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article imageQ&A: Biggest mistake enterprises make when planning cloud spend Special

By Tim Sandle     Sep 24, 2020 in Business
New analysis has been produced describing what enterprises can do to gain control over cloud spend at a time when consumption is increasing yet budgets are tightening.
For many Information Technology professionals this is considered important in the context that reliance upon the cloud has risen sharply in response to the global pandemic, (in terms of data collected and remote working). Most IT decision-makers are anticipating that the surge with cloud use will continue, irrespective of whether their workforce stays remote or goes back to the office.
Recent data reveals that nearly 1 in 10 IT leaders say they will not be able to pay their cloud bills this month, 31 percent are renegotiating cloud contracts and 32 percent are asking their cloud vendors for extended payment terms.
To expand upon these points, Jay Litkey, EVP of Cloud Management at Snow Software, tells Digital Journal that gaining visibility over all cloud environments is the first key step for organizations to begin to gain control over their cloud spend. Until an IT, Finance, Financial Operations (FinOps) or line of business (LOB) team understands how teams are consuming cloud and why they are using specific cloud providers, any best practices, policies or tools implemented to try to achieve savings is really only a short-term solution.
Digital Journal: What’s the most effective way to gain control over cloud spend?
Jay Litkey: The most effective approach to gain control over cloud spend is to provide both centralized governance and decentralized autonomy to stakeholders based on their role. Best-in-class organizations aggregate visibility across all environments, but can also do granular slice-and-dice analytics to understand spending by logical constructs that have relevance for their business (e.g. person, team, application, LOB, etc).
The age-old adage in IT is that you can’t manage what you can’t see, and it’s just as relevant today when it comes to cloud. When we talk about cloud, it’s important to consider that most organizations have a hybrid strategy in place. On top of trying to better understand when and why various departments spin up new public cloud instances or consume various PaaS and SaaS services, it’s essential to consider what is being used and in which clouds – as it’s not a one-size-fits-all consumption pattern. We often see enterprises having dozens or even hundreds of individual cloud service accounts scattered across internal groups and so getting an aggregated view is critical to first understanding who is spending what and where.
DJ: What’s the biggest mistake organizations make when planning their cloud spend?
Litkey: Managing costs in the cloud is not the same as managing costs in a data center. IT leaders cannot set it and forget it. Cloud environments need to be monitored on an ongoing basis and adjusted accordingly. Monitoring of cloud consumption must be done both centrally (to understand the macro patterns) and also by providing delegated self-service visibility and optimization to the actual cloud consumers (who understand the micro context). The absence of this hybrid approach (both centralized and delegated) is one of the biggest mistakes many organizations make.
DJ: How can organizations lower cloud spend waste?
Litkey: Automation and orchestration can be huge allies for organizations looking to cut and maintain lower cloud costs, in order to remove manual tasks. This inherently provides predictability and also can enable enforceable guardrails to ensure cloud consumers can still go fast without losing control.
There are also a series of other potential actions that IT teams can to take to reduce spend including rightsizing (ensuring that the proper resources are allocated to the appropriate workloads), power scheduling (powering down non-production workloads when teams are offline, which could potentially create 10-15% savings), and purchasing reserved instances. It’s important to remember that the meter is always running when it comes to public cloud, so it’s important to continuously monitor, manage and optimize your deployments.
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