Why Cloud Costs are a Big Problem and What to do About Them


One of the primary reasons why organizations migrate to the cloud is to get out of the business of owning and operating IT infrastructure. The cloud can be especially beneficial to organizations facing forklift upgrades of aging hardware, and those that need on-demand scalability to accommodate rapid growth.

However, many organizations move to the cloud without a full understanding of how much it’s going to cost. Some assume that the cloud will be cheaper than on-premises infrastructure, while others look at the price per hour of compute without factoring in storage, backups, management tools and all of the other services that are required to operate a workload. This results in budget overruns, particularly as the cloud environment grows.

Not surprisingly, cloud cost management has become a huge concern for organizations of all sizes. For the third year in a row, cloud cost optimization was cited as the top priority in the RightScale State of the Cloud Report from Flexera. The 2019 report found that 64 percent of organizations are focused on optimizing their cloud spend, up from 58 percent in 2018. That number increases to 76 percent among advanced cloud users.

These findings are echoed in a separate survey by Densify, which found that 45 percent of organizations believe their cloud spend is too high. Ten percent said they had exceeded their cloud budget by 100 percent.

Part of the problem is that cloud invoices are notoriously difficult to understand. Few organizations have the in-house expertise needed to analyze the data and determine how to reduce expenses. Meanwhile, costs continue to add up on a monthly basis.

Furthermore, organizations aren’t taking basic steps that can help to rein in costs. The 2019 RightScale survey found that just 35 percent of respondents are using automated tools to shutdown workloads after hours — down from 37 percent in 2019. Just 31 percent are using automation to right-size cloud instances, 29 percent are specifying expiration dates for workloads and 24 percent are taking steps to eliminate inactive storage. Failure to utilize discounts and shop for the lowest-cost cloud or cloud region also contribute to cost overruns.

Organizations that lack cloud expertise should consider outsourcing cost management. Technologent’s cloud experts can analyze your workloads and cloud spend and determine if you’re using the most cost-effective service and leveraging reserved instances to lock in significantly lower rates. Technologent can also take over cost management and billing to help you take full advantage of discounts.

More importantly, we can help you develop a cloud strategy that ties costs to business value. For example, if high levels of uptime are critical, the cloud is probably more cost-efficient than trying to build out a highly resilient infrastructure. If the cloud helps to better serve customers, create opportunities and accelerate time-to-market, any added expense will likely be justified.

Cloud costs have become a big problem that only increases as more applications and workloads are migrated to the cloud. By partnering with Technologent, organizations can get a handle on their cloud spend and ensure that it delivers the most bang for the buck.

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