Leadership Strategies Tech Perspectives

IT’s New Year’s Resolution For Cloud Cost Savings

This IDC Metri blog is the first of a two-part series that brings IT to reckoning about the shortcomings that often cause them to give up on efforts needed to cut wasteful cloud spending.
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The start of the new year brings many people closer to realizing ways they can improve, perhaps its eating better, or fitting in more time with family and friends. There might be professional resolutions such as meeting more regularly with your boss, connecting with colleagues outside of your department. For IT, cutting back on wasted cloud spending is often high on the list but tends to eventually fall through the cracks, with no resolution to this pattern. 

According to Forbes, while executives estimate that 30% of their cloud spending is wasted, at the same time enterprises intend to spend even more on cloud services. Clearly wasteful cloud spending is a recognized yet growing problem that for many continues to go unresolved. As this blog will show, where IT leaders fall short on is not identifying areas of spending that can be improved but implementing a plan of action for cost savings and maintaining it. 

To elaborate on cloud costs, there are many tools available from cloud providers and third parties that provide reports and dashboards, and even recommendations about which instances can remove or reduce/enlarge (rightsizing). Tools that provide intelligence can also determine how to use discount options (reserved instances, savings plans, reserved capacity, etc.), how to handle licenses smartly and what to do in application architecture to save costs. And, instances can be disabled when not in use. 

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In summary these resources provide insight, but knowledge into your spending is only as useful as what you do with it to turn around your spending. And how you act will determine how effective you are at plugging the holes of your spending.  

Because of the effort that’s needed its common for IT to plug their holes with patches. Take, for example, disabling instances outside working hours. In theory this is an excellent saving, but instances are part of applications, which in turn are part of chains. And then it may just be the case that data exchange takes place in a chain outside working hours. But also, test teams that are approaching a deadline may sometimes need their environment outside the pre-planned working hours. And if environments are used in the management chain, they must also be available after hours in case of an emergency. Overall savings is easier said than done, mainly because it takes work to get there. 

Rightsizing is also more difficult than it seems. Users and administrators are often hesitant about removing capacity; users see their performance decrease, and administrators see the risk that more failures will occur because there is less overcapacity to absorb issues. In the latter case, you must carefully analyze where these issues come from; a mediocre application can benefit from more capacity, but that is not a long-term solution. Remember, if the roof leaks, you can replace the bucket that collects the water with a larger tub, but that too will become full at some point. You’ll eventually need to repair the roof. 

Ultimately, you’ll have to move towards an entirely new approach in which you not only have insight into the costs, but also involve users and administrators, so that you can make the right decisions about saving on your cloud costs. This isn’t as daunting or unattainable as it sounds. In our next blog we’ll reveal how some IDC Metri Cloud Economics clients have transformed their cloud spending, so you can see how to get there too.  

Can’t wait until the next blog is published to learn more about cutting cloud costs? Contact us to schedule a conversation. 

Paul is an experienced sourcing consultant, with a strong focus on supplier selections, contracting and cloud economics. Due to his technical background, Paul is capable to see through solutions in supplier’s proposals, and to advise on their suitability for the client organization. On top of IDC Metri’s capability to compare pricing against market standards, this provides a total view on proposals. In cloud economics, Paul helps not only to analyze cloud costs to find possible savings, but also on actually realizing those savings by interacting with the client’s organization.