Spending to Save

**Reality of the Shift from On-Premises to Cloud **

Cloud is not just a single product; it's a comprehensive ecosystem designed to meet the complex demands of enterprises. These demands include scalability, adaptability, extensibility, and effective management. In addition, the cloud provides enterprise-level features such as top-notch security, real-time availability, and high performance.

In the past, smaller companies lacked the resources to access advanced cloud technologies used by large corporations. However, the cloud has democratized technology, allowing businesses of all sizes to store data remotely instead of locally. Cloud-hosted desktops have streamlined operations, making companies leaner, faster, more secure, and highly efficient.

But here's the catch: while the cloud promises scalability and flexibility, it has also led to rising costs. Despite offering benefits like enhanced security, reduced data loss risk, faster deployment, improved collaboration, connectivity and efficiency, cloud spending has become one of the highest expenses for many companies.

In the past three years, cloud adoption has surged, driven largely by the global pandemic's challenges, such as remote workforces and the need to enhance employee and customer experiences through digital expansion. However, a recent study reveals that businesses are overspending by at least 30% to 40% on public cloud infrastructure. This overspending can be attributed to various factors, including the distribution of applications across multiple clouds, increased charges by cloud service providers for pay-as-you-go services, and cloud waste. For instance, Google Cloud recently announced significant price hikes for several core services, justifying them as offering "more flexible pricing structures and options."

One often overlooked cost factor is the small fee charged by many public cloud providers each time a client accesses their data. Although these costs may seem insignificant—often just a few cents per hour—they can accumulate rapidly for firms running numerous analytics processes.

The Importance of Cloud Governance

While technology is crucial for cloud success, cost management plays an equally vital role. A study shows that cloud prices can hinder efficiency, making it essential to better control and track resources. Cloud cost management covers factors such as virtual machine instances, memory and storage usage, network traffic, web services, software licenses, and more. These aspects must be considered when developing an effective cost management strategy.

Businesses must continually monitor their cloud resource expenditures, evaluate them, and optimize their usage, all while pursuing other business objectives such as security, accountability, improved visibility, and strategic planning. Managing the cloud entails handling multiple components independently, including selecting the right instance size and deactivating unnecessary resources. Cloud cost management is an ongoing process with interdependencies across departments and sectors within an organization. We say this again and again that CCM is a company-wide problem and not a stand-alone or a single team’s problem.

Cloud management solutions integrate cloud operating systems, applications, storage frameworks, provisioning, and security across teams and departments to provide visibility and control over the disparate elements of cloud ecosystems. Establishing standardized systems with third-party cloud management tools ensures efficient operation and management of cloud resources.

Cloud Governance vs. Cloud Management

Effective multi-cloud strategy begins with differentiating between governance and management. Companies must establish guidelines for managing cloud infrastructure and applications across diverse clouds, accompanied by protocols to mitigate risks. While cloud governance defines configurations for cloud security, cloud infrastructure management tools play a vital role in enforcing these standards by automatically identifying security vulnerabilities.

Cloud Cost Visibility and Aligning with Business Metrics

Achieving visibility into the cloud can be challenging, even with a single cloud. Organizations with hybrid or multi-cloud environments need a unified view across all cloud platforms. Managing spending and understanding its origins is a complex task, particularly for organizations with hundreds of engineers receiving a single bill.

Specialized software is imperative for comprehending enterprise-level cloud spending. It enables efficient data processing, ensuring that organizations can analyze vast amounts of data effectively. As workloads shift to the cloud, predicting monthly cloud expenditures becomes increasingly intricate. Organizations have to continuously optimize costs while maintaining performance, a task that necessitates access to insightful metrics on cloud service performance, cost, and utilization.

Businesses can achieve significant returns on investment by reducing cloud spending. It's one aspect of a comprehensive cost management framework that includes cost comparison, forecasting, budgeting, tracking, allocation, reporting, and anomaly detection.

The cloud's significance continues to grow, and future cloud spending is poised for exponential growth. As the cloud underpins new technologies, getting cloud cost management right now is paramount. While there may be arguments against the cloud, understanding cloud spending and its value can pave the way for successful cloud adoption.