In today's fast-paced digital environment, organizations continue to face issues of cloud cost overruns and inefficiency. Cloud services are often viewed as IT capabilities only, but the key to successful cloud optimization is far beyond technology.
In an interview with CTO's office, Dirk Ras, in his practice lead at the renowned software solutions provider Dariel's Cloud for Cloud, he defines cloud optimization as a combination of financial governance, operational efficiency, and technology.
“The cloud is resilient, but many companies don't treat it that way. If you don't continually check, adjust and refine your use of the cloud as an evolving part of your business strategy, your money will be wasted. Cloud migrations should also be assessed based on a broader IT needs, not a silver bullet.”
Many organizations fall into the trap of the idea that optimization is no longer necessary when their workloads migrate to the cloud. “In a cloud environment, continuous monitoring, proper sizing, and economic monitoring are required for cost-effective maintenance.” Without a dynamic approach, inefficiencies accumulate and lead to increased costs.
Optimization procrastination price
How extensive is the cloud challenge inefficiency?
The scale of cloud inefficiency is impressive. Gartner research shows that up to 70% of cloud costs are wasted due to excessive deployment, idle resources, and inefficient use. A 2023 survey by Gartner, 200 IT leaders, found that 69% face budgetary dismissals in cloud spending. In contrast, 31% of respondents who were able to stay within budget were attributed to accurate predictions, aggressive monitoring and effective optimization of success.
What are the main issues with cloud optimization?
Lack of vision and governance in cloud management is a core issue. “Finance teams often have no real-time insight into cloud usage. They only receive the bill at the end of the month, and by then the damage will be done.” Without continuing tracking cloud usage, businesses often end up paying for idle resources, such as underutilized EC2 instances.
Another common problem is the tendency for businesses to carefully provision cloud resources rather than dynamically scaling as their needs evolve. “It's much better to scale up as needed, if necessary, than paying for unused capabilities.” If you're overreliant on-demand pricing and don't take advantage of reserved instances, autoscaling, or proper storage management, it's a big contribution to unnecessary costs.
What hidden costs should an organization know?
Data transfer costs can add inefficiencies that are often overlooked in cloud strategies. Moving data between services affects costs. If you don't design your cloud environment with these factors in mind, you can spend more than you need to.
A cross-working approach to cloud optimization
Ras argues that for cloud optimization to be truly effective, it must be a company-wide effort, not a siloed IT feature. “The cloud is not just an IT concern. If finance doesn't know what provisioning is and how costs are allocated, it becomes an uncontrolled cloud spending.”
Collaboration between departments is essential. He emphasizes its funding, operations and needs to be consistent to ensure that cloud usage remains efficient and cost-effective.
Are there any recommendations to tackle these challenges?
To tackle these challenges, we recommend using real-time cost visibility using cloud monitoring tools such as AWS Cost Explorer and Azure Cost Management. Organizations need to focus on proper sizing and autoscaling of their cloud resources to match their actual demands.
Furthermore, treating data governance as a cost control strategy is essential to helping businesses implement appropriate lifecycle management for cloud storage and data use.
Cloud Audit
What are the most important steps in cloud optimization?
The most important step in cloud optimization is knowing what you need from the start. Clients can communicate what they want and what they actually need more quickly and effectively. Because they are not always the same, which makes the optimization process better. Choosing the right technology from the start makes a huge difference.
How do you approach optimizing your existing cloud environment?
When optimizing an existing cloud environment, the first step is always auditing. This includes checking whether the allocated resources match actual usage. Running a large instance of a web server that only gets a few hits a day makes no sense. Once that's done, you can tackle a variety of optimization points, such as automation, correct size of the instance, or calibrated storage.
What does the future look like for cloud spending?
According to Gartner, global spending on Public Cloud Services is projected to reach $723 billion by 2025, from nearly $600 billion in 2025. As cloud adoption grows, concerns about inefficiency and waste must also grow.
The cloud is just an expensive server rental, just as smart as the way it is managed without a strategic approach.
