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Home > Blog > All > Why Are So Many Companies Failing At Cloud Cost Management?

Why Are So Many Companies Failing At Cloud Cost Management?

Why-Are-So-Many-Companies-Failing-At-Cloud-Cost-Management

Introduction to Cloud Cost Management

Cloud Cost Management is the idea of managing your cloud expenses efficiently. It includes understanding the costs related to your cloud, removing the unnecessary ones. It means finding the most cost-effective ways to maximize your usage at the lowest price possible. It involves managing memory, storage, network traffic, instances, and several other expenses.

There are no shortcuts when it comes to managing costs in this arena. You have to make proper plans, get the basics right, and involve your staff to ensure they understand its importance. There can be multiple reasons why you must know what it is and how to get it right. In this article, we will discuss cloud cost management and have a look at why most are failing at it. Let’s fasten your seatbelts.

Why do we need Cloud Cost Management?

For anything decentralized, cost management can be a headache. More often than not, the cloud follows a decentralized management approach. It means that the cost visibility is less, and we face difficulty in understanding it. Cloud cost includes a lot of components, all of which need separate handling. 

Cloud waste is enormous and is growing prodigiously. There are several reasons due to which cloud waste occurs, and most of it is due to poor management. If we want not to let the cloud spending takes a toll on our health, it is time that proper strategies must be in place. Cloud computing services providers have called for an efficient cloud cost management which can take care of its diversity while not losing out its benefits.

You must be willing to put in extra efforts to be able to cut incessant spending that has tormented one and all. It is not just about managing the costs; surveys indicate that we waste around 35 percent of our cloud. It calls for getting your instance size right, shutting down unused capacity, and scheduling your VMs right.

What does the survey state about Cloud Cost and its management?

How many of you think that your organization can stay afloat without using the cloud for its benefits? Well, famous survey brand Gartner believes that by the year 2020, no organization can survive without the cloud. Companies have been actively trying to cut costs, which has led to a decline in the usage of private clouds recently.

As per Flexera, 84 percent of enterprises have been employing a multi-cloud strategy. To manage privacy and costs, 58 percent of enterprises are using a combination of public and private clouds. It also states that the public cloud spends growing thrice as much as the private cloud. A staggering fact is that organizations are willing to pay 24 percent more on a YoY basis.

Gartner has also suggested that the public cloud services market can grow 17.5 percent in 2019 to USD 214.3 billion. These figures are by no means tiny and call for you to take note if you haven’t already. With companies spending billions on the cloud, they must manage the costs efficiently. But it is precisely the opposite of what is happening right now. 

Why are most companies failing at it?

Like a kid running for the latest toy in the market, many companies ran for the cloud when it broke into the scene. With time, most of them failed to manage their cloud costs and ended up suffering huge losses.

We believe that that the cloud train was over-hyped and led to over-acceptance. People didn’t understand its dynamics, nor did they care to learn about it enough. Plus, a particular plan works for a specific organization and will not fit any other organization more often than not. Organizations that jumped into the bandwagon did not care to understand what suited them the most and made hasty calls. 

Here are some reasons why most companies are failing at cloud cost management - 

No change in mindset

With time, we must give away our old thoughts and let the new ideas sip in. Had this been the case with the companies adopting cloud, the suffering would have been far less. They treated cloud in a fashion similar to their good old on-premise setups and ended up over-provisioning cloud services. It meant that they were paying for more than they were able to utilize.

You can overpay for a year or two, but you won’t be able to bear the burden in the long run. It meant that such organizations had a hard time managing their resources and eventually broke down. In spite of shifting to new technology, many organizations have failed to change their mindset. 

Cloud cost management is by no means easy, and we need to have a sound plan to ensure planning, monitoring, and control in a cost-efficient manner. If you don’t let the new ones, the old ones will eventually be worn out, and you will have nothing on which you may bank.

No proper Governance policies

Do you know that over 60 percent of taggable cloud resources lack appropriate tags or 

metadata? In such cases, how do we expect different teams to work in synergy over such data? Lack of necessary governance policies is creating uncertainty amongst various users in an organization. 

Not only the process gets stalled unnecessarily, but the cost attached to it also keeps on rising as well. The point is, we must follow the policy to tag our data to make the transition between teams easier. The creation of governance policies will give more leeway to the company in deciding how it wants the resource utilization.

It also reduces the chances of any friction amongst various core parts of an enterprise. You can utilize the controls that various cloud providers provide along with the cloud, or you can use third-party controls. It will ensure that all of it is placed well and working as expected. 

Irregular instance size

Most organizations suffer from unaccounted cloud costs. They don’t even know why they are paying so much when they did nothing else than the regular work. One part of failure from the management occurs at the very onset. They choose incorrect instance size that may be too small or too big for the operations it is about to carry.

Choosing an incorrect instance size plagues most of the companies and has led to cloud spend being wasted. Not only that, but it also leads to an imperfect workflow. Imagine fitting a truck tire in your cycle! How good will you feel the next time you try to go on a bicycle trip needs no explanation. 

Similarly, choosing incorrect instance size has led to failure on the part of the management to manage its cloud resources. They end up wasting a chunk of it and find it difficult to assess where it all went wrong. To achieve it all, the organization must have the policy to determine what instance size fits them perfectly. 

