Despite the COVID-19 pandemic impacting spending in general, cloud IT infrastructure spending has continued to grow since Q1 2020, according to the International Data Corporation (IDC). This growth is expected to continue as well in 2021. The benefits of the cloud for organizations and businesses are clear. Among other advantages, the cloud provides the scalability and flexibility needed to address the challenges that come with the shift to remote working environments.
Unlike traditional on-prem infrastructure, the cloud doesn’t require a physical server to operate and allows users to use as much or as little computing power as needed. However, businesses that are new to cloud services and have no cost management tools in place may struggle to understand and reduce their cloud bills. In this blog post, we will explore the cloud cost management trends for 2021 that will dictate how businesses will save on cloud costs.
1. Higher predicted cloud spend in the coming months suggests the need for better forecasting and cloud cost optimization.
In May of 2020, Flexera released its 2020 State of the Cloud Report, which highlighted the latest cloud computing trends. Their research found that 23% of participating organizations were overspending on their public cloud spend. 47% also stated that they expect their cloud spending to go up in the next year. For organizations that expect higher cloud spending and are struggling to forecast their monthly cloud costs, it may be time to invest in cloud cost optimization tools that can help forecast spending and potential savings.
Currently in the market, there is a myriad of forecasting and cloud management tools that deal specifically with optimizing costs and lowering cloud spending. However, these tools vary in their abilities to identify cost drivers and predict changes.
2. It’s not enough to just have better forecasting tools – it’s also important to identify operational waste.
In the same report, respondents estimated that they waste 30% of cloud spend. Cloud waste is an accumulation of all unused cloud resources. A cloud bill will usually have an itemized list of cloud computing usage, cloud storage, big data, and so on. Each organization is different, so it is important to identify the areas in which there are opportunities to save and also identify unnecessary resources. For example, a business can choose to downscale its virtual machines to fit its actual needs.
With their cloud providers, users can leverage existing monitoring tools to keep track of usage via alerts and notifications and subsequently take appropriate measures to reduce waste. But this step can get confusing, especially when using multiple cloud service providers.
Many public cloud service providers offer cost management services directly on their platform. Google, for example, offers GCP Budgets, allowing usersto set budgets and create alerts. Similarly, Azure offers a budget management function that lets users create alerts with its cost management/billing services. Neither provides options to turn off services on the users’ behalf, however. This is why organizations should consider alternative cloud cost optimization tools that can accomplish this.
3. Redefine cloud service criteria to prevent overspending on the cloud.
Compliance, security, and manageability are all important in evaluating a cloud service provider, but nowadays, efficiency and lower costs are at the forefront of many organizations’ checklists. Cloud efficiency is tied to lower cloud spending, especially when taking into account the cloud services that take up resources even when not in use. Furthermore, because cloud bills are not always clear on what “billing term” corresponds to which cloud service, there’s a greater chance of overspending.
For the public cloud, time equals money. For many businesses, it’s more than just a matter of choosing a cloud service provider that offers the lowest-cost options for cloud compute instances. There’s also the added possibility that they may choose to work with more than one cloud provider, which often has different terms for the same services. When working with separate cloud providers, clients are more likely to overspend than save on cloud costs. Once again, this can be mitigated with cloud management tools and cloud cost optimize tools.
4. Cloud cost optimization will use more automation and artificial intelligence (AI) capabilities.
In Deloitte’s recent report, Enterprise transformation and performance improvement strategies amidst the pandemic: November 2020, it states that success for businesses moving forward is dependent on resiliency. They conclude that the use of digital technologies in cloud computing, cybersecurity, and cognitive and artificial intelligence tools will empower organizations to “have greater flexibility in managing costs and the agility to engage more effectively with their customers as changes occur in the way goods and services are delivered and consumed.”
This goes hand in hand with cloud cost optimization tools and the move toward cognitive and artificial intelligence capabilities. More specifically, for cloud optimization, the need for dynamic resource allocation can be fulfilled with workload automation technology combined with management capabilities. Cloud cost optimization can also work to reduce cloud spending by constantly monitoring and predicting future cloud bills using artificial intelligence (AI).
Takeaway
With more businesses bringing their key operations online due to the COVID-19 pandemic, moving to the cloud makes sense. The advantage with cloud computing for these businesses is that they can automatically and dynamically scale without needing to wait. Added benefits include cybersecurity and remote working support. Whether they’re on the public cloud or using a hybrid model, managing cloud costs is likely one of the top priorities for businesses. Regardless of which cloud service provider is used, it is important to take steps to reduce cloud spending with effective cloud cost management strategies.
