The pandemic and the subsequent global economic downturn have forced enterprises to slash their IT budget significantly. But the need to compete in this digital-first economy has pushed the cloud investment graph up in the air, probably, higher than ever as Gartner predicts an 18% increase in 20211. That makes cloud cost management a top priority for enterprises as they enter new market dynamics riding out the aftermath of the COVID-19 crisis.
With this sudden growth of enterprise’s cloud consumption comes the need to control the spiraling costs of public and hybrid cloud. The cost overruns have already caused the finance departments enough woes putting a renewed focus on implementing cost optimization frameworks. To ensure a smooth transformation across organizations, enterprises are also investing in establishing a central cloud cost management team whose primary responsibility would be to design, drive and monitor cost optimization policies across different business units and cloud subscriptions.
But is spending smarter the only objective of cloud cost management? Or are there bigger benefits that an organization can derive from it? In this article, we will delve into some of the hidden benefits of cloud cost management.
1. Gain Visibility
Common problem enterprises face when shifting from on-prem to cloud is the lack of clarity on who is buying what services. Considered to be one of the key challenges between the on-prem CapEx model and cloud-based OpEx model, the traditional method of setting a static budget for procuring IT needs is to be blamed for this issue. In the new environment, when engineering teams spin up resources without calculating the costs of setting a usage alert, the spending goes haywire at the end of the billing period.
But when you have a cost management framework in place, organizing and structuring costs against your exact business needs become a norm leaving little room for a budget overrun. Besides, it provides you with a granular view of cloud usage and spends, department and team-wise, and a clear picture of the otherwise-obscure Total Cost of Ownership. For an enterprise, this visibility is proven to be crucial in the long run as this cost analysis can fuel the decision-making as well as the revenue.
2. Allocate Budget Accurately
Cloud cost management eliminates the biggest roadblocks—shared resources, untagged costs, etc.—from your accounting structure, giving you a cohesive view as well as accurate information about business units, products, cost centers, and roles. With such powerful financial information in hand, it becomes easier for businesses to map their resource and budget allocation. This gives finance teams the power to analyze raw billing data and the ability to chargeback by optimizing resources. Businesses can also use this information to negotiate pricing or discounts with cloud service providers. Here, it is crucial to dispense the financial data between every team member involved in the process.
3. Create and Promote a Culture of Accountability
One of the several challenges of dealing with the new digital environment nowadays is accountability. According to the Business Dictionary, accountability is a form of transparency as well as taking ownership for activities and their subsequent impact, which includes both money and resources. But the lack of accountability is not always linked to the ill-intentioned human resources of an organization. The challenge rather stems from the absence of robust structure or tools to monitor the activities and the incurred costs. This is where the cost management framework and cloud governance come in handy.
A “lack of accountability” is rarely intentional. More often, it’s the result of an underlying issue, such as unclear roles and responsibilities, limited resources, a poor strategy, or unrealistic goals.
~ Harvard Business Review2
Cloud governance provides teams with a robust structure that helps them stay focused and aware of their activities on the cloud. Through tag compliance, it ensures that none of the resources are untagged. The governance framework also allows decision-makers to benchmark their team progress and build strategic initiatives to empower them further.
4. Drive Organizational Transformation through Cloud Cost Management
The Organization for Economic Co-operation and Development (OECD) has demonstrated a strong correlation link between organizational changes and investment in IT, to be precise, cloud. IT teams who are accustomed to the old way of managing or working with on-prem infrastructure are now facing a greater challenge coping with the new environment. Their decision-making capabilities are greatly clouded by a sense of fear and uncertainties, in other words, FUD (Fear, Uncertainty, and Doubt) syndrome.
For your engineering team, the environment is new as well as the management’s expectations, which can make them uncomfortable, anxious, and prone to making errors. Studies show that a lack of cloud readiness can result in failure in meeting the business objectives, wasted money, and lost opportunities. In such a situation, the cost management framework becomes a driver of organizational transformation as it not only brings teams together but also fuels innovation and, in the end, steers growth. Optimizing storage and resources is the first step towards this organizational transformation as it creates a more cost-effective environment and shifts the focus of IT departments to strategic business initiatives. The transparency and visibility add to this changing mindset as every individual consciously becomes a cost-watcher. Not only engineering teams, but the ideal framework also involves every department, right from finance to C-suite executives, to drive this change.
Simply put, for today’s enterprises, cloud cost management is a crucial driver for growth and transformation as it helps run a pan-organization strategic digital initiative. It sets the base right and secures the growth journey in a post-pandemic, highly volatile, and disruptive economy.
A Cloud partner can accelerate this journey further by assessing the existing infrastructure and providing recommendations for setting a cloud management strategy. Not just this, based on the findings they suggest and implement solutions for right-sizing the resources based on the current demands. They support 24*7 and monitor real-time to identify anomalies/cost leaks, usage patterns etc., enabling enterprises to keep cloud costs in check without compromising on the security & compliances.
Cloud4C is a preferred partner of the hyperscalers Microsoft, Amazon, Google and has extensive experience in managing Cloud infrastructure. What are you waiting for? Get in touch with our Cloud experts, frame your cloud management strategies and leverage the benefits of cloud cost management right from the beginning.