While the value and benefit of adopting cloud is undisputed, there are numerous examples of pivoting and course-correction that organisations have undertaken to align to their original goals. Course-correction takes many different forms, as highlighted in the public domain:
- Cloud still offers benefits, but the cost of realising those benefits is creeping up, so you have to be meticulous in how you adopt the cloud
- Leaving the cloud because it no longer fulfils the promise that the original business case was relying upon
- A huge spike in cloud bills and reduced ROI, mostly due to unplanned growth in cloud spend
- Poor ROI with costs on public cloud climbing, with no end in sight
- Cloud migration is exceeding budgets and timelines, compounded by increasing costs, security, and performance fears
- Moving back from public to private clouds because they are unable to manage the budgets, and cloud providers increasing their prices
As businesses look to adapt their Cloud implementation, we typically see five reasons why their approach is pivoted:
- There is a lack of visibility and control of cloud spend
- No visibility of cloud spend across LOBs and cloud service categories
- Rising cloud spend with no visibility into what is contributing to the increase
- There is a lack of accountability with frequent spikes and anomalies
- Unexpected and unaccounted frequent spikes in spent, with limited or no accountability
- Blame-game culture and a defensive mindset when things go wrong with unexpected increases
- Forecasting and demand management is inefficient and reactive
- Forecasting processes are based on historical spend or linear extrapolations, with no visibility of future spend
- Demand management is often a kneejerk reaction when costs are spiralling
- Different stakeholders tend to have different priorities
- Tech and engineering teams often overlook financial impact of their spend
- Finance team’s cycles are static and long drawn
- LOBs have no incentive to reduce cloud spend
- Hybrid and multi-cloud exacerbates cost governance
- Cloud providers have different models and methods through which they offer discounts and credits
- Cloud services can have their own nuanced billing models
In the recent years, businesses understandably had to redirect funds and invest in virtual and remote working, remote collaboration, and productivity tools – to ensure business continuity. Such sudden and unprecedented demand meant business leaders had to make quick decisions and undertake massive investments to procure and enable these systems (often in haste and under pressure!)
Post the pandemic-era, leaders are having to reassess those decisions and investments and take a fresh look at aligning to the strategic roadmap of the organisation. This requires re-examining cost variances, reflecting on the original business case, and finding a sustainable way to manage and control them going forward.
Back-to-back global challenges after the pandemic have meant that leaders are now forced to look at the aspect of cost optimisation – not as a one-off exercise, but something that is a core component within the operating model, that can be driven sustainably and continuously in the organisation. This will enable the business to confront such uncertainties head-on in the future and prepare to take swift and decisive actions proactively rather than reactively.
When the enterprise is looking at cost re-evaluation, optimisation, and savings from IT, all organisations which consume IT services across the business - such the CMO, CTO and CISO, must be consulted. This drives convergence at multiple layers – 1) technology, finance and business coming together and; 2) people, technology and processes coming together.
Everyone should have accountability for identifying wasteful expenditures in cloud, IT and digital so that the savings can be reinvested into new growth areas in the business.
Read the next in the series, ‘How Cloud requires organisations to act with speed on key focus areas’, or read our other takes, including ‘Cloud strategy and spend in the face of uncertainty’
If you want to talk about tactical quick-wins to reign in cloud spend, reach out to our specialist digital team: