top of page

Managing the Cost of Cloud Computing

Updated: Jan 28, 2021

There is no doubt that one of the more attractive benefits of cloud computing and services, especially to IT budget watchers, is the pay-as-you-go model. The ability to minimize costly upfront capital investments in infrastructure while improving flexibility and speed-to-market has been a significant driver in the growth of cloud services. Cloud computing has enabled businesses to achieve greater scalability and flexibility for presumably more predictability in the IT budget.

However, as with anything - too much of a good thing can become a not so good thing if not done in moderation. As cloud services became more prevalent and easier to use, so did the ability for many business units to take up this capability on their own as they looked to quickly solve their own needs. In addition, the overall ease in leveraging cloud allowed IT departments to quickly spin up environments as needed in response to business demand. As a result, organizations are now seeing cloud spend as a significant line item on their budgets.

In the RightScale 2019 State of the Cloud report from Flexera, 786 technical professionals were surveyed across a broad cross-section of organizations. The survey found that:

  • Companies plan to spend 24 percent more on public cloud in 2019 vs. 2018.

  • 13 percent of enterprises spend more than $12 million a year on public cloud, while 50 percent spend more than $1.2 annually.

  • SMBs generally have fewer workloads overall and therefore smaller cloud bills, but 11 percent of SMBs still exceed $1.2 million in annual spend.

Source: Rightscale 2019 State of the Cloud Report from Flexera

Rightscale’s 2019 State of the Cloud Report also found that “Optimizing existing cloud use for cost savings continues to be the top initiative in 2019 for the third year in a row, increasing to 64 percent from 58 percent in 2018.”

Interestingly enough, some of the same problems that existed within an organization’s own data center have now proliferated into their own cloud environments.

  • Over-provisioned resources – Provisioning compute power beyond the ultimate requirement leaves systems underutilized. Although you may not have paid for a physical server and the associated costs for running that server in your own data center, you are paying for the cloud compute power you have allocated.

  • Not decommissioning unused resources – Cloud services have made it easy to spin up whatever compute power you might need, but just as easy to forget them when you don’t.

Adding to the hidden cost of cloud computing, many organizations have leveraged cloud services from multiple providers in order to meet specific application requirements. Although it might make sense at the time, managing multiple cloud service providers (CSP) creates more complexity which usually means higher overall costs. Many organizations are also faced with decentralized control of their cloud computing environments. As business units have happily taken charge of solving some of their own challenges using cloud services, lack of centralized oversight has diminished opportunities to leverage services more effectively and optimize available resources.

Organizations can optimize their cloud resources and better manage their cloud spend by:

  • Leveraging automation to decommission, right-size, and scale environments.

  • Taking advantage of CSP tools that provide detailed insight into the usage of your cloud environment.

  • Centralizing the governance of cloud management to ensure usage is optimized and properly managed. This team should be responsible for tracking costs and providing visibility back to the cloud service consumers.

  • Charging cloud spend directly back to the consumers of those services. If they know what they are paying and it’s coming out of their budget, they will likely be more inclined to reduce any waste and manage their own usage more carefully.

  • Taking advantage of available vendor discounts. These discounts require you make an upfront commitment but can provide significant savings in the long run.

Even though the growth of cloud computing may be exponentially growing within your organization, your cloud computing costs don’t need to grow at the same rate. By creating visibility for all cloud consumers on how much they are spending and creating a level of governance and oversight, your organization can assure they are optimizing usage of their available cloud resources.

Let Tsource Help You Build Your Cloud Strategy

Tsource has been helping our commercial and government clients in Maryland, Virginia, and Washington, D.C. maximize their potential, right-size their infrastructure, and achieve their business and technology goals since 2003. We've helped customers deliver faster leveraging an Agile approach, improved system availability and performance by modernizing their technology portfolio, and successfully matched hiring managers with great IT talent. Experience matters and with over 30+ years of IT experience in the most diverse and complex environments, we are passionate about helping our customers get the most out of their technology investments by providing them with cost-effective, right-sized solutions. Tsource is a ISO 9001:2015 certified Woman Owned Small Business delivering IT Solutions, Managed Services, and Staffing. If you are interested in working with us, contact us online or give us a call at 410-970-6669.

5 views0 comments

Recent Posts

See All
bottom of page