By Karind Ori, Cloud & Digital Executive at new-age solutions and systems integrator, +OneX
Chief financial officers (CFOs) know that the cloud can save them money. Yet as they pore over their income statements, many CFOs are concerned to see that their cloud costs are skyrocketing every month. What’s the deal with the cloud making a material dent in the budget? Is the cloud inherently expensive? Or could it be that many organisations are simply not using the cloud in an optimal way?
If you’re asking these questions, you’re in good company. The Flexera 2024 State of the Cloud Report found that managing cloud spending is the top challenge facing organisations for the second year in a row. Research also shows that 30% of cloud spend is wasted on underutilised resources, overprovisioned systems and orphaned workloads.
Before we consider some actionable strategies to address cloud cost concerns, it’s worth considering why cloud computing can deliver some nasty cost surprises. Perhaps the single biggest factor is a lack of control over, and visibility into, the cloud estate. Many organisations run sprawling environments and have lost track of what’s being used and by whom in the business.
Departments managing cloud resources in silos lead to duplication and inefficiency in many enterprises. Issues such as overprovisioning of resources (paying for more than you need) and under-provisioning (not having enough cloud resources to meet demand) have become commonplace. Failing to leverage reserved instances, spot instances and other cost-saving strategies can result in unnecessary expenses.
There are three main cloud deployment models to take control of the situation. Of course, the optimal model depends on the needs and priorities of your organisation, so let’s examine each closely.
1. Go all in on a public cloud provider
For some organisations, going all-in on the public cloud is the way to go, at least for specific workloads. Hyperscale public cloud players like Amazon Web Services (AWS), Microsoft’s Azure, and Google Cloud provide scalable solutions, robust services and increasingly sophisticated cost management tools within the public cloud landscape. The proven benefits include:
- You only pay for what you use.
- There is no hardware overhead or capex.
- You can leverage cloud-native architectures and pricing models like spot instances and reserved capacity to optimise spending.
The catch of the public cloud is that you lose some of the control and predictable costs of private infrastructure. Managing public cloud spend demands a disciplined approach to areas like right-sizing resources, eliminating idle waste, accessing reserved pricing, and monitoring usage across accounts and teams. An example shared on Reddit outlined how a Kubernetes environment on AWS cost $20,000 per month before optimisations like leveraging spot instances brought costs down to $5,000.
2. Get the best of both worlds with the hybrid cloud
Many enterprises embrace a hybrid cloud approach to rein in runaway cloud expenditures. This involves combining on-premises private cloud resources with public cloud services to create a best-of-both-worlds solution. Your organisation could use the private cloud for sensitive or high-stakes workloads that require elevated security and performance.
Some applications and data might need to stay on-premises for reasons such as data gravity, latency, IP protection, performance and app entanglement. The public cloud could be used for less critical workloads and to take advantage of cloud bursting during periods of high demand. Some of the pros include:
- You can optimise workloads by choosing the best environment for each task.
- The approach allows you to reduce upfront costs with the public cloud and leverage existing infrastructure with the private cloud.
- You can quickly scale resources up or down to meet fluctuating demand.
- It’s possible to maintain sensitive data on a private cloud while enjoying the public cloud’s agility for less critical workloads.
Managing and integrating the different environments in a hybrid cloud setup can be complex. Your teams will need robust tools for visibility across your hybrid landscape. While a private cloud avoids some public cloud costs like data transfer fees, you will still need to factor in hardware/software costs and overhead.
3. Hedge your bets with the multi-cloud
In this approach, your organisation can distribute workloads and data across multiple public cloud providers to avoid vendor lock-in, access best-of-breed services, and mitigate risk. The goal is to optimise performance, costs, and business needs. There are numerous advantages:
- It allows you to quickly adapt to business needs by leveraging the strengths of different cloud providers.
- You can avoid single points of failure and vendor lock-in by distributing workloads across multiple clouds.
- Choose the ideal cloud provider for each workload based on performance, latency, and cost.
- You have the ability to tap into the latest features and services of providers to drive innovation.
Your enterprise may run containerised applications on AWS, use Azure for Office productivity workloads, and leverage artificial intelligence/machine learning services from Google Cloud to capitalise on each provider’s strengths. But no cloud consumption model is perfect. On the upside, you gain flexibility and redundancy. However, the multi-cloud also adds overhead in managing disparate environments, dealing with pricing complexities across providers, and handling data transfer costs. You will also need robust skills across multiple cloud platforms.
Public, hybrid, or multi: Which cloud is for you?
The cloud itself is not inherently cost-prohibitive. Yes, the pay-as-you-go model can lead to unexpected sprawl, but runaway spending results from how businesses consume and manage (or mismanage) cloud resources.
Provided you select the optimal deployment model based on your application portfolio, workload requirements and skills, implementing ongoing governance through FinOps and leveraging the latest optimisation techniques – the cloud can be a cost-effective enabler of business transformation.
