Biz Tips: Evolution, Not Revolution: Cost Optimization Still Tops Challenges of Cloud Computing

Biz Tips: Evolution, Not Revolution: Cost Optimization Still Tops Challenges of Cloud Computing

Biz Tip:

Evolution, Not Revolution: Cost Optimization Still Tops Challenges of Cloud Computing

Over the past five years, we’ve seen the challenges of cloud computing evolve – but ultimately, their core needs are the same as ever.

It’s interesting to experience and observe how these needs get translated into products, both our own and others. Depending on company growth and culture, Build ↔ Measure ↔ Learn cycles can continue to turn in a rapid fashion as ideas get adopted and refined over time. Or, they can become bogged down in supporting a large and often demanding installed base of customers.

In a few short years, tools built for optimizing public cloud have evolved into a number of sub-segments, each of which in turn has developed to meet customer needs. In part, this reflects a predictable maturation of enterprises using cloud computing as they have migrated from on prem to public or hybrid cloud, and adopted best practices to enhance performance and security while tackling overall growth in monthly spend.

How This Year’s State of the Cloud Report Stacks Up

Flicking through various analyst reports and “Cool Vendor” white papers, it’s fascinating to see how quickly cool becomes uncool as industry needs develop. Being a social scientist by training, longitudinal panel type surveys always grab my attention. RightScale/Flexera’s annual customer survey ticks a few of these boxes. No doubt the participants have changed, but it likely provides a valuable source of data on customer needs and challenges in cloud computing.

You do not need to go back to the first RightScale survey in 2013 to see some big changes. Even when comparing the 2016 to the 2020 survey in terms of company priorities in the cloud, it’s hard to believe that just a few years ago, the number one challenge regardless of maturity was related to a skills/resources gap. These priorities were followed by security and compliance issues, with the focus on cost optimization being a lower priority and then only for those at a more mature state. Roll forward to 2020 and cost management is now the number one cloud initiative in all but the most recent adopters of cloud where it sits at number two. Interestingly, security seems to have dropped off the top-five list. Governance has held on, although likely headed the same way. Conversely, cost optimization now sits atop all other initiatives.

Why Is Cost Optimization Still #1?

What seems to be apparent when reading between the lines of such reports and when talking with customers is that unlike migration, security, and governance, there are still some large holes in companies practices when it comes to optimization and reducing cloud waste. Despite a plethora of tools on offer in 2020 that offer to bring visibility and cost management that the overall cloud waste number is actually still growing as infrastructure grows.

More money has been spent tackling security and governance issues – and these challenges in cloud computing need to be dealt with. But cost optimization can deliver ROI to free up budget to deal with these issues.

In the wake of COVID-19, finance teams across the world will now be sharpening their pencils and looking more aggressively at such measures. While cloud spending may rise, Gartner and IDC have both forecasted overall IT spending to drop 5-8%

Yes, You Can Optimize Now

As with security and governance, a mix of human behavioral and business process changes will be required, both of which can be supported by effective tooling, both native cloud provider and 3rd party ISV tools. Incentives to implement such changes are likely to be higher than in the past, albeit in a more cash-constrained world where low cost, ease of use, and most of all, quantifiable ROI will be prioritized. It has always appeared to me somewhat oxymoronic when I hear promises of reducing cloud waste through the use of expensive cloud management tools that charge based on a percent of your spend.

I foresee a wave of low cost, multi-cloud, and simple to use tools emerging. These tools will need to demonstrate a rapid ROI and be built to be used across engineering and operations (not just in the offices of the CIO/CTO/CFO) to ensure the self-service nature of cloud is not disrupted. A similar pattern will emerge as these tools become part of day-to-day cloud operations where cost optimization is part of the cloud culture. With this the need for specific cost optimization initiatives should be replaced by a new wave of needs, like application resource management.

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