Head in the cloud: how businesses can optimise their cloud usage without unintended consequences

By Mallory Beaudreau, Customer Portfolio Director – EMEA at Apptio

Introduction

Amid inflation and the ever-growing threat of a possible recession looming on the horizon, businesses are likely to pay even closer attention to their cost base. This is particularly true where cloud is concerned. However, businesses need to be mindful of untargeted cost-cutting, which could harm their long-term business health.

Does public cloud still make sense for the average business?

It makes sense to see cloud computing under tight scrutiny: It is one of the most significant costs major organisations incur, with cloud bills that can run into the millions. Cloud spending currently represents approximately 30% of overall IT budgets; and with potentially challenging conditions on the horizon, it is unsurprising that some analyses show that spend has fallen YOY for top public cloud providers, as businesses are slowly but surely looking to tighten the belt. Given its significant expense, and the difficult economic climate, does public cloud still even make sense for the average business?

Public cloud provides unparalleled flexibility and elasticity, which in turn makes way for innovation and the delivery of business-critical services. A common practice to achieve a balance of innovation, cost saving and efficiency was for businesses to explore both on and off premise technology stacks. But now, tighter budget constraints mean that organisations cannot as easily justify a dual approach of on-premise and cloud infrastructure – as has often been the norm – to experiment with different operating models.

The real question around cloud computing costs therefore is not if it still makes sense – clearly it will continue to be a vital element of enterprise innovation. The real question is whether businesses are able to adequately maintain control and visibility as they cut costs in some areas and embrace more cloud services than ever in others. In these challenging times it’s essential to know where your cloud spend is going and what value it is driving for your business.

What a challenging economic environment could mean for the next five years of business

It is clear that CFOs are considering cutting back on cloud projects to offset the negative effects of inflation. However, while this method may save costs in the short term, this strategy carries its own risks in the long-term. Over-focusing on reducing spend could cause longer term damage to a business’ competitive ability.

Now more than ever, it is essential that businesses track the value of their transformation projects to understand what is driving long-term business value and ensure that they do not lose competitive advantage as a result of reducing capability in the cloud.

In fact, those businesses who do establish better visibility of their cloud infrastructure across business, finance, and technology teams will be able to make better data-driven decisions and ensure that vital projects are not scaled back. To use an exercise analogy, businesses need to cut fat, not muscle; in cloud, this requires a strong understanding of who is spending what and for what business purposes.

Visibility leads to flexibility, and those that continuously adjust their priorities while continuing to invest in areas for growth will be the ones who will lead the market in five years.

How to establish cloud cost visibility

By understanding cloud cost associated with each application, service and customer, business leaders realise the true value of investment and focus on a balance between cost and quality. That is why frameworks such as FinOps are becoming essential business tools.

An evolving discipline and cultural practice in cloud financial management, FinOps enables enterprises to maximise commercial value by tracking, analysing and planning cloud spend. Working with FinOps in mind, businesses achieve accountability as they’re faced with a clearer structure through which to track the success of their investments.

FinOps helps businesses gain a better perspective on their cloud spend which in turn optimises cross-departmental collaboration. By renegotiating the architecture of cloud spend within a business, leaders can then begin optimising cloud usage, in turn reducing their cloud service bill.

So, at a time where businesses would normally look to cut down on cloud spend, they should instead focus on engaging in frameworks such as FinOps to gain a better view of where the spend is going in order to redirect it more efficiently. By doing so they would be promoting business cloud utilisation efficiency; increasing spend without losing sight of data in the cloud to maximise competitive advantage.

Conclusion

Leaders do not have to choose between cost saving and innovation. There are clearly challenging times ahead, but those leaders who prioritise greater spend visibility and tracking will be the best placed to not only survive but thrive in the next five years. By engaging in frameworks such as FinOps business can help their business grow, optimise development, and retain competitive capability.