Businesses Must Build Strategies to Tackle Rising Cloud Cost

With companies fraught with uncontrolled and wasteful cloud spend, organisations must take a proactive approach to cloud cost management strategies

With cloud infrastructure usually accounting for a significant portion of organisations’ budgets, cutting unnecessary spending and optimising cloud resources is essential to driving down costs. Amid rising interest rates last year, businesses have been feeling the pinch when it comes to cloud spend, with 55% stating that they already pay a lot for cloud infrastructure, and more than 80% already noticing an increase in their total cost of ownership (TCO) in the past two years alone.

According to a study by integration and automation leader Boomi, conducted by Forrester Consulting, companies are fraught with uncontrolled and wasteful cloud spend, and cost remediation tactics are introduced too late or without a full picture of the environment.

“We believe the findings are a clear example of integration being left out of the cloud cost equation,” said Ed Macosky, Chief Product & Technology Officer at Boomi. “When systems are disconnected and data is siloed, companies are only seeing part of their organisations’ cloud cost picture, and this lack of visibility impacts tracking and decision making.”

Stakes are high for improving cloud cost management and optimisation strategies

Growing rapidly in recent years, the cloud has become a critical part of the digital infrastructure of many businesses, providing cost-effective and scalable solutions for their computing needs. This has helped drive global cloud infrastructure spending climb to US$57bn in 2023, with this number set to rise further.

Boomi and Forrester Consulting’s independent study found 72% of global companies exceeded their set cloud budgets in the last fiscal year. With public cloud spend expected to reach more than US$1tn in the US by 2026, the stakes are high for improving cloud cost management and optimisation (CCMO) strategies.

Although the study shows leaders prioritising CCMO tactics earlier in the cloud development process (65%), the report suggests that most companies lack proactive strategies at the earlier architecture level.

Just 6% of decision-makers report their cloud cost remediation strategies are as proactive as possible, and only four in 10 say they contain costs at the solution architecture stage. While organisations are aware that they could optimise cloud costs at the solution architecture level, less than half of companies have the strategy in place to resolve perennial problems, such as excessive storage (52%), lack of integration strategy (44%) and overconsumption of bandwidth (42%).

When asked how difficult it is to track areas of cloud spend with the CCMO tooling currently in place, leaders stated data management as the most difficult undertaking, followed by egress charges (e.g., fees for moving data in and out of the cloud), with time and resources needed to build and maintain app integrations as the third most difficult area to track.

Taking a forward-looking and proactive approach to cloud cost management strategies

According to Chris Carreiro, CTO of Park Place Technologies, the study by Boomi and Forrester highlights a critical oversight in the current approach to cloud cost management. “This isn't just about financial oversight; it's about strategic planning. Early and proactive engagement in cloud cost management, particularly at the solution architecture level, enables businesses to design efficient and scalable systems, avoiding costly retrofits and optimisations down the line,” he says.

Cloud costs are almost entirely usage-based, and are therefore subject to monthly fluctuations much more than traditional OpEx costs. “This uncertain nature of cloud costs puts businesses in a position where it is crucial for them to use all the data available to them to have the highest chance at successfully predicting their future costs in the cloud. While most cloud vendors have tools built in to help customers estimate their monthly costs, these tools struggle to effectively extrapolate historic costs into future expected costs as your business grows and workloads increase.

“For these reasons, it is necessary for a business to not only look at its current compute and storage landscape when making the choice to transition to the cloud, but to also accurately estimate where it expects these needs to be one or several years down the road. It’s also important to consider how the time of year affects these needs, and whether a business is at a high or low point when gathering this data — a ski resort that calculates its cloud needs in the summer time is going to be in for a surprise when winter hits and their compute workloads skyrocket. Gaining a complete view of the current compute and storage landscape and using historical data to accurately predict how these needs will increase in the future will give a business the best chance of accurately estimating its cloud costs in the coming years.”

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