Apr 05, 2022

Cloud Economics: How to Optimize Business Costs When Moving to the Cloud


Cloud has been regarded as a catalyst for innovation and digital transformation, and organizations have started seeing its real benefits. Cloud can help organizations provide near-limitless scale and accelerate their development efforts multi-fold. Evaluating the role of cloud in transcending IT and the vast potential that moving to cloud could generate, a Mckinsey & Co. report estimates $1-trillion dividend for companies that leverage the full capabilities of the cloud by 2030. This number will only go up with cloud forming the backbone of blockchain, augmented reality, and other emerging technologies. This immense value pool increases pressure on organizations to succeed by leveraging cloud adoption for revenue growth and efficiency engine.

The organizations, who have successfully implemented cloud practices, are adept at executing a well-defined, value-oriented strategy. They adopt a technology-first mindset and develop a first-hand experience with the tools, while actively working on educating their workforce about the nuances of cloud. But no matter at what stage the organization is in terms of cloud adoption, controlling costs becomes an issue for most of them as the process of optimizing costs in cloud infrastructure is often tricky, and can get complicated.


Understanding the gap


Tracking the business value of cloud and the cost optimization associated with it are two of the top priorities for CIOs. However, cost effective cloud environments need way more than a few optimization exercises. Inefficiencies across architecture, sizing, governance, automation, and poorly migrated applications can derail a cloud migration process and increase costs.

Organizations sometimes achieve optimization by just stopping the instances or converting to Reserved Instances, but that defeats the purpose of the process. Optimization concentrates on cost reduction and standardization by calibrating processes, and this calibration enables identification and fixes in the architectural gap. Having a detailed report on these factors enables organizations to conduct their own analysis and act on certainty. This will not only minimize the cost, but also enable utilization of the available space in an organized way.


Factors to focus on during adoption


Migration to cloud tends to be the focus while the activity is taking place, and optimization of costs takes a backseat. The impact is not usually realized until the contracts are up for payment. Prioritizing actions before the project starts or when it has just begun is ideal, as all stakeholders can contribute with full clarity. It gives a clear and comprehensive understanding of the cloud environment to the organization, and helps to integrate specific needs of certain aspects of the business during migration.

A thorough audit of solutions provided by various service providers is a good way to save costs. Often, certain discounts are made applicable based on the size of the migration, and organizations can take advantage of this.

Automating cloud cost optimization is another way for organizations to manage their cloud costs. By shutting down workloads after required hours, minimal cloud waste can be ensured. Also, policies like rightsizing instances or resource cut downs are some ways for organizations to reduce cumbersome processes and unnecessary spends.

Aligning licenses with the cloud provider is an oft-overlooked area, because both processes happen independent of each other. While some cloud service providers enable organizations to bring their own license (BYOL) to the cloud, some may not. Getting an overview of the licenses under use in the organization and the impact migration may have on them, might help in whittling down the shortlist. Also, this acts as an informal audit of licences and software being used in the organization which leads to better cost planning. Having an understanding of the cost implications beforehand helps organizations map out their future expenses better.

Finding the right option among many procurement choices available can be difficult, but understanding the organizational needs can shed light on the type of services necessary. Customized plans can also be created to cater to the needs of the organization, based on the type of service used.

Building a culture of cost awareness ensures that the effectiveness of cloud optimization project persists. Building a cloud center of excellence or a practices team dedicated to establishing standards can be a good way to do so. To accelerate the cultural shift necessitated by migration, getting a buy-in from decision makers is essential as they can help champion enterprise-wide initiatives to make cost optimization a top priority.


Finding a custom-made solution


Enterprises aiming to strike a balance between cloud and the associated costs should have the right cost management strategies in place. This is as important as the organization having a cloud-first approach. An agile, resilient, and undisrupted enterprise can optimize its migration to cloud efficiently, and expect faster returns from their investment too. By understanding cloud economics, organizations can choose the right tool to monitor their cloud spend, visibility, governance, and infrastructure. While the task of migrating to a cloud is not beyond the capabilities of a decent IT team, having an experienced partner handle optimization can greatly enhance identification of cost saving methods. With an added benefit of unburdening the already-overwhelmed IT departments, of course.

A tailored framework, such as Microland’s Cloud Cost Management Framework (CCMF), goes one step beyond optimization with Cloud Economics. It utilizes a combination of toolsets and 4 key optimization processes, each focusing on Architecture, Utilization, Process, and Usage. This 4-pronged approach delivers a comprehensive cloud cost management solution that can be complemented by innovative commercial models like gain share, or outcome-based engagement.

Summing it up


With the right optimization partner, organizations can experience significant savings. Microland, for instance, helps its partners realize at least 30% savings on their cloud environment. With accelerated digital activities of consumers, organizations should scale up to respond and adapt rapidly – and cloud provides a way out to do so. But without proper optimization, the desire to stay up to date with the latest can end up being a pricy affair. Cloud can help organizations reduce IT costs and move faster, support innovation better, enable secure remote work policies, integrate powerful and disruptive technologies, and a lot more – and the entire process can be optimized to yield more returns over time.

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