With huge investments in cloud computing, the revenue of the big three public cloud providers (AWS, Microsoft Azure, and Google Cloud Platform) has increased significantly, and they have more than tripled their investment to cope with this increasing demand. With investments like these, it becomes important to realize the benefits to an organization’s full potential.
Despite being a growth accelerator for a large number of organizations, the cloud brings with itself some real-life challenges that could make an organization’s digital growth journey below par. According to a study conducted by McKinsey, ‘Enterprises estimate that around 30 percent of their cloud spend is wasted. Furthermore, around 80 percent of enterprises consider managing cloud spend a challenge. Thus, even though more than 70 percent of enterprises cite optimizing cloud spend as a major goal, realizing value remains elusive.’
There are a host of optimization challenges that organizations succumb to and need to overcome to avoid getting into this trap of sub-optimal cloud usage.
Optimization Challenges faced while adapting to cloud services
1. Improper forecasting
Overprovisioning and underprovisioning are common challenges faced by many organizations. While each organization has a different strategy for forecast versioning, most of them fluctuate in workload requirements. Almost every organization’s cost-benefit ratio can be improved if the workload is forecasted correctly. Since the workload prediction varies from application to industry, it is important to understand the requirement for each use case. This forecasting is complex, and it requires setting up processes and workflows, deep expertise, and the right data.
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2. Innumerable options
The bombardment of new offers, features, instances, and pricing can rattle organizations, especially the ones that have just begun their cloud journey. There are many complex decisions to be made like, which instance forms out of the many available, provide the best performance and cost balance? Can the company pre-select instance forms for teams to use, or can teams make their own decisions based on the use case? Which are the regions to be chosen and can they vary? How long will the capacity be needed? How frequently will it change? Which pricing plan goes best with multiple use cases? Will a new product/feature roll-out mean a change in demand? The need for a comprehensive plan will need to take center stage to tackle the challenge of a plethora of options provided by Cloud service providers.
While AWS autoscaling enables cloud cost control by adjusting capacity to meet changing demand, there are applications that are inefficient and require long warm-up times to auto-scale. These are applications that are inelastic include databases, caches, and inefficient applications. Provisioning time, money, and resources for these applications can help organizations to more accurately predict their cloud cost savings.
4. Lack of accountability
It is important to pinpoint the teams and individuals over-spending due to lack of transparency. IT budgets are dispersed across multiple groups within organizations, making it more difficult for policy and decision-makers to keep track of where and how the money is being spent. Even if organizational leaders appreciate the value in investing, tracking, and managing this spending, finding someone with the expertise to do this effectively remains a challenge.
Realize true value by overcoming challenges
The ability to successfully leverage the cloud is crucial. Some of the best practices and key value drivers for achieving true cloud potential are mentioned below:
1. Continuous cloud cost governance
Most organizations view cost optimization as a one-time activity and not as business as usual practice and priority. There are indeed ad-hoc interventions that are needed but that doesn’t bring in the efficiencies of a regular monitoring process. A due diligent IT governance will ensure that the cloud is being managed as per agreed-upon policies, procedures, and timelines. This will also regulate the functioning, control, and maintenance of cloud assets. The IT teams need to be viewed as a partner in achieving a common goal by selecting, brokering and governing cloud services.
2. Cloud consumption management
With growing scale and costs, it becomes imperative for organizations to review the utilization of all the resources. It is advised to categorize all your workloads into three categories i.e., Idle, Underutilized, and Optimally utilized. Idle resources may be identified, and underutilized instances should be downgraded. Any early capacity planning can help in understanding utilization patterns of systems, servers, and applications.
3. Fixing inefficiencies within the existing architecture
Clients’ existing systems should be thoroughly examined by cloud service providers. Moving to a serverless architecture could help you save money since the billing is based on actual use and not on provisioned but unused space. Serverless architecture saves money in the short term while also simplifying management.
4. Operations Restructuring
To be competitive in their efforts around coud services, businesses must transform their operations. New roles can be set up, for example – Cloud provisioning manager and Monitoring manager. These roles cannot work in silos and hence, will demand a flatter organizational structure where teams can work collaboratively. In today’s day and age, companies that have the right business model will succeed. They’ll also experience greater innovation and will be able to develop new capabilities much faster with arrested risk.
5. Leveraging FinOps Solutions
The FinOps solution providers are broadly classified into 3 categories-
- Service providers that offer discounts through reselling
- Independent Software Vendors (ISVs) that offer software for cost management
- Organizations providing managed services
Companies can engage and leverage these FinOps solution providers who can assist your business with better budgeting, cost management, tagging, and optimization.
The immense value pool created from the cloud offers an opportunity for organizations to achieve scale, agility, innovation, and monumental growth. It is time that leadership starts examining where the value lies in their ecosystem by identifying the correct cloud use cases in order to achieve desired business outcomes. Follow the proven methodologies to execute a well-defined & value-oriented strategy. This would also entail building cross-functional capabilities across the workforce. In addition to this, success will be determined by a business model that is cloud-ready and accelerates product development.
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