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32% of your Cloud spend is wasted

The cloud revolutionised how businesses operate, offering agility, scalability, and innovation. However, a hidden storm brews within this digital paradise – wasted cloud spend.

Studies estimate that organisations squander a staggering 32% of their cloud budgets. This translates to significant financial losses and missed opportunities for growth. Understanding the root causes of this waste is crucial to optimising cloud spending and maximising its benefits.

Unveiling the Culprits: Where Does Cloud Spend Get Wasted?

This 32% cloud spend waste isn’t a monolithic entity. It stems from a confluence of factors, each contributing to inefficient resource utilisation and unnecessary costs. Let’s delve into the primary culprits:

  1. Unforeseen Growth: The cloud’s inherent scalability can be a double-edged sword. While it allows for rapid application and infrastructure scaling, businesses often underestimate their future needs. This leads to overprovisioning of resources, resulting in idle virtual machines, storage, and bandwidth incurring unnecessary costs.
  2. Unoptimised Usage:  Many organisations simply “lift and shift” their on-premises workloads to the cloud without optimising them for the cloud environment. This inefficient approach fails to leverage cloud-native features like auto-scaling and serverless computing, leading to wasted resources and higher costs compared to optimised cloud-based solutions.
  3. Lack of Cost Visibility:  Without proper cost monitoring tools, organisations struggle to gain real-time insights into their cloud spending. This lack of transparency makes it difficult to identify areas of inefficiency and take corrective actions before costs spiral out of control.
  4. Shadow IT:  Empowered employees can easily provision cloud services without proper IT oversight. While this agility can drive innovation, it can also lead to uncontrolled spending and a lack of standardisation, making cost management and security challenging.
  5. Complex Billing Structures:  Cloud providers offer intricate pricing models with various tiers and discounts.  Understanding these complexities can be daunting, leading to confusion and potentially overpaying for services or failing to capitalise on cost-saving opportunities.
  6. Limited Expertise:  Many organisations lack in-house cloud expertise. This lack of knowledge hinders the ability to effectively design cloud architectures, negotiate pricing, and implement best practices for cost optimisation.
  7. Misaligned Incentives:  Traditional IT teams may be evaluated based on uptime and performance, not cost optimization. This misalignment can lead to decisions that prioritise performance over cost-effectiveness.
  8. Lack of Collaboration:  Silos between finance and IT teams create communication gaps. Finance might lack understanding of cloud specific costs, while IT may not prioritise cost control. This lack of collaboration hinders the development and implementation of a comprehensive FinOps strategy.

 

Taming the Cloud Beast: Strategies for Reducing Waste and Optimising Costs

The good news is that the 32% cloud waste monster can be tamed. Here are some effective strategies organisations can adopt to optimise their cloud usage and reduce costs:

  1. Planning and Forecasting:

Accurate forecasting of future cloud needs is crucial. Analyse past usage patterns, identify potential growth trends, and right-size resources accordingly. Leverage tools for cloud cost estimation to plan budgets effectively.

  1. Implement Cost Monitoring Tools:

Gain real-time visibility into your cloud spending with cost management tools. These tools provide detailed insights into resource usage, identify cost anomalies, and enable proactive cost optimisation measures.

  1. Embrace Cloud-Native Solutions:

Instead of “lift and shift,” invest in designing and developing applications specifically for the cloud environment. Leverage features like auto-scaling and serverless computing to optimise resource utilisation and reduce costs.

  1. Right-size Your Resources:

Don’t fall prey to overprovisioning. Regularly evaluate your resource needs and adjust them accordingly. Utilise features like auto-scaling to scale resources up or down based on actual demand.

  1. Reserve Instances:

For predictable workloads, consider reserving instances with cloud providers. Reserved instances offer significant discounts compared to on-demand pricing.

  1. Develop a FinOps Culture:

Foster collaboration between finance and IT. Implement a FinOps culture that prioritises shared accountability for cloud costs. Encourage cross-functional teams to work together to identify cost optimization opportunities.

  1. Educate and Empower Employees:

Provide training to employees on using cloud resources efficiently. Empower them to understand cloud cost implications and make informed decisions.

  1. Manage Shadow IT:

Develop a clear policy framework for cloud service provisioning. Encourage responsible shadow IT by allowing controlled self-service options while ensuring compliance and cost optimization.

  1. Negotiate Pricing:

Don’t blindly accept default pricing offers. Negotiate with cloud providers based on usage patterns and explore committed use discounts or volume-based pricing models.

  1. Continuous Monitoring and Optimisation:

Cloud optimisation is an ongoing process. Regularly monitor performance and costs. Better still, employ some of the very effective automated technology tools available in the market to improve cloud consumption transparency and reporting.

How can we help you improve your cloud utilisation and reduce costs?

In working and speaking with clients we have developed an approach and identified the right technology partners to help you solve your cloud cost conundrum. We look at all aspects of cloud resource management and waste reduction, including:

  1. Cloud Strategy Planning: Identify the most suitable cloud environment and platform for your needs.
  2. Measurement and Reporting: Track usage and costs, analyse results to identify improvement opportunities.
  3. Cloud Environment Optimisation: Implement insights to optimise your cloud environment for better performance and reduced costs.

 

We’d welcome the opportunity to discuss your cloud journey and challenges and to share some more of our expertise and experiences.

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