In the space of just a few years, enterprise cloud services have become more prevalent, more embedded in core operations, and more diverse. The initial cloud computing risks of security, privacy, and sovereignty have largely been addressed. Instead, they have been replaced with new challenges related to business value realization as enterprises start measuring the business impact of cloud services.

When the good amplifies the bad

The benefits of cloud, when properly implemented, are well known and attractive. Real-time and dynamic on-demand purchase enables scalability and agility. What’s more, you don’t need to project future demand and risk overprovisioning to meet those requirements or cope with erratic peak periods of load.

However, the on-demand nature of cloud use can often accelerate and amplify the escalation of cloud costs. Many organizations are exposing themselves to significant risks as a result of a lack of action in adopting processes and technology to monitor and optimize their cloud environments. This leaves them open to financial and operational risks that impact business performance.

What key steps in cloud financial management could you be missing?

In research from Enterprise Management Associates, 42% of survey respondents listed the desire to control cloud costs as their top IT operations priority. These cloud computing risks could be having a serious negative effect on your business.

Slower cloud adoption

Without a process for managing how cloud resources are consumed, controlled and budgeted, enterprise adoption slows or comes to a halt.

Negative impact on innovation

The promise of cloud and freedom to innovate is at risk. Cloud spend escalates if organizations don’t properly manage decision making at the design stage.

Lower quality of service

Poor utilization of cloud puts a strain on service levels.

Sprawl/under-utilization of resources

Visibility is critical to prevent over or under-provisioning of resources.

Higher cost

Lack of awareness into current spend levels leads to rampant overspending.

Disorganized multi-cloud computing

In the early days of cloud computing, it was thought that using multiple providers would save money. Organizations could pick the most cost-effective way to deploy workloads. In reality, the opposite is often true. A variety of factors makes the reality fall far short of the hope. Only the right analysis and mix of techniques and tools can help rein in costs to make multi-cloud more workable.

Don’t ignore cloud computing risks and inefficiencies

Often organizations don’t face up to the negative side of cloud migration. As growth has occurred organically in many areas there is no central control for spend. Cloud computing risks and problems are ignored, hidden behind the misperception that the amount of overspend is too small and not worth resolving. There is a reluctance to admit to wasted spend factors, ‘missed’ savings and deepening levels of inefficiency.

Achieving the goal of efficient cloud use must be more than a one-time event or once-a-quarter focus. Organizations need to build best practices for continuous optimization.

IT teams and finance staff must become proficient in continuous processes to monitor and optimize cloud spend. Using deep dive IT operations analytics tools to deliver insights is necessary to efficiently govern costs, especially when new resources are being continually provisioned, scaled, and de-provisioned.

In the next post in this series on optimizing your cloud costs, we’re going to take a deep dive look at why cloud computing seems more difficult and expensive as the technology and systems have developed over the years.