Capitalize on Cloud Computing Costs to Adapt, Thrive in Changing Times

Cloud computing is the top investment area worldwide for IT departments. And with the shift to remote work, organizations are all-in on cloud solutions. According to the Flexera 2020 State of the Cloud Report, enterprises embrace multi-cloud and hybrid cloud strategies, and use more than two public and two private clouds on average.

As the ongoing pandemic continues to impact business of all sizes, across all industries, cloud technology is the key for building resiliency. To help capitalize on the cloud to adapt and survive in changing times, gain inside advice to get the most out of your cloud investment.

Tip 1. New cloud, old telecom problems

As organizations transition to cloud computing, it may be assumed immediate savings is gained by replacing traditional phone and data services. But don’t assume the old days of telecom billing are behind you.

When migrating to the cloud it’s common to overlook cancelling or scaling back the services it was intended to replace, including conventional business telephone equipment. As a result, oversight opens the door for common telecom billing errors to add up, such as applied overage or minimum usage charges.

As the majority of respondents to a recent Gartner survey reported cost savings as a primary reason for cloud migration, the actual realized ROI should be carefully analyzed. In fact, a technology expense audit can find as many similar savings in cloud service costs as traditional telecom spend, and often more.

For instance, in a sample of 6,100 SpyGlass clients:

• The average savings identified of overall spend for those without cloud services is 20.39%, compared to 20.77% with cloud services.

• For those without cloud services the average savings opportunity captured is 31.83%; clients with cloud computing averaged a 32.88% savings opportunity.

While the sample of clients with cloud services represent having a portion or all services with the cloud, the savings opportunities remain regardless of provider or service type — just like in the old telecom service days.

Tip 2. Examine your resources

According to Cisco, almost all workloads will be on the cloud by 2021. As a result, the struggle to forecast fast-growing cloud costs while optimizing for the future is real. But, savings opportunities exist if you know where to look.

The top three public cloud providers for enterprises remain AWS, Azure and Google, with customers spending more than $50 billion on Infrastructure as a Service (Iaas). Flexera reports 93% of enterprises have a multi-cloud strategy, while 87% take a hybrid approach, combining the use of both public and private clouds. As companies adopt different types of services and add multiple cloud service providers, cloud computing can trigger wasted cloud spend — an issue that’s becoming more critical as cloud cost continues to rise.

Two common causes of wasted cloud spend include idle and overprovisioned resources:

Idle resources – VMs (virtual machine operating systems) and instances are resources paid for by the hour, minute, or second — and it’s easy to overspend on instances or VMs that sit idle. Usually, VMs and instances are non-production resources used for development, staging and testing. While the services are typically used during a 40-hour work week, they don’t need to run 24/7. While they sit idle the other 128 hours of the week, you continue to pay for the service.

Overprovisioned resources — Basically, overprovisioning is buying more of something than needed — just in case. While this seems like a good idea, long term you end up paying for resource capacity you’re rarely, or never using. It’s easy to overspend on large instances or VMs that aren’t needed. In fact, Flexera found 40% of instances were sized at least one size larger than needed for their workload. By reducing an instance by one size, the cost is reduced by 50%; downsizing by two sizes saves 75%.

Tip 3. Capture unused and over scaled services

Whether an organization chooses a private, public or hybrid cloud approach — or a blend of all three — cost savings is almost always the envied end game. There’s no doubt cloud computing directly boosts productivity and performance of the web platform, but over scaled or unused services may be adding to your bill.

When migrating to cloud computing the monthly charges may seem reasonable, but as adoption grows and more data moves through cloud services, the bill can balloon. And services are often unused, or organizations lose track of what services are being used.

While billing errors on traditional technology services from provider mistakes are the norm, overlooking unused or over scaled cloud services is today’s growing source of increased costs. Yet, they also present savings opportunities.

For example, by eliminating a third of unused cloud-based service, SpyGlass saved a manufacturing client $90,000, or 35% of its annual spending. A thorough audit of cloud spend also recovered significant discounts that were not being applied.

The ongoing cloud cost challenge is fueled by many services being purchased, and then not used. To optimize costs, visibility of your cloud spend — and potential waste — is essential for efficiency that builds your budget for the future.