In today’s digital era, efficient spending is crucial for businesses, particularly during tough economic times. Many companies are moving to cloud services to save money, providing a lower total cost of ownership, enhanced agility, and improved productivity.
If your organization has adopted a ‘cloud-first’ approach, a substantial part of your IT budget is likely tied up in cloud assets. These major expenses often come under the spotlight during economic downturns. But there’s a silver lining: the more your business uses the cloud, the more potential to save money.
Research in 2020 found that 80% of companies globally spent more than they had budgeted for on cloud infrastructure. This was largely due to not having a solid plan to make the most of their cloud usage.1 Fast forward to a 2022 survey, it was revealed that over a third of businesses didn’t know how to effectively manage their spending on cloud services.1 Without a solid strategy and understanding, businesses can spend more than necessary on cloud services.
It makes you wonder, if spending too much on the cloud is a widespread problem, why aren’t businesses tackling this issue before it becomes a financial burden? It seems that while optimizing cloud usage is high priority for IT decision-makers, maintaining and securing the cloud infrastructure often takes up the bulk of their time and resources.
Let’s look at a specific example, a global pharmaceutical company. Initially, PharmaPlus was spending excessively on cloud services due to uncontrolled costs, unexpected usage, and wastage in the testing phase. They decided to employ a FinOps approach, a financial strategy designed to manage and optimize cloud usage. By keeping tabs on usage, setting clear guidelines, and reducing wastage in testing, they cut their annual cloud spending by 20%.
Managing cloud services can become even more complex when businesses opt for a multi-cloud strategy. While using multiple cloud service providers can give you a stronger negotiating position with vendors, there are many factors to consider beyond cost. The broader your cloud usage, the more complex it becomes to manage. As a result, many businesses seek outside help when trying to optimize a multi-cloud environment.
Consider the case of a large retail company. When they decided to use a multi-cloud strategy, they initially struggled with managing their multiple cloud environments and saw a cost spike. After bringing in outside help, they implemented efficient tools and strategies that allowed them to manage their cloud services effectively. This not only led to significant cost savings but also improved their operational efficiency.
Several service providers can help evaluate your current data usage, advise on licensing, and provide guidance on other areas of IT cost-saving. Each business has its own unique needs and these providers often bring in a team of experts to work with you and create tailored offers and roadmaps.
For instance, a digital marketing company employed these services and saved an average of 24% on their license costs. They addressed their cloud usage strategy and followed recommendations from external experts, achieving the same service level but at a lower cost.
Here are some practical steps you can take to manage your cloud spending:
In conclusion, making the most of cloud services and saving money is not only possible but essential, particularly in an economic downturn. Businesses can survive and thrive during challenging economic times by understanding why overspending occurs, carefully implementing a multi-cloud strategy, and using external help for optimization.