For most businesses the cost of running their cloud operations can be prohibitively expensive.
Unsurprisingly, most organizations are looking for options to reduce what can become an overbearing cost.
Some businesses may find that they have prohibitive cloud costs due to the fact they over-provision cloud resources, such as storage and compute. Unfortunately, this can lead to wastage and the inevitable higher costs.
Organizations can ‘right-size’ their cloud resources, such as CPU, storage and memory, to better match their usage needs and avoid over-provisioning.
It’s also worth remembering that data transfer costs between cloud services and on-premises infrastructure can add up quickly and significantly impact the overall cloud costs.
It’s also safe to say that enterprises may not optimize their cloud workloads, leading to inefficient resource utilization and higher costs.
Organizations should analyze their cloud usage and identify opportunities to optimize their usage patterns to reduce costs.
A lack of automation can also prove to be costly. Manual labor costs can add up quickly, particularly if an organization is not using automation to manage routine tasks such as provisioning and monitoring.
Organizations should automate routine tasks, such as resource provisioning, deployment and monitoring, to reduce manual labor costs and improve operational efficiency.
You don’t have to be a tech expert to know that cloud environments can be overwhelmingly complex, with multiple services and configurations to manage, which can add to the cost of cloud operations.
Finally, and by no means least, the dreaded vendor lock-in needs to be mentioned. Some cloud providers may charge higher prices for their services or make it difficult to move workloads to another cloud provider, leading to higher costs for enterprises that are locked into a particular provider.
When possible, organizations can explore different cloud pricing models, such as reserved instances and spot instances, to reduce costs and get the most value out of their cloud investment.
We asked three industry experts how organizations can reduce the total cost of their cloud operations. Here’s what they had to say.
Edmundo Miralles, Director, Cloud Products, Microsoft Colombia
Latin American organizations are rapidly adopting cloud technology, driven by the accelerated Digital Transformation demanded by the recent pandemic. BCG estimates that this accelerated trend toward Digital Transformation will continue, and the cloud market in Latin America will grow 2.5 times in the next three years.
There are multiple reasons for migrating to the cloud, including cost optimization. Migrating to the cloud offers advantages, such as eliminating initial investment in infrastructure and hardware. Additionally, organizations only pay for what they use, meaning there are no fixed costs or idle infrastructure. The cloud also offers flexibility and scalability, allowing organizations to grow to adapt to consumption peaks and lower costs when those peaks pass.
Additionally, the cloud provides a variety of applications (PaaS and SaaS) that are not available for physical servers, such as App Services, Cognitive Services (AI), and others, which allow for quick and inexpensive research and development to accelerate organizational innovation.
Migrating to the cloud can have a significant economic impact on savings and efficiency. According to a study by Forrester Consulting commissioned by Microsoft, companies can potentially obtain a return on investment of 560% and recover their investment in less than six months by using development tools and cloud services from Microsoft, such as Visual Studio, GitHub Enterprise and Azure.
Additionally, according to Rackspace, 88% of companies save money by running services in the cloud due to the reduction of maintenance and support costs associated with having a local server.
The cloud implies a change in the spending model from Capex to Opex, one of the most effective ways to control costs. This model involves transitioning from capital expenditures (Capex), investing in expensive hardware and software and depreciating them over time, to operating expenses (Opex), paying for using cloud resources as needed.
However, changing paradigms can generate uncertainty in some organizations, and controlling the total cost of their operations in the cloud can be intimidating; To overcome this, the starting point is the implementation and proper configuration of a landing zone. A landing zone is a set of Azure practices and resources designed for organizations to implement workloads efficiently (in terms of performance and cost), ensuring that their Azure resources are configured correctly from the beginning and comply with security regulations standards.
If the organization already operates in the cloud and does not yet have a landing zone, it can implement one. And if configured, it can evolve to ensure that it uses all available tools and best practices to get the most out of the cloud at the lowest possible cost.
Additionally, organizations can use tools such as Azure Pricing Calculator, Azure Cost Management, Azure Advisor, and Azure Monitor to monitor real-time performance and estimate costs before implementing or changing cloud resources.