The usage of pay-per-use basis is imperfect

Cloud providers generally charge us on a pay-per-use basis. It means that you can demand how much of it is required for you. The figure will never come out of thin air. Properly researching and understanding the scenario might help the case. 

If you become over-optimistic, you will end up paying much more than what your budget wanted it to be. Cloud is a flexible resource, and we must understand the liberty that it provides us. If the strategy is faulty, we will end up wasting opportunities like scheduled-scaling or auto-scaling.

Flexibility is a prime characteristic of the cloud, and we must be prudent enough to take full advantage of it. Make sure that you use the additional features optimally to ensure that the resources don’t go down the drain. If we get the cloud model right, it will be vital for our cloud management plan, and costs will reduce considerably.

Lack of regular cleanups

Do our production machines call for regular cleanups to stay efficient? Do we ignore them? No, we don’t as their inefficiency is visible to our glaring eyes. What about cloud cleanup? Most of us don’t have the visibility to understand that some redundant processes are running in the background and ruining our cost budgets.

The truth is, there are several instances that, even after the work is complete, stays functional in the background. They offer no utility but consume power and cost. What is the best way to ensure such processes don’t hamper your cloud cost optimization objective?

We need IT, professionals, to teach a habit of regular cleanups. It will not only improve space but also ensure that we are not bearing extra costs for our cloud operations. 

DevOps culture is somewhat missing

For managing IT resources, it is imperative to have a DevOps culture lingering in the organization. For clouds, people often tend to follow non-DevOps culture, which can lead to inefficient resource management. 

DevOps culture is necessary for several reasons. Firstly it is known to improve automation. It can automate provisioning, recovery procedures, deployment procedures, and several others. Secondly, it helps in the reduction of manual interaction. Reducing manual interaction improves efficiency and reduces cost while increasing reliability along the way.

We are yet to understand how the clouds operate entirely, and without a DevOps culture, the situation is only going to worsen. Most of the organizations have developed their cloud adoption keeping DevOps in the center and has benefited with better cloud cost management and improved visibility.

Internal miscommunication leading to a rise in costs

We have already mentioned the decentralized nature of cloud management. It requires secure communication and the ability to listen. Just drawing up plans in your boardroom won’t help the cause. Companies will have to be active in ensuring that there are no gaps in communication between parties.

A successful cloud scheme can never be successful without having a line of communication and talking it out. While deciding on the best cloud cost management strategies, an organization must harp on the importance of communication. Internal miscommunication can make all the efforts redundant, howsoever good they were.

IT must be given enough freedom so that they can decide horses for courses and decide the best path to succeed in cloud implementation. Even after the application is made and dusted, the communication flow must remain intact to monitor and bring about the necessary changes.

Reluctance to change

With the change in technology, IT professionals must get a move on and acquire new skills. Companies will have to invest money and time in training them and to make them 

acquainted with the latest tools. 

When it comes to cloud, if an IT professional is reluctant to understand its dynamics, he will never be able to procure, deploy, and manage it efficiently. It is about time that companies ensure that IT professionals understand the importance of cloud cost management. The timely deployment of proper and well-planned resources will reduce a lot of unnecessary 

clutter which surrounds cloud computing.

Poor Cost optimization

We are wasting around 35 percent of all cloud spending annually. The rate is alarming, and the reasons are varied. But most companies seem to be failing at cloud cost optimization. 

Some of them are spending way too much by over-provisioning, others are getting the wrong instance size, and the rest forget to turn off their VMs when not in use.

The result is the same in most of these cases. The companies have not found a way to optimize their spending even after trying hard. Most organizations also report that the cloud bills are higher than expected, and the reasons are unknown to them.

If you are not able to optimize your cost, how are you going to survive? You will ultimately have to bow to the pressure and give way to the competition to move ahead in the race. It is time that you set up proper plans and execute them to ensure that the cost bears fruit. 

Poor Visibility

Another weakness of decentralization is weak visibility. Before clouds, IT professionals had a stringent hold on the visibility of sensitive data. Cloud has made it very difficult for them to have the reign back. It has made the organization data vulnerable and open to both internal and external threats.

If the situation was not already rotten, those who keep their data on the public cloud are always worries about its security. They lack visibility to understand how critical data is handled and stored. As per a recent study by Forcepoint, 21 percent of professionals accepted that their organization keeps sensitive data in public clouds.

Looking at how vulnerable the public cloud is, it becomes imperative to have better visibility to ensure that the data is safe and within reach. If the organization fails to create a strong IT team that lacks clarity, its efficient cloud cost management will always be a dream.

The Sum Up

There are several reasons why organizations have failed to optimize their cloud spending. A lot of it has to do with faulty or unavailable cloud strategies. They have been unable to emphasize its importance to the employees. It has led to a massive hole in their cost budgets.

Not only that, they are not able to get the most out of their spending due to faulty execution and a laid-back approach. If the entities want to get back on track, they will have to ramp up their strategies and plan to their strengths. Cloud waste is getting severe, and the numbers are awe-striking. If the negligence persists, the trash is only going to increase and will keep deepening the hole that has already burnt our pockets enough.