Bridgehead IT logo

Why Do Cloud Costs Get Out of Control?

Posted: Nov 2020

The advent of the cloud and the solutions it offers have caused a scramble.

Organizations have moved quickly to take advantage of the benefits offered by shifting IT workloads to a live cloud. With these benefits, however, has come an upward surge in cloud costs.

Tracking and managing the costs associated with the cloud has become one of the major concerns of CIOs and CFOs. They realize that the cost of cloud services is far exceeding set IT budgets.

Part of the problem is these organizations just don’t have the in-house resources. Private infrastructure helps to manage the real-time analysis of cloud use and expansion. This causes surges in costs that are both unpredictable and unmanageable.

More than half of organizations have moved their IT workloads onto a live cloud service. The fact remains that organizations need to move to the cloud to remain innovative and competitive. The innovations possible on the cloud have pushed enterprises from every sector to adopt this disruptive technology.

The question then not if but how.

How do you optimize cloud usage to mitigate the costs associated with its implementation and management?

In this guide, we’ll talk about what cloud services enterprises are using, why, and how to optimize these services to reduce cloud computing costs.

Understanding Cloud Computing

Cloud computing services are used today for anything from Netflix streaming services to backing up the videos and photos on your mobile devices. The agility of the cloud is a major factor in the pressure organizations feel to use it.

Cloud computer services are used for basic storage, networking, or processing, and even for things like artificial intelligence and machine learning.

Even the famous Jeopardy! Watson is now found on the cloud helping process hundreds of terabytes of data into a form that can be used by scientists and doctors.

The cloud can be broken down into three cloud-computing models:

1. Infrastructure-as-a-Service (IaaS) – This kind of cloud-computing model is beneficial for organizations that are looking to build applications from scratch. It offers the foundational parts of computing for rent.

This includes servers, both physical and virtual. It also offers data storage and networking. The benefit is the organization with the technical know-how can control almost every element of the application they’re building.

The agility leaves room for innovation, cuts on-going maintenance costs, and cuts time in shipping your application or services. A drawback is that it isn’t as secure as other options.

2. Platform-as-a-Service (PaaS) – PaaS is an upgrade to the IaaS. It includes the basics such as virtual servers, networking, and processing powers. Besides, it includes the operating systems, middleware, development tools, and other software and tools that developers can use to build applications on and/or with.

3. Software-as-a-Service (SaaS) – The model of cloud-computing most people are used to. In this model, the software, hardware, and operating systems aren’t seen by the user. They’re “hidden”. This is what a consumer sees when using a website or application. Known as delivering applications-as-a-service.

SaaS is by far the most commonly used model and accounts for 60% of cloud spending. The expenditure is mostly for customer relationship management (CRM) applications and enterprise management (ERM) applications. The SaaS cloud-computing model is used for CRM applications such as Microsoft 365 and Salesforce.

The benefits of cloud computing provided by these models are based on the fact that an organization can run without having to build or manage its own computing infrastructure. The organization can pay only for what they use and ship applications faster. They can test faster and don’t have to wait for the traditional IT red tape and procurement.

This agility makes it well worth adopting this new service, but the question remains: How do you get a handle on the cloud computing cost?

Understanding Cloud Costs

Part of understanding cloud computing costs is identifying the areas where the leaks are. Here are four areas where overspending can result: 

The Ease of Scaling

One of the major benefits of cloud computing is the ability to instantly scale up should demand increase. While this is an advantage over having an in-house infrastructure, it can also increase expenses very quickly.

On-demand services mean upgrading cloud services at the click of a button leading to many organizations scaling expenses spiking unchecked.

Leaving the Lights On

These same organizations don’t have a way to see what is being used, for how long, and whether they have more than what they actually need. Most don’t turn off what they aren’t using and leave the systems running overnight or over the weekend when it isn’t being used. This leads to waste and unnecessary expense.

Cloud services upgraded for a specific project or temporary workflows are left on and non-critical cloud infrastructure isn’t downgraded when the temporary need passes.

Enterprise Mobile Devices

The introduction of mobile devices and their wide-spread use in organizations is another source of costs that can become unmanageable.

Mobile spend optimization has become part of the best practices in enterprises. This prevents the tendency to expose the organization to unpredictable costs, such as cloud storage costs.

Organizations Not Equipped to Control Costs

Cloud computing has exponentially increased the complexity of the IT environment. The quick adaptation of cloud computing has left a gap. IT departments and personnel are not equipped for cloud cost management.

Before the cloud, IT solutions were simple, one-time applications, Cloud solutions are now on-demand, real-time requiring constant oversight. Most IT teams do not have the budget or equipment to gain the visibility needed into the cloud to control cloud usage and costs.

Understanding Cloud Spend Optimization

Cloud costs often originate from the transition process. The benefits of using cloud or multi-cloud computing include being able to use your on-site infrastructure along. Along with the ability to chose the best locations to host your workloads depending on your needs. Meaning geographical reach, data sovereignty requirements, and redundancy.

The other side of the coin is the higher costs associated with the initial integration and restructuring of your cloud-based systems. This along with the need to gain and maintain visibility of a dynamic and complex cloud environment.

In the above we’ve talked about the what, the why, and the how much. Now that we have a basic understanding of the different places costs can originate, we’ll discuss how to develop a cloud cost strategy.

Gaining Visibility

To answer questions such as, “How much does cloud storage cost?” or “How much does a specific level of cloud infrastructure cost?” you much first gain visibility and equip your organization to track cloud usage.

Cloud usage optimization platforms have in-built tools created for monitoring cloud usage. The top-performing platforms also have tools that give you detailed and extensive reports providing cloud spend tracking.

To be able to create an optimization plan from this data you have to understand it. You have to pinpoint exactly where the overspending is coming from whether from buying more than what you use or considering taking advantage of tier cloud pricing available.

An organization needs further consider whether a hybrid computing infrastructure would be more of an advantage. Would have some in-house infrastructure lower cost? Private infrastructure costs are usually lower than cloud-based infrastructure. It is also easier to track.

Creating Balance

Your organization must strike a balance between protecting the flexibility, innovation, and scaling of the business and the elimination of redundant or unnecessary cloud usage. This means developing a cloud cost strategy that is clear and easy to implement.

Cloud usage needs monitoring in real-time. The best strategy includes a design that addresses issues on a daily basis to control costs. Weekly optimization workflows would also help maintain control.

After deciding on an analytics solution, building a strategy, and deciding on a maintenance schedule you need to equip your IT team to be able to manage the cloud computing system.

Acceleration and the Cloud

Cloud computing has brought about an acceleration in almost every sector. With this acceleration has come a surge of cloud costs. But these costs don’t come from adopting the cloud itself as it can actually be used to bring down costs. 

The cloud computing cost crisis has come from the that exists in many organizations that do not yet have the resources to properly track and manage cloud usage. With a strategy in place and eyes on cloud usage and its fluctuations, companies can get their costs under control. 

Contact us today to learn more about how to implement cloud cost optimization. 

Contact us to learn more about how Bridgehead I.T. can help you align your I.T. with your business objectives.

Connect with us today for all of your outsourced IT needs