The Cloud Cost Conundrum: Why It’s a Problem and How to Fix It

The business case for the cloud has moved well beyond cost savings. Organizations are proceeding with multi-cloud deployments to ensure that each workload and application is in the optimal environment. They’re focusing on making their teams more productive and the organization as a whole more agile. They’re using the cloud to take advantage of artificial intelligence and the Internet of Things.

As cloud adoption continues to surge, however, we seem to have come full circle as cost has come to the forefront. Although it was once a foregone conclusion that the cloud translated to cost savings, these savings can be easily negated by cost overruns. Multiple studies have shown that companies are struggling to get cloud spending under control.

The RightScale 2019 State of the Cloud Report shows that 64 percent of respondents say that cloud cost optimization is their top initiative in 2019, up from 58 percent in 2018. These findings are supported by a separate study from Kentik, which found that the biggest challenge for organizations using the cloud is cost management. A third study from Softchoice found that 57 percent of organizations have exceeded their cloud budgets.

Why are cloud costs such a problem? Many organizations are so eager to move workloads to the cloud and use cloud-based services that they make the leap without understanding the true costs involved. In addition, 96 percent of IT respondents admit to having a cloud skills gap in their organization, according to the Softchoice study.

Another issue is wasted resources, according to the RightScale survey, which found that organizations are wasting about 30 percent of their cloud investment. In other words, cloud services are provisioned but underutilized. In some cases, those resources are simply forgotten. Overall, the RightScale study found that organizations haven’t automated cloud usage policies and are likely underestimating how much money they’ve wasted. These problems get worse in a multi-cloud environment as management becomes more complex.

When you take all these factors into account, it should be no surprise that 43 percent of IT leaders aren’t sure how to create a cloud management strategy, according to the Softchoice study. The Kentik survey revealed that 46 percent aren’t using cloud monitoring tools, and 10 percent admit that they still track cloud costs with spreadsheets.

Larger companies are devoting more resources to attack the problem, as 66 percent of enterprises have created central cloud teams to manage cloud services. For smaller organizations that don’t have the budget or personnel to dedicate to cloud management and cost optimization, partnering with a managed services provider (MSP) is the best solution.

An MSP can fill gaps in cloud skills and knowledge, enabling you to stick to your budget, minimize waste and efficiently manage cloud services across a multi-cloud environment. In addition to helping you control costs, an MSP can help you migrate workloads to the cloud, address security issues and enhance your disaster recovery capabilities.

Instead of using the cloud to reduce costs and complexity, too many organizations are simply shifting cost and complexity to the cloud. Let us show you how the SSD can help you take full advantage of the cloud while keeping costs under control.