As businesses increasingly shift to the cloud and introduce multiple cloud vendors, the cost is becoming a major concern. Implementing more automated policies, fully leveraging discounts from providers, and improving understanding of software licensing could help businesses be more efficient.
Some increase in spend is natural as businesses move more workloads to the cloud. The cloud is crucial to the next wave of enterprise computing capabilities, supporting many advanced capabilities such as artificial intelligence and analytics.
But at the same time, it is also causing the budget to spiral out of control. Many organizations have or are planning central cloud teams or cloud centers of excellence to manage governance and cost optimization.
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As per IDC’s Worldwide Whole Cloud Forecast, 2020–2024, the global spending on cloud computing services is predicted to exceed USD 1 trillion in 2024.
Cloud Implementation Strategy
Some of the costs are unavoidable and would be incurred whether businesses use cloud services or an on-premises solution. However, creating a sound cloud implementation strategy before adopting the cloud can help businesses reduce some of these costs, or at least foresee them, so the impact on the operating budget does not come as a complete surprise.
Matching the business requirements to what the cloud service provider offers, verifying what services the cloud provider manages, establishing implementation workloads and task times, and what the IT team is responsible for can help ensure that cloud costs stay under control.
Managing the Budget
Cloud services need a new way of budgeting since most services are usually offered on a subscription basis. Licensing is often done on a per-user basis or a usage basis, and getting an accurate idea of the numbers of employees who will need access to the service is crucial to attaining a clear picture of what the monthly costs will be.
Underestimating an organization’s demand for a service can lead to exceeding or upgrading subscriptions, and this is one of the most common mistakes that result in surpassing the original budget. But building flexibility into the budget can help businesses ensure that fluctuations in users and usage will not be too disruptive.
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Organizations also need to remain vigilant about removing old or unwanted user accounts who are no longer need access to the services is another quick win when it comes to finding small cost savings.
Securing Enterprise Contracts
A long-term enterprise contract can help organizations avail of some heavy discounts from cloud vendors. Knowing a customer has a long-term commitment, and minimum spend means that the cloud vendor will have access to some fixed variables that can pass on savings. It can be appealing for an expert center as well as they can staff-up and train accordingly, with the knowledge that the cloud vendor will be a part of their infrastructure planning for long-term.
The downside to this is that the trade-off means agreeing to vendor lock-in and regardless of a changing business environment or needs, the organization will be committed to spending a minimum significant amount over the stipulated time.
Managing Cloud Usage
Costs can quickly get out of control with cloud services being used in multiple ways across a business, especially if employees don’t fully grasp the implications of their usage. A typical project consists of numerous instances hosting different environment types like staging, testing development, and live environments. Amplified across projects and teams and multiple cloud vendors can potentially lead to unprecedented consumption of resources.
Cloud storage is another critical area where planning and managing usage can result in significant cost savings. Having a well-thought-out plan on which files should be stored in the cloud and which files could be stored on a local server at a significantly lower cost can help manage costs.
Keep it Visible
Investing in tools that help supervise cloud usage and infrastructure may uncover significant savings elsewhere. These tools can help choose the best cloud options for various parts of the business identify and remove apps that aren’t being used and improve the functionality of existing apps. Cloud management platforms are a useful way to do this.
Visibility over users and licenses is also crucial. Cloud services can be a challenge for businesses as costs can be challenging to track and split between departments. Having a clear strategy of tracking who uses what service can make it easier to split cloud service bills in the long-term and spread the financial burden across multiple departments.
Prangya Pandab is an Associate Editor with OnDot Media. She is a seasoned journalist with almost seven years of experience in the business news sector. Before joining ODM, she was a journalist with CNBC-TV18 for four years. She also had a brief stint with an infrastructure finance company working for their communications and branding vertical.
