Organisations struggle to keep track of cloud costs

As organisations increasingly adopt a cloud-first strategy and shift their resources from on-premises to multi-cloud, they face greater complexity, which can lead to higher costs.

Many organisations move to multi-cloud to speed up innovation and agility while providing more flexibility through scalability. However, the cloud’s on-demand consumption model needs to be carefully controlled, or organisations can quickly find themselves fire-fighting spiralling costs.

Some organisations use cloud services ad hoc across siloed business units, spending unnecessarily on unused or unneeded services. As well as unmanaged costs, organisations are missing out on performance optimisation opportunities and leaving gaps in securing data assets.

According to a recent report, 89% of enterprises now have a multi-cloud strategy, and 80% use a hybrid approach by utilising both public and private clouds. Wasted cloud spending, however, continues to be a real issue and many enterprises underestimate the amount they are wasting. Respondents self-estimated that their organisations currently waste 32% of cloud spending. This is likely to be significantly higher as enterprises tend to underestimate in such surveys.

Areas of concern concerning cloud overspend include idle or over-provisioned instances, orphaned resources and misaligned license assignments. All can significantly impact current and future budgeting.

How to reduce multi-cloud costs

Reducing cloud costs is not a one-time, tick-box task. It requires continuous assessment to identify precisely where overspend occurs in a multi-cloud environment. Enterprises should identify underutilised resources, right size virtual machines, and reserve capacity for higher discounts from cloud providers.

Organisations need to view the bigger picture regarding cloud activity to rein in cloud spend. For example, automated monitoring and management tools can help enterprises discover where cloud waste is and resolve the issue.

Cloud spending, however, will not stay static due to the dynamic nature of the technology. Business needs to accept that budgets will fluctuate and scale accordingly.

Lack of cloud cost visibility

Cloud visibility is essential to maximise cloud usage. Enterprises can reduce cloud spending by monitoring workload requirements, cutting back on waste, and anticipating any changes. To achieve this requires a granular view of cloud costs, including how services are billed and the aim of specific spending.

Tagging is one easy way to monitor costs. Tracking costs per tag enables enterprises to attribute costs to a function or specific business department, for example. Budget alerts can also be set up to notify when cloud spending based on usage or costs reaches or exceeds a defined amount.

Shadow IT in the cloud

Shadow IT can be an issue for organisations concerning cloud services procurement. Shadow IT is the unauthorised use of cloud services that have not been approved and are not supported by the IT department.

The problem with cloud is that procurement is so simple. Public cloud providers allow anyone with a credit card to purchase cloud resources. Unchecked, this can lead to out-of-control costs and are a potential security risk and potentially non-compliant.

The old adage you can’t protect what you can’t see rings true. Cloud governance and management tools can help organisations identify shadow IT instances and proactively detect misconfigurations and threats. Unified visibility and control are available across multi-cloud environments to discover and manage shadow IT.

Adopting a cost optimisation culture

To maximise the value of cloud, cost optimisation and awareness need to be integrated into the culture of the organisation.

Tools and technologies are available to help monitor cloud costs and provide visibility into multi-cloud estates. But, a cultural change is essential to optimise cloud spend.

By adopting FinOps, a cloud financial management discipline, organisations can break down silos and follow centralised best practices to open up maximum business value in the cloud and mitigate financial risk.

If you are just about to start your cloud journey or are well on your way, FinOps will help organisations rapidly realise their cloud investment.