The shift to the cloud could cost companies more than they save

Over the past decade, cloud adoption has become the rule, not the exception. And yet, many companies that have embraced the cloud are feeling the acute burden of spending spikes. In other words, cloud usage can cost many businesses more than they actually save.

Despite, 69% of companies worldwide have accelerated their migration to cloud computing in the past six months and end-user spending on public cloud services worldwide is expected to increase to nearly $482 billion at the end of this year. This exploding cloud spending is often based on the assumption that a company’s massive investment in the cloud today will ultimately make computing a more economical venture in the future.

The market has collapsed, companies are looking to cut costs and many are rethinking their cloud spending. But cloud reliance is so essential to business continuity today that many organizations are reluctant to touch their often-inflated cloud budgets, even when they know there’s a lot to cut. This includes startups with the huge costs of overusing the cloud, but lack of leadership insight into where to cut corners.

Here are some tips for enterprises to better understand their cloud costs and ultimately reduce wasted spend.

Understand the basic costs of the cloud – and waste

The majority of cloud costs can be broken down into three main components: service, usage and unit price — all of which can create waste if mismanaged.

Maintenance refers to the cloud service provider that an organization uses for a particular function (i.e. AWS, Microsoft Azure, Google Cloud). It also includes the general technical specifications of the service, including instance family, instance size, processor, and operating system. “Compute” and “storage” are two service types that are responsible for large costs. It is challenging to change service decisions once cloud usage is up and running, so organizations need to understand this part right from the start.

usage assesses how well a particular organization actually uses and implements the chosen service. This includes the volume of service used, how much data is regularly transferred across cloud platforms, and the effectiveness of rightsizing. Unnecessary costs can arise when instances are not maximized for efficiency – you pay for the full instance even if you don’t use it completely – as well as when unused “zombie infrastructure” is left unchecked.

Unit price refers to the amount you pay to use the service. Major service providers like AWS have a standard on-demand unit price, but also offer lifelines such as savings plans, committed use discounts, and corporate discounts. All of these reservations are negotiable with cloud service providers and help reduce cloud overheads.

Manage cloud costs

At its core, cloud cost management comes down to a three-pronged method of: visualization, optimization and monitoring.

Often, organizations will embrace cloud capabilities simply for the sake of “digital transformation,” adopting this transformative technology without adequate understanding of every dollar spent or what function it will serve. But this lack of insight into cloud usage and costs quickly becomes a major problem. This is especially true for companies that use multiple cloud services or platforms across the organization as each respective cloud vendor only provides visibility within their own offerings and it becomes a huge challenge to get a holistic view of the cloud spend across all. suppliers.

Organizations should start by visualizing a “map” of the following conditions: which people or teams are using which respectively Services; how much calculation volume is there? used by each respective team or employee; and the bottom-line breakdown of how unit price affects the total cost of the cloud budget.

This visualization process must transcend internal silos and touch every facet of the organization where the cloud is used. If each team uses a different dashboard, each its own specialized ‘language’, cloud processes become like the Tower of Babel – no common language to be found. Just a bird’s eye view review from all platforms and dashboards simultaneously enable organizations to communicate well to identify where they are overspending on the cloud.

Once the visualization process is complete, IT teams should try to optimize cloud features along the following lines: improving instance-workload alignment; reduce congested infrastructure and end zombies – all while taking full advantage of available reservations or discounts.

In addition to visualization and optimization, there must also be a continuous process of monitoring possible configurations that can improve the alignment between instance and workload, for different usage intervals and for impacts on total costs. Even when cloud costs are under control, enterprises must remain vigilant to ensure costs don’t rise again. You can always discover further possibilities for budget optimization.

Don’t let the cloud rain on your success

There is a good reason for the increasing ubiquity of cloud use: with the right implementation, the cloud can make work easier and more collaborative, improve efficiency and communication within an organization, ensure agility, scalability and business continuity – and, at best, save money. .

But the digital cloud is no different from the one in our sky – dynamic, elusive, always shifting, easy to lose sight of… look away and it may have taken on a whole new shape.

Cloud-dependent businesses — ultimately, all businesses — must assess services, usage, and unit pricing across the enterprise through a process of visualization, optimization, and ongoing monitoring.

This way they can guarantee clear skies even in difficult times.

David Drai is CEO and Co-Founder of Anodot