With increased investment in remote workforces since the onset of the pandemic and the subsequent acceleration in cloud adoption and digital transformation, cost-cutting initiatives have become more important as a critical consideration for technology leaders and C-Suite.
According to research by Deloitte, two out of three (66%) organizations worldwide are currently pursuing cost-cutting strategies, and overall, since pre-COVID, cost-saving initiatives have increased dramatically – by 74%. Within this, a common assumption is that migration to the cloud immediately translates into cost savings for a business. But without the proper evaluation process, the true costs of cloud computing can quickly add up.
Not all clouds are equal in the potential support and cost savings they can provide to organizations, the costs can be significant and need to be looked at closely. Hidden fees, complex pricing models and other variables can drive total costs far beyond the original tender and make the economic framework for evaluation difficult to navigate.
Plus, with so many cloud providers on the market now, it can be difficult to look beyond the hype surrounding the big brands and find the right partner for your business. While many will undoubtedly beat the cost of a traditional, on-premises environment; the additional savings that partner providers offer can be hard to discern at first glance.
Thus, it is critical that organizations compare the features, capabilities and metrics of all providers from the start of the evaluation process in order to set achievable expectations regarding both performance and cost and evaluate them appropriately.
For starters, technology leaders need to debunk the top three myths surrounding cloud costs.
MYTH #1: One size fits all
The old adage, “You get what you pay for” applies here. Moving to the cloud is no small feat, but moving to the wrong cloud (cloud type or vendor) could cause an economic disaster or a service-level disaster for the business (or both)!
Focus on priority business applications
CTOs need to start by understanding the key business drivers for moving their organization to the cloud, and align those drivers with the business application requirements. Some applications are CPU intensive, others are memory intensive, and others are cost sensitive.
Balancing Cost, Security, and Performance
All applications may require a high level of security and protection. In a “one size fits” approach, applications are tied to the lowest common denominators of the platform, in terms of performance, cost and security. In other words, you might be paying too much for one application to get another application to meet your SLA. Conversely, you could hurt your performance from one application to make sure another application fits within your budget.
Recommendation: Consider multi-cloud types for your specific application needs. Examples include public clouds for cost-sensitive apps and private clouds when performance is critical. A multi-vendor approach can also help reduce the risk associated with compromising performance and costs within a single portfolio.
MYTH #2: Lowest price equals lowest cost
This is perhaps the biggest myth and most often overlooked when evaluating budget requirements and cloud costs. It is critical to understand the total costs that a supplier’s business will incur, including any hidden costs that are not necessarily announced in advance. These will vary widely based on performance, security, management and other factors
Think of it like buying a house. The monthly mortgage rate can make a home’s price tag attractive, but it’s important to remember that utilities, insurance, and maintenance are not included, which can vary widely based on usage and other factors.
Recommendation: Opt for a Total Cost of Ownership mentality with cloud. The advertised price is likely to be one line item on the monthly bill. Knowing what the other line items are and what your applications need before you deploy them can help you meet budget expectations.
MYTH #3: The bigger the cloud, the better
Gartner estimates that companies that make mistakes during due diligence and cloud adoption could exceed 20-50% indefinitely. It is common for organizations to look to hyperscalers such as AWS, Azure and Google Cloud to reduce cloud adoption costs, yet hyperscaler customers almost always pay for more than they need and these extra and unnecessary services can add up quickly.
It’s important to remember that a generic mass-produced product can be difficult to tailor to your unique business needs. For example, many of the integral components of an on-premises infrastructure, such as monitoring day-to-day operations and network security, are not included in the equation for cloud services (in fact, they are sold separately for Azure and AWS).
Recommendation: Remember that cloud infrastructure matters. There are technologies that are superior to others, for a specific business need and in general, whether or not they are adopted by the masses.
When IT leaders begin evaluating cloud services, they need to ensure that they exercise due diligence from the outset and truly understand the costs of cloud deployment upfront.
IT leaders can tailor their cloud investment and avoid falling for these common myths by addressing the evaluation process with a comprehensive audit of their organization’s unique business needs and benchmarking vendor solutions against these common performance issues , costs, security and management.
By recognizing that each individual organization’s cloud requirements are unique, IT leaders can quickly browse assessment frameworks to identify the true costs of cloud investments and deliver a robust, custom solution that translates into real cost savings for the business.
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