“41.4% of cloud leaders are increasing their cloud-based services and products – Google Cloud Brand Pulse Q4 2022 survey.”
Before we unravel the areas where our budgets drained last year, we are already in the mid of February 2023. The macroeconomic downturn has gone rigorous in recent months and is threateningly widespread. The sooner the enterprises figure out their business sustainability areas, the safer their cash flow. Cloud expenses occupy a significant portion of any fast-paced digitally transforming enterprises’ overall budget. This article will show you the ways to optimize your cloud budgets for days to come.
1. Watch out for the cloud trends!
“Hyperscalers will face a period of rising costs and lower revenue growth” – Canalys.
Public cloud service providers like Azure, AWS, GCP, etc. are expected to hike their prices percentage to compensate for the current inflation ramifications. If you are a cloud-native or a cloud-dependent business, ensure your team planned the 2023 cloud budget considering a 20-30% price hike assumption. Update your existing cloud environment with recent cloud modernization practices.
2. Stay focused on business goals.
In response to worldwide inflation, if you think reducing your cloud resources count might control your cloud expenses, you are in the wrong direction!
Understand the business purpose before you touch any cloud resource. For example, if you are forecasting a 10 -15% increase in your flagship product/service Q1 sales that uses VMs, trimming down the VMs count might land your profits downfall.
3. Educate every stakeholder.
Cloud cost management is a continuous process involving finance, operations, and business teams. Certain enterprises are still in the migration phase. It is vital to bring financial prudence among every team member involved in the process.
Example: If one of your cloud engineers has scaled out Kubernetes cluster resources during an app dev stage and left it as such in the production stage even after a lot of unwanted functionalities are purged, it would compound the cloud bills. Educating each cloud practitioner before adopting and updating them at periodic intervals on how they are accounting for the bills is crucial.
4. Historical Data is Gold
Nothing tells us better than the past. Bundle up all your previous year’s cloud cost, and utilization data from your cloud bills. You can take the help of your cloud service provider’s native data analytics tools or third-party tools like CloudCADI. You can get the cost trends for a defined period. By observing the cost spikes and valleys we could find the department, time, and resource responsible for what percentage of cloud budgets.
For example, if a project’s cloud resource utilization is at its peak during business hours and less or none during the festival/holidays. These patterns could help predict the cloud budget for 2023 accordingly.
5. Collaboration serves the purpose.
Success is a collaborative process. We cannot blame the finance team every time there is a cloud budget overrun. Get a cost estimate from every team for the following year. Understand the fact that it is difficult for a team leader to predict a budget as they are afraid of the wrong forecast and becoming answerable to the management. Educate them that it is practical and 10-30% variance is acceptable. So, we get a number to start.
Don’t forget – Cloud Cost Optimization is the Key!
“CIOs Still Waiting for Cloud Investments to Pay Off” – Wall Street Journal
Gartner forecasts worldwide public cloud spending to cross $592 billion in 2023. While the expenses on the cloud constantly rocketing, ROI is still under question for most enterprises. Cloud technology seemed like an economical option with huge benefits like scalability, agility, flexibility, etc. during the crisis. The pay-as-you-go model from cloud service providers further eased the organizations to migrate their on-prem workloads at a faster pace in the last few years. Cloud practitioners started enjoying the luxury of cloud resources without worrying about their impact on the cloud budget. Rightsizing, cloud tagging, discounts, etc. are inevitably helpful to overall business growth.
Remember, how smart and strong may be your cloud budget, if not utilized on the right resources at the right time and in the right manner, you’ll end in negative ROI and a cloud resource deficit that can harm your end customer.
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