IT Governance

Are Cost Savings a Myth in the Public Cloud?

One thing organizations especially love is saving money. Businesses shift from on-site servers to cloud solutions because they rightfully expect it will reduce costs. But in an article for InformationWeek, Charlie Li and Jason Hatch argue that a cloud switch does not translate into instant savings. Rather, saving money in the cloud is a result of having excellent governance and planning.

Watch Your Wallet

The authors present three ways that the cloud can end up costing IT leaders more than they had anticipated:

  • Not adjusting to variable spending
  • Too much cloud access
  • Ongoing management practices

IT is used to operational costs being relatively static, but if you treat your cloud usage as another static cost—you are doing things terribly wrong. The benefit of the cloud is that you pay for the capacity and resources that you need at a precise given moment. However, this can actually be a bad thing if you are not actively anticipating the times when you will need more or fewer resources. This means that budget planning must occur on smaller scales and at a higher frequency than in the past. It is the only way to optimize the advantage that the cloud is giving you.

Another cost problem regards how much access to the cloud that you give teams. Instead of people having to wait their turn to use on-site server resources to stage, test etc. applications, they can instead just buy more cloud resources right now to continue their work. These expenses can multiply fast if governance mechanisms are not in place to control who can buy, how much, and when.

About the problems of ongoing management practices, the authors say this:

Building a managed services function around your public cloud investments is a smart way to corral hidden or unexpected costs. In practice, however, organizations may not start the managed services conversation until long after the cloud migration planning and strategy phase. A successful managed services framework entails equipping internal IT departments (or external providers) with the right tools to enforce your cloud usage controls – a lofty goal for businesses operating a hybrid environment. The tools used to maintain on-premise systems differ from those needed to support cloud-based applications. Without a unified way of managing both, complexity will cloud IT leaders’ visibility into their actual spending and they may incur redundancy costs in licenses and operations.

Lastly, here are some tips to use governance to manage cloud costs appropriately:

  • At the outset of migration discussions, include a mixture of pivotal business stakeholders and technical experts.
  • During planning, segment applications according to usage patterns, such as “always on” or “on demand.”
  • Use tools to make it easier to monitor cloud applications.

Ultimately, the cloud does not solve problems. It only enables you to solve problems. You can view the original article here:

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