How Executives Should Balance Cloud Cost and Output Expectations

balance cloud cost

The cloud has improved the speed and efficiency of enterprise computing. However, it does introduce a variety of challenges. Challenges like security, monitoring, backup and disaster recovery, and more. Often overlooked, though, are issues around cloud spend. Many enterprises struggle with exorbitant costs because they don’t understand cloud usage.

It shouldn’t be a surprise that enterprises become overwhelmed with understanding the full depth of their services cloud usage. So often teams want to purchase new software or services, which leads to increased costs. When evaluating a new solution, how that solution impacts cost might not come up. DivvyCloud CEO, Brian Johnson, said “not effectively managing those expenditures can spin quickly into headache #1 – overspending.

Over the past few months, we’ve interviewed industry experts to learn their takes on cloud cost. These experts include Matthew Scott – Cloudability, Brian Johnson – DivvyCloud, and Grant Kirkwood – Unitas Global. We asked each of them how executives can balance cost and output expectations.

Matthew Scott, Cloudability VP of Strategy and Alliance

In today’s world, digital transformation is changing business models and forcing executives to ensure that quality software is shipping on an iterative basis. The advent of DevOps has enabled organizations to develop software faster to respond to ever-shifting customer and market needs. Just like DevOps is helping companies accelerate the continuous integration and deployment of new features, there needs to be an enterprise culture of constant innovation that is constantly optimized for highest performance at lowest cost.

Because of this, the software development lifecycle (SDLC) has become more closely integrated with finance or FinOps. This is the combination of people, process, and tools that increase an organization’s ability to efficiently collaborate around cloud resources with visibility to know exactly what is happening with cloud spend so organizations can improve margins, reduce cloud spend waste, and get solutions to market faster.

One example is a Cloudability customer that develops enterprise software for hundreds of thousands of clients. This organization wanted to ensure discipline in their operational controls such that their customers never felt any operational impact of not having enough resources. Our client didn’t want to overspend on a cloud to achieve this balance and connected their SDLC with our product’s API’s and machine learning capabilities. This was especially tough when the company went through an intense period of growth and its cloud infrastructure became increasingly complex.

Without knowing the True Cost of cloud usage, it is hard to maintain optimal coverage at scale. That’s why large enterprises and born-in-the-cloud companies rely on tools like Cloudability so they can develop software faster and increase their cloud, without increasing costs.

Brian Johnson, DivvyCloud CEO

Executives shouldn’t go into cloud computing with the expectation that it will save money or be less expensive.  By default, with no changes to applications or architecture cloud computing will be as expensive or more expensive than traditional data centers. Additionally, as you shift to a self-service model, the opportunity for cost overruns increases.

Executives must understand that “moving to the cloud” must include a clear strategy for how you will modernize architecture and applications to take advantage of the efficiencies that cloud technology offers, a commitment to consolidating and shutting down existing data centers and fixed infrastructure, and a reimagining of how to run operations with a focus on automation.  These changes also allow customers to embrace output expectations.  If companies can embrace self-service access to cloud technology, this can greatly increase the efficiency and creativity of engineers and developers.  This has real and substantial value to companies in terms of driving corporate innovation and thus profitability.

Grant Kirkwood, CTO Unitas Global

It starts with clearly defining the desired outcomes and aligning the entire team around those goals. Companies often fail to gain alignment, which leads to scope creep and increased costs.

Outcomes must be specific and constrained. We find that companies look to leverage the cloud for one of two broad themes. This depends on their overall digital competency:

  • Operational improvement and/or efficiency: Primarily tactical/practical in nature, i.e.; shutting down existing data centers, reducing cost, optimizing workloads.
  • Strategic, transformational, revenue opportunities: Strategic in nature, i.e.; leveraging cloud technology to transform the business or create new revenue opportunities, improve customer experiences, etc.

With clear outcomes and scope defined, a plan with specific milestones, timing, and budget can be created. Tracking progress against the plan ensures costs remain within budget.