More than half of large enterprises, 57 percent, are worried about cloud costs on a daily basis, according to a survey from 451 Research. A whopping 80 percent of these companies thought that poor management of their cloud deployments was proving to be a financial drain.
These are not the type of statistics you expect to see about cloud computing, perhaps.
It all looked so clear when companies first made the move to the cloud. Superficially, it all made sense. Organizations no longer had to pay for compute power that they didn’t use, so it seemed a no-brainer that there would be money to be saved.
But it didn’t work out like that. All too frequently organizations found that the promised savings didn’t materialize. Often, their cloud deployments were actually costing them more than their previous on-premise implementations.
In another Scalable blog series we have discussed the importance of establishing a cost baseline as the first step of any cloud migration project.
The basic financial drivers for a cloud migration of an existing business system are usually cost, clarity and predictability and/or cost reduction. That’s not to say these are the only drivers; agility is oft quoted, but if cost is your focus then it’s worth exploring some aspects to consider.
Cloud costs tend to be clear cut and relatively easy to understand, at least statically, before you start growing, but we’ll discuss this more in the next few articles in this series. On-premise costs are often shrouded in equipment depreciation, warranty and licensing renewals, maintenance costs, shared staffing and facility costs, management charges, time to remove exiting on- premise costs, etc., which makes them hard to clearly articulate and accurately calculate.
Just gaining an understanding of the total costs of owning and running an existing business service are sometimes enough to justify a move to the cloud.
However, this is a move that requires careful preparation, especially in terms of deep-dive analysis of your existing IT estate and the way you use the assets. If you don’t invest enough time in preparation and planning, you will struggle to realize the full benefits.
If you are considering cloud migration, there are 6 essential questions to consider to ensure success:
Once you have addressed the initial basic considerations of cloud migration you have the additional complexity of how to deploy in the cloud. Currently popular models are Infrastructure as a Service (IaaS) and Platform as a Service (PaaS).
Take a look at this overview of the typical separation of key responsibilities and potential sources of cost.
Both have pros and cons and understanding these when design decisions are made can greatly affect downstream costs and the effort required to control them.
Companies are certainly worried that they’re not using cloud effectively. The statistics show that a surprisingly large number of people are concerned about the management of cloud costs. But there are measures available to keep costs low.
Industry research reveals that there seems to be some reluctance to take measures such as shutting down unused – or little used – workloads, rightsizing instances or moving from PaaS to IaaS if conditions demand.
There could be many reasons for this. Ignorance of how much cloud capacity is needed; a lack of knowledge of what’s actually out there (something that could be exacerbated by a shortage of skilled cloud practitioners) or, perhaps, badly negotiated contracts.
In this series, we will be exploring many of the reasons about why organizations have had difficulty achieving the anticipated cost savings. We will discuss opportunities for you to adopt best practices that help rationalize and optimize cloud deployments to ensure your organization maximizes its ROI through cloud efficiency programs.
Next time, we’ll discuss the risks and rewards of cloud services as they become more prevalent, and how this has affected the ways in which organizations approach cost optimization. In the meantime, if you’d like know more, you can download our Smart Guide: Essential strategies for optimizing cloud computing costs – cutting through cloud complexity.