Tech Perspectives

Think You’re Achieving Full Cloud Cost Savings With Tools? Think Again.

How companies are partnering with a service for true end-to-end process support that brings full cloud cost savings
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48% of enterprises plan to keep spending steadily on cloud, according to IDC research, making cloud costs a focus for IT leaders. And, the majority of organizations believe they’re overspending on cloud.

The first blog in this two-part series described how tools may provide an opportunity to reduce costs. But as many organizations are aware that they need to improve their cloud spending habits, the process that it takes to get there often seems exorbitant, causing them to instead disregard the changes needed to turn their cloud spending around. This blog intends to show that the time and resources involved in executing shouldn’t deter companies from making the necessary changes. 

From insights to process, these two companies found that hiring a partner to guide them through the work needed to transform their cloud costs, in ways that were custom to their needs, made all the difference in ensuring that they not only followed through on executing a plan of action but giving them a successful outcome. 

An international telecommunications company has migrated its entire infrastructure to the public cloud (AWS and Azure) and uses a broker towards AWS and Microsoft, performing contract management and basic security services. For both providers, a System Integrator (SI) has been contracted to provide managed services (IM and TAM) on top of the cloud providers.  

During the migration, cloud costs rose above the available budgets that had been set, based on advice by the SI’s. During migration, the SI’s focused on the project deadlines rather than optimizing and saving on what was already running in the cloud. The telecommunications company turned to IDC Metri for independent advice on cloud cost savings. 

Hand typing with cloud technology system concept

IDC Metri has helped to improve tooling, and to define processes and ways of working, for this telecommunications company to analyze and manage cloud costs themselves. IT leaders can learn from their experience that recommendations from tools, including those from cloud providers, aren’t always realistic. They tend to be opportunistic, like suggesting that all instances should be reserved for three years, and that this will save over 50% of costs for those instances. That is the same as expecting your IT landscape to remain the same within that time – this is simply not true. 

PostNL has been one of the first listed companies in the Netherlands to go ‘all in’ to the public cloud, starting in 2012. Nowadays, PostNL is in the second stage transforming all of its bespoke applications from IaaS to PaaS solutions, like BI/Analytics platforms, container platforms and serverless computing. When compared to IaaS, price models for PaaS are more usage based than capacity based. Saving costs on usage-based priced services means optimizing the software, rather than the underlying infrastructure. 

Unlike the anonymous international telecommunications company in our example, PostNL doesn’t have SI’s in-between them and the cloud providers that offer managed services. The application teams, mainly DevOps based, are managing the cloud infrastructure themselves. Also here, cloud costs had an upward trend, from which PostNL has asked IDC Metri to bend it. 

IDC Metri has made recommendations, which were much less supported by tools, since these focus on IaaS, rather than PaaS. With the top 10 teams concerning costs, alignment has been done on savings, which has led to about 8% savings. A must know here is that large scale optimizations, such as applying savings plans, had already been done by PostNL itself. The savings IDC Metri helped to achieve were more on architecture and licenses. 

In conclusion, using tools that generate recommendations is only the starting point for achieving savings. First of all, the recommendations need to be taken with a grain of salt since they tend to be rather opportunistic. Furthermore, a list of recommendations is one thing, to actually achieve savings, hereby overcoming indifference or even resistance to save costs, is another thing. IDC Metri does support the full process, from analyzing costs through setting up processes to actually achieving savings. 

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.