We’re back with another educational series, this time addressing Controlling Cloud Spending. In part 1, we will address how cloud computing is transforming growth and innovation paths, while runaway cloud costs are creating a a tug-of-war in the C-suite.
The business world will hit a major milestone within the next year, when more than half of all enterprise IT workloads will live in the cloud.1 As businesses in every sector race to take advantage of the potential and power of cloud computing, many CFOs and CIOs are beginning to see a significant problem emerge: Unchecked cloud usage that leads to highly unpredictable costs. These costs are on a sharp upward trend that can quickly exceed IT budgets. It’s estimated that the typical business is wasting as much as 45 percent of its cloud spend on unused instances, sub-optimal pricing and ineffective planning.2 However, even as awareness of this problem grows, most businesses lack the tools, resources and expertise to effectively reign in cloud spending and optimize cloud usage.
Businesses Race to Capture the Great Promise of the Cloud
Most companies are aware of the great cloud transformation occurring in the business world. By 2018, IDC predicts that 60 percent of all IT workloads will live in the cloud. Cisco projects that 83 percent of all data center traffic will be cloud-based by 2019—the majority (56 percent) residing in public clouds.3 Amazon Web Services (AWS), the public cloud gorilla, will hit 15 billion users in the next year (a 50-percent annual growth) and is expected to reach 50 billion users in the next five to 10 years.
While experts agree that businesses have only scratched the surface of what’s possible with cloud computing, there are already powerful bright spots. Cloud-empowered businesses have the agility to quickly create systems and procure infrastructure, enabling them to respond in real time to market demands and opportunities as never before possible. Access to unlimited computing power— on-demand, without high upfront investment—is transforming growth and innovation paths.
Yet, even as businesses begin seeing their cloud strategies bear fruit, they are increasingly struggling to understand and control the costs.
Cloud Pains Create a Tug-of-War in the C-Suite
CFOs and other executives are starting to see the results of unchecked cloud usage and spending: eye-popping monthly bills from AWS and cloud spending that is surging beyond what they previously spent on infrastructure—and well beyond any hoped-for cost savings. “Organizations are surprised by where all the money is going, watching the money flow out the door associated with various cloud solutions,” says Scott Crowder, CIO at BMC, an organization that has earned recognition for its mature cloud strategy. “It always starts out very small—and then it starts to grow exponentially.”
This creates a tug-of-war in the modern digital business: Everyone from the C-suite down to the IT administrator feels pressure to shift more business workflows into the cloud. They recognize “cloud-first” as critical to remaining competitive and positioning a business with agility for the future. But without a sure way to control cloud usage and spending, there’s a looming risk that cloud computing will become a runaway expense that kills budgets—and bottom lines.
Join us for the second article of our three-part blog series: “Controlling Cloud Spending: Avoiding the Steep Cost of Unchecked Cloud Growth” – Part 2: Why Cloud Costs Quickly Spiral Out of Control.
1 http://www.forbes.com/sites/ gilpress/2016/11/01/top-10-tech-predictions-for-2017-from-idc/#7deb61a52790
2 RightScale 2017 State of the Cloud Report