The appeal of multicloud is that it doesn’t tie enterprises into specific services offered by individual cloud providers. This provides them with the freedom, flexibility and scalability to deploy and innovate applications without the restrictions of a single supplier. But it also makes spinning up cloud services easy, especially if they are not validated by the IT department.
Data analytics leaders who use cloud infrastructure for analytics, data lakes and other data-intensive environments are often surprised at how big their monthly cloud spend is, according to Adam Ronthal, Senior Research Director at Gartner.
“The main reason for this is that on-premises data centers and the cloud work according to different economic principles. On-premises, you tend to maximize utilization as capacity and costs are fixed. In the cloud, it’s the other way around; users must aim to consume as few resources as possible, as they will be charged for every single computing action,” says Ronthal.
Budget evaporating into the cloud
Cloud resources can be quickly and easily scaled up and down. This provides enterprises with business-changing flexibility and agility essential for success in the digital economy. But its pay-as-you-go model can quickly get out of control without an effective cloud spend and budget management methodology. CIOs need clear visibility into which services have been ordered and which are being used.
“The problem is that many enterprises don’t look at their infrastructure and how it is performing. In our experience, they only utilize half of what they have purchased – and this offers immediate savings for them,” says Robyn Chegrouche, Head of Professional Services at Orange Cloud for Business.
This is backed by recent research from 451 Research, which found that many enterprises are uneducated and unprepared to manage multimillion-dollar multicloud budgets. Over 50% of respondents said they worry about cloud spend on a daily basis, and 80% went as far as acknowledging that poor cloud financial management has had a negative impact on their business. Reluctance to admit wasted cloud spend factors into millions in lost savings and deepening levels of inefficiency, the report maintains.
“As we inevitably go through the next stage of the current economic cycle and experience a downturn, IT and finance leaders will begin looking for smarter ways of operating in the cloud since they have no plans to stop investing,” explains Owen Rogers, Cloud Economist at 451 Research. “The challenge as always will be to prevent overspend before it occurs, without getting in the way of innovation.”
A disjoint between IT and finance
The cultural transformation required to manage multicloud is still one of the biggest challenges facing IT and finance departments. According to respondents of 451 Research’s survey, 72% of respondents said there was no formal reporting facility between departments, making it virtually impossible to track usage. Eighty-two percent said they must rely on cloud vendors, spreadsheets and manual processes to track spend or have no visibility into cloud spend at all.
“Enterprises expect that cloud will provide cost savings, but to achieve this they must have a well-thought out cloud migration strategy. When progressing through the cloud journey, they must also have cost management plans in place from the outset to control cloud spend,” explains Chegrouche.
“To continue to see cost savings and optimization once they have moved to multicloud, enterprises must be committed to continuous improvement, and this is something they often don’t appreciate,” adds Chegrouche.
The critical importance of proactive budget control
With IDC forecasting that worldwide public cloud spending will more than double from $229 billion in 2019 to nearly $500 billion by 2023, it is imperative that enterprises get control of their multicloud budgets to get maximum business value from their investments. If they don’t, they could quickly start hemorrhaging any profits.
Gartner forecasts that, through 2020, a massive 80% of enterprises will “overshoot” their cloud infrastructure-as-a-service (IaaS) budgets. This is due to the complexity of a multicloud environment alongside varied billing from different providers and the lack of organizational processes within infrastructure and operations (I&O) teams to manage cloud costs.
Research is essential for multicloud management spend. Enterprises need to fully understand and evaluate their needs against the different cloud packages. Flexible storage may be less expensive with one, for example, while other vendors may charge differently by the second. Neither is it always possible to choose on price. An enterprise may find that a more expensive service actually brings more business value.
“Enterprises often over provision for workloads. They need to work out which workloads will get the biggest benefits migrating to the cloud and what will be required in terms of workloads,” explains Chegrouche. “In addition, they often don’t ensure that users access the right cloud services for the right purposes.”
Adopting multicloud in any enterprise involves major changes, from skills to new processes. Here enterprises need to be honest about the skills they will need to supplement to successfully deploy multicloud, according to Forrester Research.
“When crafting out an aggressive multicloud strategy, do a pragmatic assessment of current skills and potential for developing these skills internally and through hiring in a competitive landscape,” Forrester advises. Orange Business, for example, offers a cloud assessment service that can help define skill sets, resource requirements and best practices that alleviate these pain points and speed up the delivery of multicloud.
More options add more complexity
The more cloud environments that an enterprise adopts, the more skills and tools it needs to deploy – and the greater risk of increased spend. It is, therefore, essential that enterprises justify the cost of this added complexity against real business benefits. This should not be “a laundry list of potential benefits, but rather a very realist cost-benefit for each added element of complexity,” maintains Forrester. If the cost is too high or the benefits fall short, enterprises must remove it.
Multicloud complexity is only going to grow as enterprises adopt more clouds. Tracking and forecasting cloud usage accurately is now critical if enterprises want to stop cloud from eating their IT budgets.
Based on recent IDC research, Archana Venkatraman and Carla Arend from the IDC European Division look at what industry pathfinders are currently doing to overcome the challenges of a chaotic multicloud environment and how they are instead using it to deliver business value. Find out more in this IDC InfoBrief.