Additional financial strategies to obtain better costs in the cloud include hiring Reserved Instances and signing a Microsoft Azure Cost Saving Agreement (MAAC). Finally, implementing an Application Lifecycle Management strategy will allow you to define a path to modernize your applications, migrating from IaaS models to PaaS and even SaaS where applicable. This is another key strategy to control costs in the cloud, which also provides many other benefits that help us be more competitive in the market and better serve our customers by being able to add new value to our customers in less time.
Javier Barreto Cortes, Cloud Product Manager, IFX Networks
CIOs can reduce hidden costs in the cloud by defining their actual usage needs and finding a cloud provider that fits those needs. As a good partner we should not charge everything on a per-click basis. Instead, we should provide essential elements of connectivity, availability, performance, and data backup at a predictable or fixed cost.
As for methodologies, processes and tools to measure costs and their impact in the cloud, almost all clouds have resource consumption tools to establish expenses. We should base the best method on service availability, which ultimately guarantees that the company can continue billing and remain competitive.
It is also relevant to compare, for example, what organization pays for cloud services versus the impact generated by lack of availability or service outages.
It is critical to improve or optimize other business areas’ use of cloud resources.
We must constantly monitor the maximum consumption or ‘peaks’ of technological loads concerning what the organization acquires. We must adjust cloud resources to what we use.
There is always doubt about which cloud expenses are a priority and which should be controlled or even charged by the IT department to improve the use of cloud environments. We should always associate the emphasis on cost with the company’s BIA (Business Impact Analysis) since we must give greater availability and performance to the systems that support the business’s mission-critical and high-impact economic processes.
Similarly, we should be very austere in the resources for other types of loads.
IFX Networks recommends always costing servers based on 730 hours of uptime to avoid surprises in billing. It is imperative to clearly understand the provider’s inbound and outbound connectivity costs and the connection medium to the respective cloud.
Budgeting the price of information backup is essential, assuming a retention period that makes sense for Business Continuity or legal compliance.
In our case, you can acquire Infrastructure-as-a-Service (IaaS) from IFX Cloud, where we provide a product with zero hidden costs based on fixed connectivity costs both inbound and outbound, daily information backup with a retention period of 30 days, free platform monitoring (CPU, RAM, disk), endpoint security included through Sophos Antivirus, secure network management with IDS/IPS/geolocation, SSL VPN and free IPS consoles for virtual servers (bastion), standard All-Flash storage and 99.9% availability.
José Julián Jiménez, Cloud Solutions Manager, Claro Colombia
One of the biggest challenges for organizations is the cost of the cloud. To answer the question of what strategies to establish to minimize those costs. It turns out that there are tools on the market to determine how the organization uses computing resources, in addition to expert professional services.
These measuring tools help define different variables, including whether the organization uses the cloud resources to the full or just a tiny percentage. They can also help determine how to reduce them to minimize their costs. There are also cases of activation of services turned on but unused. Finally, there are dilemmas regarding the possibility of using the same cloud resource for different areas.
Within Claro’s service portfolio, we have Cloud Customer Success, and one of the components of this portfolio is to monitor the consumption and multi-cloud usage and establish the best architecture standards for running customers’ business processes and making recommendations and even changes with customers’ authorization to reduce those expenses that the customer has at the cloud level.
The company has been evolving its cloud portfolio for over 10 years, leveraging its ecosystem of data centers in Colombia. Now, with cloud customer success, we are ready to take advantage of the strategic alliances of the most recognized public clouds in the market, including Claro enterprise cloud, in addition to enabling internal capabilities that allow us to have specialized teams that offer partial or total support and management in the cloud environments required.
Cloud Customer Success has professional services, such as on-demand capabilities, to accelerate implementations, configurations, and knowledge transfer to customers. It aims to have a quick purchasing model, for example, by hours, days, or months, allowing to customize the service to the needs of each project or company.
Also, with managed services, customers receive specialized and consultative support for their cloud platform’s administration, management, and support under a Manage Service Provider (MSP) practice, which helps constantly improve customers, and standard services, with value offerings that define standardized service offer.
At Claro, we understand and know our customers, transfer knowledge to them, and accompany them in their growth and digital transformation, thanks to our certified experience, trust, personalization and technical and financial knowledge related to the cloud.