As the world is slowly finding its way back to normalcy and industries getting back to business, technology leaders are trying to maximize the value from the cloud. The Coronavirus pandemic has dramatically changed the way IT departments and operations teams look at the cloud.Many IT managers had learned it the hard way that their resources, systems, and tracking methods were not ready for the pandemic-induced change in the environment. Cloud is no longer a CIO’s dream but an urgent mandate. The unprecedented disruption brought by the pandemic has reinstated the value of building resilient, agile, and scalable systems leaving enterprises with no other choice but to migrate to the cloud. In this era of digital boom, cloud has emerged as the only possible way to mitigate uncertainty, maintain business continuity under widespread disruption, meeting volatile market demand, and adapt to the overnight shift to remote work.
Flexera 2020 State of the Cloud Report states that around 59% of enterprises and 50% SMBs have recorded higher cloud usage than planned due to Covid-19. 73% of organizations planned to optimize the existing use of cloud (cost savings) in 2020, which is a 9% increase from 2019. Experts predict the spending will increase further in the next 12 months.
International Data Corporation (IDC) predicts 2021 to be the year of multi-cloud, and by 2020 more than 90% of global enterprises will move to on-premise or dedicated private clouds. The widespread disruption caused by the pandemic is also expected to shoot up the global cloud market from $233Bn in 2019 to $295Bn by 2021
Being forced to adapt to this new situation, and having realized the benefits the cloud has to offer, more and more enterprises have moved or plan to move to the cloud soon. However, they are all equally concerned about the cost overruns.The Flexera report also stated that 30%-35% of the cloud spend being wasted, and to mitigate such losses, 77% of organizations are leveraging various measures to ensure cost-efficiency.
The post-pandemic business landscape demands every company, irrespective of their size or nature, to be their agile best. Companies can no longer afford the flaws and inefficiencies of legacy systems. But modernizing legacy systems is like balancing on a thin rope. Businesses often find themselves caught in between determining the scope and staying within the budget in the initial months, which can result in unforeseen costs. By investing in proven modernization & cost optimization frameworks, these challenges can be overcome while accelerating the process.
Going forward, in the near future, every industry will witness a greater focus on cost optimization. CIOs must master the balancing act of investing in the right infrastructure without increasing the costs. From using automated policies to reducing shutting down workloads after working hours to rightsizing instances, organizations are proactively looking for ways to stop overspending on the cloud and bringing down the costs.
Assuming that organizations have already taken the onerous steps to migrate their on-premise services to the cloud in order to save costs, scale, and innovate, here are some of the proven ways one can adopt to prevent any disconnect between expectations and reality jeopardize the possibilities in cloud.
First and foremost, cloud cost optimization should be treated as a priority. When migrating to the cloud, organizations tend to put the optimization process on the back burner, not realizing its impact until the bill arrives. But prioritizing is possible when everybody is on the same page and has a clear understanding of the cloud environment as well as the specific business goals which are driving the migration. Below is a detailed list of the cost management responsibilities for each of the teams involved in the cloud migration process.
Another way to save costs is by looking at the discounts provided by the leading providers by uncoding the complex pricing structures. Research shows that organizations often miss out on leveraging the various discounts offered by the providers. For example, only 30% of organizations using AWS avail its ‘savings plan’ discount, and 20% take benefits of its ad-hoc negotiated discounts. Azure also offers enterprise agreement discounts, reserved instances discounts, or even low priority VMs discounts. But apparently, only 20%-50% of organizations utilize these discounts to save costs. Hence, making a thorough assessment of all the discounts available before signing the deal can help organizations optimize their cloud spends.
Companies are also using automation for cloud cost optimization. Shutting down workloads after required hours, rightsizing instances, specifying expiration dates, or cutting down resources are some of the policies organizations are putting in place to reduce cumbersome processes and ensure minimal cloud waste.
Even existing traditional software licenses (such as MS Software/Windows Server etc.) may contribute to the costs of running applications in the cloud, as enterprises would have already invested in these licenses. In some scenarios (like Microsoft Windows), bringing your own license (BYOL) to the cloud, which lets enterprises/users leverage their existing licenses without any additional fees, can lead to significant savings. However, in some other scenarios (Oracle Database), BYOL may not be possible. Hence, getting an overview of the licenses being used or required, checking the possibility of BYOL, and understanding the cost implications beforehand, will aid in better utilization of licenses and better cost planning.
Summing it up, enterprises should strike a balance between the cloud and costs. They should not just embrace the cloud-first approach but also have the right cost management strategies in place to be agile, resilient, and undisrupted. It is crucial to understand cloud economics and the right tool to monitor your cloud spend, infrastructure, visibility, and governance. While figuring out all the ways to save costs can be another burden on the already-overwhelmed IT departments, partnering with a reliable cloud management partner can save you a great deal of time, effort, and budget.
Learn how Cloud4C has been assisting enterprises in optimizing their cloud costs.
- 2020 Flexera State of the Cloud Report
- IDC Expects 2021 to Be the Year of Multi-Cloud as Global COVID-19 Pandemic Reaffirms Critical Need for Business Agility
- COVID-19 Impact on Cloud Computing Market worth $295 billion by 2021
- A decade of Cloud adoption in Banking: Living up to its promise?