Controlling cloud spending is a priority as companies shift to the public cloud
Managing the cloud bill is a priority as companies shift to cloud services. Because the easy-to-deploy, pay-per-use services introduce unfamiliar variables into the finance equation. Previously, you enjoyed long term commitments with predictable capex, but now you face variable opex.
Furthermore, new cost drivers appear which are sometimes hard to control or even to understand. To make things worse, this dynamic applies to the majority of the spend. Before the shift, the budget for keeping the lights on required little attention, because it was pretty stable. Now, you are no longer safe when guarding the discretionary project or innovation budgets only.
You can improve cloud spending and reduce waste and inefficiencies
As a result of these changes, inefficiencies pop up easily. The participants in Flexera’s ‘2020 State of the Cloud Report’ estimated their cloud budget overruns to be 23%, on average. Furthermore, they labeled 12% of their spend as “wasted”. Also, note that experts estimated it to be closer to 30%. At the same time, the respondents expected their cloud spend to increase 47% per year. However, these percentages can easily reduce the appetite to further cloud adoption. If you lose your appetite altogether, you will miss out on the business benefits and goals too.
But there’s good news: controlling cloud spending is feasible. For example, you can follow the advice from experts in this field. Some time ago The Register recorded their recommendations. Their bottom line is: “You can always do it better. The trick is to understand that it is a process.”
Some key practices to apply, as an ongoing process
There are some principles and practices to implement, in order to improve control and identify savings opportunities. These are some of the key things we do for and with our customers:
- Do not stop after lift & shift — After a lift-and-shift from your data centers, you shouldn’t stop there. If you do, you will miss the advantages that ‘higher order (PaaS/SaaS) services’ can bring. Typically, you pay only for what you use and these services leverage economies of scale better.
- Keep moving to reduce factor costs — The hyperscale vendors also innovate in ‘basic utilities’ like compute and storage. In general, their newer services are more performant and cheaper. Therefore, if you do nothing after a migration, you forego such benefits.
- Work together to look beyond savings plans — Do not opt for the savings plans that are available, too soon. Instead, take the time to discover what’s consumed and actually needed. Also, this must be done by a multidisciplinary team e.g., with an architect and a business owner.
- Look beyond the cloud bill to increase the return on investment — Significant savings can be found typically in adjacent budget areas. Add automations and free up your IT staff to focus on value added activities; leverage smart solutions to reduce the use of services and licenses.
Once you adopt these practices and get into a new rhythm, the public cloud is a great place to be. You will find yourself surrounded by many more options to reduce costs than anywhere else. At the same, you can continue to enjoy the benefits from improved performance, agility and innovation.