How to identify and tackle your public cloud overspend

How to identify and tackle your public cloud overspend

Having an efficient cloud storage strategy is key to managing and reducing costs. Steve Wiggs, Data Centre Practice Lead, MTI Technologies, discusses the ways organisations can best utilise cloud technology with a consistent and optimised strategy to reduce costs and avoid overspending.

According to Statista, as of 2020, around 50% of all corporate data is stored in the cloud. What’s more, in a recent Gartner survey, 90% of respondents said they are using the cloud in some fashion. And despite nearly universal adoption, cloud usage is expected to continue growing exponentially. In fact, a separate Gartner report estimates the global cloud market to almost double from US$330 billion today to US$623 billion in 2023.

Furthermore, like so many areas of our lives, the recent pandemic has also impacted the public cloud. According to the ninth annual Flexera 2020 State of the Cloud Report, 59% of organisations are expected to increase cloud usage as a direct result of COVID-19.

It’s no surprise that cloud storage has become an indispensable tool in today’s hyperconnected world. But unlike the early days of cloud storage, when vendors regularly rolled out new capabilities and routinely bumped up storage limits, the market has matured in terms of capabilities and storage norms.

And the benefits are clear – anytime, anywhere access to data and applications; the ability to modernise and scale infrastructure and services without building and maintaining expensive IT assets; and improved security, regulatory compliance and Disaster Recovery.

However, finding the right cloud storage is key. If cloud usage continues to grow at the pace outlined in the Gartner report referenced earlier – and all indications are that this is a modest estimate – it’s imperative that organisations find the right cloud storage solution that meets both their needs and their budget.

With the right strategy, organisations can make the public cloud work harder for them and avoid overspending. With growing cloud usage, there is a high likelihood that organisations will struggle to get a handle on their increased cloud expenditure. Every organisation wants to reduce its operational costs, wherever possible, and public cloud spend is an area that many are already overspending on.

Most, if not all, organisations today have recognised the many competitive advantages that cloud computing brings to the digital landscape, but few have been able to adopt the technology with a consistent and optimised strategy to reduce costs.

Here are five questions that will identify if you may have a public cloud spending problem:

  1. Do we know how many open public cloud accounts we have?

Typically, an organisation will have multiple accounts with multiple cloud providers and because the public cloud is designed to empower anyone in an organisation to set up an account and allocate resources, those with authorisation to do so often create accounts without any centralised notification.

It’s simple to spin up an instance for a project and then forget to shut it down. Many teams deal with orphaned instances that have no ownership but still continue to generate costs. In the same vein, shadow IT projects often produce poorly accounted for resources in the cloud.

The end result is that no one within the organisation actually knows how many public cloud accounts the organisation has open.

  1. Do we really understand our monthly cloud bills?

Cloud bills can be hard to understand. They’re long, complicated and hard to comprehend. A monthly cloud bill will likely contain a number of pages with various lines and reference many service names, instance types and regions – none of which are self-explanatory.

If you do not understand your monthly cloud bill, it’s difficult to know what you are paying for and therefore virtually impossible to make informed decisions about the services that are needed, those that could be reduced or to understand where the additional charges come from.

  1. Can we match approved purchases to specific initiatives or cost centres?

Organisations with multiple teams, budgets and projects often do not have the time to map out their cloud storage and service consumption to assign it to projects and cost centres.

Some teams have a tendency to over-provision resources just to add some extra capacity and create a ‘just in case’ buffer. The limited visibility or control of these resources might snowball into a huge problem over time and can result in regular recurring spending that cannot be explained and in many cases is not even needed.

Simply by matching cloud storage with consumption, organisations can optimise cloud storage costs and ensure they are not spending unnecessarily.

4. Are we purchasing all our capacity at on-demand prices?

On-demand pricing is considered the default pricing model for most cloud providers. It’s worth noting that the cost of enterprise cloud storage can vary greatly depending on particular use cases. Accessing data, capacity stored, retrieval frequency and network bandwidth all add to the cost.

Working as a pay-as-you-go method gives organisations the easiest means to buy additional storage, but in many cases, the organisation doesn’t actually need what you just purchased.

Furthermore, on-demand pricing is unlikely to be the most cost-effective solution. Just because on-demand pricing is an option, it doesn’t mean that it is the only option. Most cloud providers offer a way to pre-pay for usage that the customer projects they need. By doing this, the cloud provider can better forecast their hardware and service needs, allowing them to get better discounts when buying the required hardware to support these services and passing on some of these savings to the cloud customer.

5. When did we last review our consumption?

The cost of cloud storage is more than just the cost per Gigabyte (GB), but there are additional costs applied each time data is moved in and out of the cloud. There might also be further costs applied to transfer data over the Internet. Just as it’s good practice to keep a track of your home’s energy consumption – and shop around to ensure you have the best deal – unless organisations do the same with their cloud storage (including the movement of that data) it’s impossible to have a clear understanding of your public cloud spend.

Every wasted Gigabyte equals unnecessary cost

As the famous quote says: ‘Knowledge is power’ – and that’s certainly true when it comes to cloud storage costs. It can be challenging for organisations to get their arms around this, but by tackling the five key areas above it will help gain a much clearer picture of not only cloud consumption but egress too. Unnecessary storage will increase costs. Know what you need, delete data that is no longer in use, cut down on data movement where possible and, most important of all, regularly review your cloud storage strategy.

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