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Taking Control of Cloud Costs

November 30, 2022Cloud

The rise of remote working over the last couple of years has caused a significant increase in cloud growth, which shows no signs of slowing down.

Comparing our data with last year’s study, businesses continue to understand and witness the benefits of cloud, particularly regarding its financial benefits. The volatile macroeconomic conditions businesses face in 2022 have made companies more cost-conscious, placing the financial benefits of cloud transformation under even closer scrutiny.

This latest report in our 2022 Cloud Impact Study explores the financial impact of cloud migrations, and how organizations can ensure they are mitigating unforeseen costs, and setting up their business for future stability and success.

Interviewing 400 senior IT professionals in the U.S., the U.K., and Canada, we reflect on the changes in cloud management trends compared to our 2021 study. Interestingly there is a significant increase in its benefits as well as uncovering some developing budget issues.

Financial security on the up

Gartner predicts that by 2025, 51% of IT spending for application software, infrastructure software, business process services, and system infrastructure markets will be cloud-based. With cloud growth therefore showing no signs of declining, businesses are continuing to discover the financial benefits of cloud.

Compared to last year’s findings, there is evident growth in confidence around the financial security that cloud computing provides businesses. This year’s survey revealed that 86% of our respondents feel that cloud computing is essential to the financial security of their organization (up by 6% from 2021).

The trend with the shift from capital expense (CapEx) to operating expense (OpEx) is central to the realization of the benefits the cloud can offer. Eliminating up-front capital costs has lowered the barrier to innovation as businesses embark on gaining future financial returns.

One of the crucial benefits of OpEx models is their ability to implement expense regulation and operational planning. 71% of our respondents agreed that cloud transformation has positively impacted their operational efficiency, with many companies finding it easier to measure usage in the cloud by using service providers’ dashboards and other monitoring services. Software-as-a-Service (SaaS) remains the most popular form of cloud computing, partly due to its pricing model and ease of entry.

Cost leak troubles

Although cloud computing delivers many financial benefits, our survey’s respondents still report some cost-related hurdles. The survey found that 73% of the companies surveyed had an unexpected increase in cloud computing IT costs, a notable increase from 57% last year.

Looking at our collected data, Aptum has identified six primary causes for these cost leaks:

  1. A lack of familiarity with the cloud
  2. Runaway cloud costs
  3. The ‘Hotel California of Clouds’ effect
  4. Hybrid complexity
  5. Cloud Modernization
  6. Wrong costing model

A key solution to these cost leak issues is choosing the correct consumption model for your business. There are multiple models to choose from, from pay-as-you-go to subscription, to name just two.

Measuring up – metrics, ROI and planning

Although our survey uncovered that 89% of organizations were likely to measure their ROI on cloud investments, there it is still no consensus on how to do it. Operational resilience was the top ROI at 22%, followed by scalability, agility, and continuity (16%). This shows there’s not one single metric to best represent ROI, mainly because cloud investments are often business-driven and varying in motivation.

As well as difficulties with measuring ROI, many businesses underestimate the importance of planning. Creating a strategic plan for the cloud can dramatically improve financial savings on computing resources. Companies require a holistic plan for their cloud transformation to secure these benefits.

When implemented properly with planning and forethought, the financial benefits of cloud computing could help businesses to offset the rising cost in a changeable business environment. You wouldn’t set out on a journey without a map, so embarking upon cloud transformation without a plan shouldn’t be different.

With the help of a managed service provider, businesses can avoid taking ‘wrong turns’ in business operations and finances, helping make cloud use a seamless and cost-effective experience.

Read the third part of Aptum’s 2022 Cloud Impact Study to learn more about how businesses can optimize their cloud environment and make the most of their cloud budgets.

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