An organisation can set itself up for success by building a good foundation and establishing clear goals. This is the best way to stay out of trouble and avoid having to double back and make costly fixes.
Business leaders and IT teams should start by analysing the workloads they’re transitioning to the cloud. They should align each workload with the business outcomes and processes they support to gain clear visibility into what the cloud infrastructure should look like. This enables the company to see how the utilisation of processes impacts resource requirements, find better ways to do things, and associate a cost with each process that allows for better ROI analysis.
Successfully budgeting cloud spend means staying true to best practices. That includes leveraging tools from cloud providers that offer a clear view of a company’s entire landscape to see what’s being used. If the organisation can’t find an answer itself, it should then look to tap into the specialised expertise of service providers to help analyse its situation.
At the same time, companies should avoid vendor lock-in wherever possible. In some cases, it might be too costly to move from one cloud to another because of the state the company’s data is in and where it resides. One advantage of the private cloud is a business can maintain ownership of data and streamline an exit strategy. Rather than focusing on one vendor, it’s more realistic to have a handle on what the company is trying to accomplish and how a cloud provider can help it reach its targeted outcome.
How to course correct if an organisation is already overspending
If an organisation is already in a position where it has overspent, fear not. It is possible to get back on track with some attention to the right areas.
These companies should start with an analysis of what their organisation has deployed to the cloud. This will allow leadership to have a conversation about those workloads, including expectations, business functions they support and the minimum requirements they need.
From there, the business can undertake a full redesign and redeployment of its cloud infrastructure or perform a surgical-like alteration of your existing deployments. The latter is more expensive, but the company must determine whether it makes more sense to start fresh or refactor what it already has.
Keeping cloud costs under control
Research from TCS has identified that 51 percent of organisations have increased cloud spending as a result of the pandemic, with only 27 percent of those surveyed having their core enterprise systems in the cloud pre-January 2020. This shows it is now more crucial then ever for companies to optimise their cloud spend, with it now playing an increasingly important role for businesses up and down the country.
Wasted cloud spend is a big frustration for many companies, but it doesn’t have to be. By implementing proper governance and controls, working with managed service providers and experts, and leveraging the tools and offerings at your disposal, businesses can keep their cloud costs under control while optimising spend and performance.
