This year, 89% of organizations are using multiple cloud services for their IT, and 73% are using hybrid cloud, a combination of both cloud-based and on-premises IT, according to Flexera.
Many enterprises use a hybrid combination of internal and cloud-based systems to deliver an array of IT services that range from recordkeeping, HR and other administrative functions to accelerate operational efficiency.
The benefits of cloud computing are exponential, but how can IT leaders manage cloud costs as they move more IT to the cloud?
A majority (58%) of organizations feel that their cloud costs are too high, and 82% have doubts about how well they are managing their cloud spending. That’s why managing cloud costs is a key objective for businesses, and it often comes down to cost reduction, cost optimization and cost control.
Click the banner below to learn why IT infrastructure updates boost business agility.
Cost Reduction Starts with Anticipating Cost Increases
The first step in reducing costs requires doing the opposite: You must ascertain where costs will increase when you move to cloud. This might sound counterintuitive, but too many cost reduction efforts fall flat in organizations when this isn’t done up front.
Here’s how it happens: Say an organization wants to move IT to the cloud to save money. Then, it finds out that it can’t begin to think about a cloud move without increasing network and internet bandwidth and without procuring additional security services for the cloud, such as secure access service edge.
The best practice for addressing this is for the CIO to present these transitional costs up front to budget decision-makers and bake these new costs into the total cloud budget. This new budget number then becomes the baseline against which cost reductions are measured.
Once you have a total cloud cost picture, you can look for cost reductions in a few key areas.
For starters, look into user subscriptions. As more businesses use cloud-based resources, teams will independently budget for these without IT’s knowledge. This is especially true for Software as a Service offerings that were previously delivered to end users via download but are now delivered through the cloud. Often, there are more cloud services in use than IT planned for. In some cases, these resources are underused or redundant. IT can perform an audit so service duplications can be eliminated.
Similar auditing and tracking should be done to highlight cloud storage and processing that is going unused. This usually happens when resources are provisioned and then left in an active state because someone forgot to deprovision them after use. As a result, the organization keeps paying for them, even though they sit idle.
Finally, you might have cloud providers that provide the same service, or there might be excess or obsolete data stored and paid for in the cloud that should be purged.
These are all areas where IT can tighten up payments and privileges so that teams are paying only for the most important cloud services.
Find Opportunities for Cost Optimization
The beauty of the cloud is that, if you manage it well, you pay only for what you use. You eliminate dormant assets such as in-house processing and storage that you’ve amortized as capital investments.
“Eliminating redundant infrastructure is key to reducing costs,” says Paige Johnson, vice president of education marketing at Microsoft. “You can also use existing license agreements and long-term vendor relationships that can result in cost savings.”
It’s also important to train IT staff on the resource management tools that each cloud provider furnishes. “Investing in cloud training for IT personnel ensures that companies can better manage and optimize cloud environments without hiring new staff,” Johnson says. “This helps in retaining institutional knowledge while expanding cloud expertise.”
The cloud tools available to IT staff include solutions for monitoring cloud use, security, uptime and throughput. The same tools help IT to fine-tune applications for optimal performance at a low cost.
UP NEXT: How financial service organizations are reducing their cloud costs.
Regain Cost Control
Closely evaluating cloud bills is another strategy for addressing your cloud spending. These bills are often convoluted, which is why many cloud providers offer a cost analysis tool. Mastering and using these tools is a task for both IT leaders and finance department cost analysts.
By gaining a comprehensive understanding of your cloud cost picture, you can identify and eliminate surplus cloud costs and ensure that the cloud services you are paying for align with your organization’s business goals. Remember, as IT moves to the cloud, so will IT costs.
