You’re Probably Spending Too Much on Cloud Computing
Slalom and Microsoft want you to put that money to better use
Does anyone really know what 2023 has in store for us? While many reports say that a recession is imminent, there are also predictions that we’re going to be spared from such a fate — at least for a little while. So how do you plan, adapt your operations, and staff your organization when there’s so much uncertainty?
Many organizations are cutting costs as a way of dealing with the current economic upheaval. While this isn’t necessarily a bad thing to do, it must be done intelligently. As pointed out by the Harvard Business Review, that means giving serious thought to the business’s future needs.
“Riddled with the anxiety of making the wrong choices and having to deliver tough news, leaders are often prone to making short-sighted decisions when cutting costs. … The ultimate failure comes from taking their eyes off the future. For example, only 9% of companies create enough capacity to take on growth and innovation to support their long-term aspirations.” — Harvard Business Review, When Cutting Costs, Don’t Lose Sight of Long-Term Organizational Health, February 2023
In this three-part blog series, we’ll look at some actionable recommendations for setting your business up to not only thrive during these turbulent times but also be ready for when you return to a more growth-oriented mindset. One way to do this is to strike the right balance between optimizing costs and making sound investments for the future of your business, including investments in technology and your people. A big part of this equation — and our focus in this first installment in the series — is to make sure you’re getting the most out of your existing assets and discover where there are opportunities to realize savings.
As many businesses have recently increased their investments in cloud technology — to an expected $591 billion in total global cloud spend this year — this area is ripe for optimization. A recent Flexera report supports this assumption. When asked to self-estimate how much of their total 2022 cloud spend was being wasted, survey respondents came back with a staggering figure of 32%. If this trend were to continue this year, wasted spend would total roughly $190 billion globally.
To eliminate the waste, you first have to find it
To ensure you’re not making the short-sighted mistakes as described above, your focus should be on optimizing costs rather than cutting them. Cost optimization starts with eliminating waste, and if your organization is anything like those in the Flexera survey, your cloud estate could be a major source of wasted spend. Pinpointing exactly where the waste is occurring, however, has proved to be a difficult exercise for many organizations.
It’s therefore important to focus your cloud spend optimization efforts on increasing visibility into where the money is going, making the most of savings offered by your cloud provider, and running your workloads as intelligently and efficiently as possible. When working with Microsoft and Slalom, you have access to a broad range of resources that can help you both discover and eradicate wasted cloud spend, including:
- Microsoft Cost Management, which provides increased spend visibility with dashboards that offer both broad views of your entire cloud estate — whether you’re operating on Azure, AWS, or a combination of the two — as well as more insights into more detailed parameters, such as spend and usage over specific time frames, locations where the workloads are running, and the cost centers generating the expenses.
- Discovery of usage and spend patterns using the Microsoft Cost Management dashboards as well as through Slalom’s engagement with your organization’s stakeholders, including analysis of your existing architecture and collaborative workshops.
- Slalom expertise in promoting greater understanding and alignment between the teams generating the cloud expenses and the teams paying the cloud bills. When IT is aware of its budgets and can track usage against those budgets in real time, there’s less chance of overruns. Similarly, when finance has a better depth of visibility — down to the project level — of where the expenses are being generated, it can budget more accurately.
- Support for creating a cloud center of excellence (CCoE) to ensure all the necessary functions across the organization — including C-suite, IT engineers, finance department, etc. — are involved in planning, decision-making, and goal-setting for your cloud spend. Your CCoE will play a vital role within your larger FinOps efforts to improve overall ROI for your cloud services.
- Azure Advisor for actionable recommendations to help you run your Azure resources as reliably and securely as possible, with specific focus on operational excellence, performance, and cost.
Stop paying for resources you don’t need
Once you’ve aligned your teams, gained the necessary visibility into your cloud spend, and optimized your workloads, you’ll have a much better idea of what your actual resource needs are and therefore will be much better positioned to take advantage of Microsoft Azure savings programs such as Azure Reservations, Azure Hybrid Benefit, and Azure savings plan for compute. These programs allow you to pay in advance for your cloud resources over a longer period and therefore incur much lower costs for those resources than if you were to pay on a month-to-month basis.
Putting all these pieces together, you may realize savings from your cloud investment that you could then reinvest elsewhere to drive even more positive impact for your business. We’ll explore some of the ways you can do this in the next installment of this series. But, in the meantime, if you’d like to learn more about optimizing your cloud costs and other actions you can take to help your organization thrive in turbulent times and beyond, download the Slalom and Microsoft whitepaper.
We’re also here for you when you’re ready to start a conversation about doing more with your Microsoft Azure investment.
Slalom is a global consulting firm helping people and organizations dream bigger, move faster, and build better tomorrows for all. Learn more and reach out today.
