How to lower cloud cost without harming the value?

How to lower cloud cost without harming the value?

14 Ara 2022

5 dk okuma süresi

Organizations have embraced the cloud because it offers greater performance and flexibility at a fraction of the expense of traditional IT. This pledge will be tested in the current difficult economic environment. Companies can take simple steps to reduce expenses, create value, and increase productivity to weather the storm successfully.

You can find significant saving opportunities in your cloud plan if you know where to look. Cost pressures are on the way, and it's unclear if most businesses' cloud programs are ready. CIOs and CTOs can expect difficult questions regarding cloud expenses as the macroeconomic environment becomes more difficult and business leaders search for methods to increase business resilience.

While the proper use of the cloud can generate substantial value, many organizations have seen their annual cloud spending increase by 20 to 30 percent. CIOs may soon find that their cloud operations are on the chopping board if they don't become more cost-conscious and responsive to the economic challenges that businesses are experiencing. That would be a big setback for most organizations' competitive aspirations. However, IT executives could immediately reduce the costs of their cloud operations by up to 25% while keeping their ability to create value by implementing a focused set of strategies. Here are five ideas to get tech leaders started on the right path.

Unhealthy growth

The development of new digital capabilities, an increase in digital adoption, and user base growth are all examples of healthy growth that can be reflected in rising cloud costs. But frequently, those same cost increases also cover up unhealthy growth brought on by bad consumption habits or resource management, such as not shutting down instances that are no longer in use.

Frequently, businesses lack a clear understanding of these healthy vs. unhealthy costs. This can be especially harmful if consumer purchasing patterns change—as they tend to do during recessions—leaving businesses unsure of how to modify their cloud spending.

Organizations should set up a consistent, exceptional, and thorough tagging and reporting capability (often automated) and implement an allocation model that encourages accountability, such as making business leaders aware of their cloud-based products or services costs. Financial controls, such as actively tracked and controlled budgets for the various product teams, should also be implemented by organizations to promote healthy growth and guarantee that cloud spending is directed toward business priorities and crucial use cases.

Simple fixes

There is a broad range of cost and performance optimization opportunities. The good news is that businesses can take advantage of these productivity improvements by following a few simple procedures. Release of unused capacity, introducing scheduling and auto-scaling features, and aligning service levels with particular application requirements are among the no-regret activities. You can switch from memory-optimized to standard instances or use a serverless computing engine for containers instead of managing your own cluster. Prioritize the fixes that will benefit customers the most, implement them quickly across teams and cloud users, and conduct rapid feedback loops. If a fix is effective for one app or team, it can be scaled to others quickly.

One major government agency saved roughly 20% by adjusting cloud services to meet application demands better, terminating assets it was paying for but no longer utilizing, following some basic storage tiering standards, and updating the instances to the latest version.

Once a base level of optimization has been reached, businesses can maintain the results by educating technologists on cloud best practices, giving them the authority to reduce costs as necessary, requiring the FinOps team to continuously look for new cost-reduction opportunities, and monitoring the outcomes of optimization efforts.

Cloud elasticity

Theoretically, cloud elasticity—the capacity of the cloud to scale up and down to fit a company's current needs—should result in lower costs since it allows businesses to only pay for the services they really use. However, many businesses have multiple practices that prevent them from effectively utilizing cloud elasticity. Examples include rigid and frequently manual provisioning procedures, technical debt that prevents the inclusion of elasticity features, and excessive reliance on reserved instances. As a result, businesses pay for cloud capacity that is not being used.

A major telecom operator had to deal with this problem because the cloud infrastructure's scaling was primarily done manually. Teams frequently increased capacity in response to traffic spikes but hardly ever decreased it in response to declining demand. This problem may have serious repercussions during a recession when consumer demand declines and companies scale back marketing or implement price reductions, which may have a big effect on traffic and cloud usage.

The usual suspects are the ones lifted and shifted to the cloud. Companies should engage with their engineering team to identify inelastic apps and workloads to rework them, starting with the ones with the largest footprint. Standard autoscaling features can often be set up very easily. Even greater elasticity can be achieved by investing in more sophisticated capabilities, such as containerizing workloads. However, these investments must be carefully chosen because they frequently take time and effort. In general, businesses should steer clear of the "lift and shift" approach during future migrations unless there are strategic justifications, such as leaving a data center.

Vendor agreements

Organizations frequently overestimate the speed of cloud migration and are saddled with spending commitments that can be challenging to fulfill during a recession. Many businesses wait until 12 to 18 months before their contract ends to start renegotiating, which is sometimes too late to strike a good deal.

Companies should consider whether they would sign the same vendor agreement today when examining vendor contracts. They ought to attempt renegotiation if the response is negative. Companies are often able to negotiate trade-offs, such as larger discounts in exchange for less flexibility or extending deadlines for achieving goals. Companies that are approaching or undergoing contract renewals should think about including clauses that would increase flexibility, such as the ability to adjust commitment levels in response to predetermined trigger events or changing the terms of the services credit so that it can be used all at once or spread out over several years.

Smarter migrations

It's a common misconception that businesses can cut costs by delaying cloud migrations and utilizing their already-paid-for on-premises environments. On-premises data centers, however, require constant operating support from employees, utilities, leases, and licenses to maintain systems, manage refresh cycles, and prevent outages. Cloud does not require any of this. Cutting these support functions' expenditures can also lead to expensive troubles. Additionally, strategic and well-planned cloud migrations not only assist in saving costs but also put the company in a better position to expand more swiftly after the recession.

Businesses should prioritize migrating workloads that provide value to the cloud, such as those that support crucial business activities like automating customer assistance, working on old and underperforming hardware, or having high operational costs.

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