Why Public Cloud Costs Increase
Getting the most out of public clouds for the least amount of money is the essence of cloud cost optimization. We have observed that the pandemic panic caused enterprise IT to act reactively not proactively. This leads to cost considerations and planning being tossed out the window.
- Not planning in advance for cloud use, which would gain the use of reserved instances at a much-discounted price, as well as other benefits. While many enterprises are responding rapidly to the changing needs of IT due to the pandemic, others are still not cost planning, which could significantly optimize their cloud spending.
- Lacking cloud cost governance systems. These tools not only monitor existing usage costs which are tracked down to the applications, databases, and users, but assist in demand planning as well. They are invaluable.
- Tossing money at the problems. In short, we’re forced into stress testing cloud-based systems perhaps prematurely. Pushing applications quickly into production means that the number of issues needing fixes ramps up 500 percent in the short term. Enterprises are forced to hire some very pricey people to fix the issues, using whack-a-mole tactics which are hugely expensive
3 Focus Areas for Public Cloud Cost Optimization
To make an impact in cost optimization for Cloud, one will need to look the following three areas
1. Cloud Demand Management
CIOs and their teams are traditionally seen as responsible for managing the IT budget, although some organizations have moved to a shared or more distributed budget model.
| Challenges | Resolutions |
| A higher on-demand or spot price is often charged for short-term capacity, whereas longer term requirements offer a lower price in return for a reservation or longer-term commitment. | Planning and reserving predictable capacity, but buying unpredictable demand more flexibly, IT organizations can reduce their cost commitments. Use tools to compare options in often complex pricing models. |
| Cloud infrastructure requirements are underused because they were overspecified. | Scalable cloud services have since made overprovisioning unnecessary, but old behaviors continue. Gartner found that organizations overspent by up to 70% for reasons including a lack of oversight |
| Access requests to PaaS / SaaS licence aren’t always motivated by genuine business needs, but are instead motivated by a fear of losing status or missing out. Once granted, access is rarely, if ever, reviewed in most companies. | Review the usage and access to licences provided to users on a periodic basis. This review can help save cost substantially by removing unutilized or sharing access. De-risk your cloud journey. |
| Lack of right skills trying to resolve challenges in a new cloud environment, either complicating the issue or delaying the resolution. | Engage a certified cloud MSP or a MSE that Oracle calls its certified partners, to advise, build, migrate, and manage any simple to complex cloud environments on OCI. |
2. Managing the Public Cloud Provider
Some financially challenged IT organizations move to the cloud because they hope it will lower their costs, only to discover costs they hadn’t planned for. It’s unreasonable to expect online cost comparison calculators to consider every possible eventuality.
| Challenges | Resolutions |
| Lack of cost planning and oversight, as organizations continue to control provisioning when they migrate to the cloud, leading to increasing costs. | Right size and provision for scalability and rely on automation, while keeping monitoring and alerts in strict check |
| Budget holders often fear being unable to manage their suppliers. They’re afraid of being locked into a cloud service where the provider keeps increasing the fees | It can cost far less to start using another public cloud provider than to build a perpetually licensed solution on-premises |
| In case you do not archive or purge your data, you may be paying for excess for data storage. | Regularly archive and or Purge unused data from cloud provider can avoid storage surcharges |
| Customizing infrastructure to bare metal solution. This may lead to increase in costs. | Buying a ready-made cloud solution can lower risk when compared with custom solution development. E.g With Oracle OCI Oracle AU apps can easily migrate to OCI. You may not get the same economics when you move to AWS or Azure. |
3. Recognizing Cloud Savings
Cloud adoption can achieve significant cost savings that go far beyond enterprises’ IT budgets. The cloud can also bring costs into the IT budget that were previously recognized elsewhere. Some organizations overestimate cost savings from staff reduction because they overlook the need to manage both the supply and demand for cloud services. However, even after moving to the cloud significant savings can still be recognized by simply putting the records straight.
E.g Data center occupancy, If accounted for in the budget under heads like, buildings and facilities, it will never be able to give a correct picture to justify the Cloud cost savings. Account all possible budgets be it HR, Operations, Infra, etc to ensure your cost savings are truly accounted for.
If account control is dispersed across a company, cloud spend may be recorded in cost centers unrelated to IT. It can take time to uncover all spend points and implement a cooperative governance model. Without coordination, these dispersed and often underutilized environments can easily rack up excessive monthly charges.
Cloud doesn’t guarantee savings, once has to continuously work on the cost optimization to save money. CIOs must raise their teams’ game and tactics in all these areas to optimize and make real savings in the cloud, especially demand management, provider management and financial accounting.
