A recent article in The Wall Street Journal noted that cloud-enabled businesses are experiencing a slowdown in sales, following years of sharply rising, pandemic-driven demand. Revenue growth is turning south, the result of economic worries, out-of-control spending and low ROI —and the numbers back it up. According to analysts at IDC, cloud costs and spending will drop a full two points this year. KPMG research has found nearly 70% of US tech leaders say they’ve yet to see a significant return on cloud costs or investments. In a McKinsey survey, 75% of respondents said they had exceeded budget on their cloud migration process, with roughly 40% admitting they were also behind schedule.
Perhaps most telling, VentureBeat reports that a new study shows over 80% of IT teams have been told to flatten or reduce cloud spending by their C-suite.
Tips for pinning down the cloud
CIOs are still aware that the cloud can enable agility, scalability, reliability and speed in a cost effective way for their business. Companies need to migrate to the cloud to meet ever-increasing storage and data security needs. But conflicting motivations highlight that many leaders are torn when the overarching mandate is to control, if not lower, spending. This is a challenging promise to deliver on when not executed with a well-defined roadmap.
The following quick tips can help CIOs and other leaders pin down cloud costs, efficiently migrate, raise ROI and overall navigate waters that may get choppier in the days ahead.
- Plan to succeed: It’s estimated by the Cloud Security Alliance that 90% of companies encounter migration issues. With this in mind, always begin initiatives with a skills assessment and enlist specialized partners to fill any gaps. In doing so, clearly define the shared responsibility model, supported by SLOs and KPIs.
- Organize governance and guidance: Be sure to collaborate with stakeholders when setting policies for things like infrastructure design, application monitoring, security and programming. Soliciting expert guidance will eliminate a lot of headaches down the road.
- Understand value: Increased costs aren’t necessarily bad news. Growth in some computing areas can be attributed to bringing new services to market and higher revenues, as well as more efficient internal operations. The secret is understanding the value of these and how to effectively measure it.
- Audit resources: It’s vital to identify underutilized services. They likely don’t deliver enough value for teams and individuals to use. Removing these can both lighten your budget and management complexity. According to Flexera, 40% of cloud-based instances are at least a size too big.
- Automate optimization: The best way to ensure employees adhere to cost optimization is to automate best practices. Labels can help classify instances according to usage requirements. For instance, the ability to autoscale can increase capacity as needed. You have to be able to scale up to handle increases in traffic, then automatically come back down when needs decrease.
- Plan for savings: According to research by Flexera, less than 25% of customers leverage cost-savings plans from cloud providers. Make sure to ask partners about sustained and committed use discounts, pricing that’s flat-rate, b****** on a per-second basis and other ways to optimize rates and services.
- Modernize architectures: In many cases, cost and efficiency can go beyond what you already have to find newer solutions that are more efficient. Unfortunately, that revamp can often come with some short-term costs, but these are an investment in a future with increased scalability and flexibility that will benefit your team in the long run.
Partner up
Having the right tech and tools to manage cloud spend is essential, but remember, optimization challenges will continue and further evolve as your company grows. Enlisting external expertise can put you in a better position to handle and head-off future complications. When it comes to harnessing promising new technologies, especially machine learning (ML) and AI, focused outside understanding can help lift your projects off the ground.
This type of expertise can be found among experienced partners – ones backed up by certified services and a deep bench of cloud architects from a broad array of industries and experiences. Companies can gain even more by choosing those with cloud expertise and deep technological capabilities and tools. It’s one thing to advise on products and services, it’s another when a provider can develop purpose-built technology and automate processes to produce even greater savings and performance gains.
In short, it’s imperative to make optimization, analytics and governance an integral part of your cloud usage. The right partners can facilitate ongoing, efficient and fully optimized progress. What’s more, those with the ability to work with mega storage providers, like Google Cloud or Amazon Web Services, are assured access to the latest and greatest tools to ensure compute workloads improve performance, reduce costs and don’t fall victim to longevity issues.
It’s true that cloud expenses and complexity are mounting. However, with better management practices and support, it’s also easier than ever to bring costs and control down to earth and send your future potential soaring by delivering on the original promise of the cloud.
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