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How to control cloud costs

Image: Adobe Stock / Ar_TH

It’s time to double down on cloud spend, says Paul Mardling, CTO at Redcentric.

Many organisations have been on their cloud journey for years, and while some of the early priorities such as data security remain important, economic uncertainty is now influencing IT budgeting and the balance of priorities has changed to reflect the wider economic outlook, as businesses react to change. This was addressed in a recent report, where Flexera found that nearly a third of an organisation’s cloud spend is not used efficiently or simply wasted.

Businesses generate vast amounts of data and with multi-cloud investments now the norm, keeping track of resources is an ongoing challenge. In light of this, it’s easy for costs to soar and spending to increase. Cloud services are a critical part of digital transformations today, offering both scalability and resilience as organisations continue to demand flexibility. But how can organisations better manage cloud spending? This article will look at the reasons behind rising cloud costs and how to remedy the issue by supporting budget alignment and delivering a return on investment during a time of economic uncertainty.

Why cloud computing costs spiral

As organisations have migrated away from on-premise storage options, costs related to cloud usage have spiralled. Cloud usage is not achieved seamlessly overnight, and at the outset of migrations, cost calculators are often utilised. However, they are intended to be used by those with a high level of knowledge and mistakes are common. Migrations themselves are very energy intensive and moving workloads can be an arduous task for already stretched IT professionals.

Even if initial calculations are correct, costs can change over time as cloud providers increase the price of their services, even when usage levels remain the same. Furthermore, the pricing models used by public cloud providers have many factors that add to the task of estimating costs. With organisations heavily reliant on external cloud providers, it’s vital that they get on top of their costs and make efforts to better understand their current situation so that they are better prepared to make change happen.

Economic uncertainty and supporting budget alignment

The global economy continues to face many challenges when it comes to inflation and cost pressures, impacting the operations of businesses as they become more cautious. The IMF recently stated that the global economic outlook is brighter, but growth is still weak and businesses are responding to this. Notwithstanding the current economic climate, the outlook for IT spending remains promising, with Gartner forecasting spending growth of 5.5% in 2023. However, businesses continue to face cost and budget pressures, so cloud spending needs to be tightly controlled and aligned with available budgets.

The cost baseline is one of the six cloud governance foundations, with a cloud governance framework maximising cloud adoption efforts. In order to control cloud costs, visibility, accountability and optimisation are key. This includes prioritising the quick wins that can be achieved in the short term, as well as the longer-term goals. As soon as practically possible, cost reports should be sent to all of the relevant parties, in addition to the clear monitoring and setting of budgets. Old resources should also be reviewed, so they are streamlined and more efficient for decision-makers to manage.

When it comes to forward planning, optimising workload costs is vital and continually tracking costs against usage is essential. Right-sizing should be a key tool in controlling cloud costs and can be actioned through the analysis and monitoring of instance types and activity, ensuring instances are well-matched to the workload. This allows for a high-performance level to be achieved at the lowest cost possible.

Delivering return on investment

While many organisations are facing challenges around their current use of cloud services, keeping one step ahead of the competition relies on new cloud technologies being successfully leveraged. When looking at cost management, organisations need to balance current and future needs and embrace the opportunity to think ahead and consider the cloud technologies that are the most important to their digital transformation efforts both in the short- and long-term.

During a time of economic uncertainty, IT leaders and organisations are more under pressure than ever to demonstrate a return on investment. Doubling down on cloud spend and ensuring a robust cloud governance framework can help organisations to maximise their cloud adoption journeys and wider digital transformation, and this is something that should be prioritised sooner rather than later. 

Paul Mardling
Paul Mardling
CTO at Redcentric

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