As cloud spending and governance issues mount, more organizations turn to managed services providers.
It is now almost universally accepted that cloud computing is the ideal model for the consumption of IT resources. According to the RightScale 2019 State of the Cloud Report from Flexera, 94 percent of businesses across all verticals are using cloud in some form, 84 percent have a multi-cloud strategy using an average of five different cloud platforms, and almost 80 percent of all workloads now run in the cloud.
While the cloud’s on-demand access to infrastructure, applications and services offers clear-cut business benefits, there are significant challenges. According to the RightScale study, 84 percent of enterprise cloud users admit they are struggling to optimize costs and establish effective governance.
“Cloud has become a significant line item in the IT budget for most organizations,” said Don Gulling, CEO, Verteks. “However, a great deal of that money is being wasted on services and infrastructure that are either no longer in use or have overprovisioned capacity.”
RightScale says that more than half of enterprise organizations now spend in excess of $1.2 million per year on public cloud, and 13 percent are spending 10 times that amount. However, the study suggests that as much as 35 percent of that is being wasted because companies are not doing all they can to optimize costs.
The need for cost optimization and improved governance is leading many organizations to turn to managed services providers (MSPs) for guidance. An MSP can identify waste, recommend corrective actions, provide budgetary guidance and implement automation solutions for increased efficiency.
Reining in Costs
The complexity of cloud pricing and billing contributes to overspending. Cloud providers often use per-second billing models with tiered pricing levels for thousands of separate line items such as compute, network, memory and disk space. The complexity is much worse for organizations with a multi-cloud strategy that must deal with multiple providers using different pricing models and terminology. Flexera notes, for example, that the three leading public cloud providers offer tens of thousands of prices just for virtual machines (VMs).
“According to Gartner, 95 percent of business and IT leaders say that cloud billing is the most confusing part about using public cloud services,” said Gulling. “A managed services provider can help with that by analyzing bills to uncover errors and hidden costs, identify unusual usage patterns and evaluate historic spending trends.”
More than half of those surveyed by RightScale said managing software licenses running in public cloud environments is another spending challenge. Software manufacturers can have wildly different ways of addressing cloud use of their products. Some base licensing on the number of users, others charge per processor and others charge based on actual usage. An MSP can assist with software inventories and license analysis to eliminate unused or unauthorized software and ensure license compliance.
Many organizations also waste resources by running cloud instances when they aren’t needed. For example, developers may spin up a public cloud instance to use for testing during working hours but then leave it up and running 24x7. An MSP can help implement automated scheduling tools on the cloud platform to power down such instances at night and on weekends and holidays.
The Need for Governance
Overprovisioning is one of the more wasteful cloud habits. Lacking visibility into ever-changing workload demands, IT teams tend to overprovision public cloud resources in an attempt to assure performance. Flexera estimates that nearly 40 percent of cloud spending is going to VMs with utilization rates of less than 40 percent.
One recent study concluded that nearly one-third of companies do nothing to monitor or control cloud provisioning. This has contributed to high levels of cloud sprawl in which resources are provisioned without IT’s knowledge or consent. These rogue clouds increase the risk of duplication of services and unnecessary spending.
Software-as-a-Service (SaaS) is another source of cloud waste. End-users may subscribe to SaaS solutions and never use them, create duplicative accounts, or leave large volumes of unmanaged data in the cloud.
An MSP can help organizations take control of the cloud environment with a cloud governance program that establishes rules, policies andprocesses to guide the deployment and use of cloud services. Automated governance tools can track the creation of virtual machines and any associated resource allocation to help prevent sprawl and improve utilization rates.
“Operating in the cloud offers terrific business benefits, but organizations have to understand the challenges,” said Gulling. “Much of the time, addressing spending and governance issues is simply a matter of improving oversight. Verteks has the expertise to help customers gain visibility into their cloud usage to better understand how cloud services are being used and where improvements can be made.”