I’m starting to see articles in the business press calling for a downturn in cloud spending since the economy is likely to slow down. I’m always a bit skeptical of predictions that if something bad is happening or will happen, then we need to do X and Y. In most cases this means layoffs ahead of the actual slowdown, and budget cuts that kill business momentum. If most companies are reacting this way, why shouldn’t we?
As you may recall, we most recently went through this with the pandemic. Technology companies and enterprises alike prepared for economic Armageddon, including much the same things we’re seeing now, including proactive layoffs, spending cuts, and destitute sales forecasts.
Although some things did suffer, the cloud computing sector was not one of them. Demand for cloud computing exploded as businesses sought to leave data centers (some of which were quarantined) for the relative safety of public cloud providers that could also support remote workers. Many businesses were caught with their pants down and could not shift into aggressive cloud mode, thus hurting or killing the business.
My point is not that we won’t see a slowdown—it’s inevitable. Only that the way we should respond with cloud spending, and cloud growth specifically, is sometimes decoupled from the economy and even enterprise revenue. There’s no “obvious way” to respond to a downturn when it comes to technology spending, certainly cloud computing.
Here are a few things to think about before you start throwing people and cloud projects overboard.
Cutting cloud costs does not mean cutting cloud
Follow my logic here. One of the things we found out last year is that most enterprises are actually overspending on cloud computing due to their inefficiencies of cloud usage, not because they are overusing resources. Cloud resource utilization has not been managed well, and we’re spending about 2.5 times more than we need to spend.
Why not establish finops mechanisms, processes, and policies that solve the cost utilization issues? Reducing spending and increasing cloud resource utilization means using more cloud, not less. You’ll get much more value out of the cloud dollars that you do spend and you’ll increase the use of cloud-based resources. Of course, this means spending in other areas, such as finops programs; however, money spent there will likely come back to the business 20-fold. I’ll make those investments all day.
Take advantage of the talent now available
This is even more counterintuitive: “Okay, we’re going to make less money this fiscal year. Let’s hire more cloud talent.” How does that work?
The price of good cloud talent has skyrocketed in the past few years, largely due to the pandemic, which caused an explosion in the use of cloud computing and the need for cloud skills. We’re still living in a seller’s market when it comes to cloud skills, even if there is a downturn. Now, there are more skills on the street thanks to layoffs from other enterprises and technology companies.
A downturn is normally temporary, so it’s a great time to bank some of the skills you needed but could not find, even paying full price. Also, keep the more talented people in your company; don’t push them out due to some shortsighted decisions.
There is plenty of work to do. Put them on planning or special projects if needed. Build what many enterprises are missing, such as a finops program, systems migration and modernization, multicloud management strategy and technology stack, getting the data mess under control, etc. All these efforts will reduce costs and increase efficiency.
When the economy does come back, you won’t be scurrying around attempting to rebuild your cloud team. You will have made major strides to build a team and create strategic technology layers that can make the business even more effective going into a recovery.
Playing 4D chess with your cloud strategy
Of course, there are dozens of other things to consider when looking at strategic opportunities in a market downturn—way more than I can list here. The core issue is to sell the board and leadership on zigging when others are zagging. A willingness to follow the crowd is an indication that your team is perhaps not as clever or strategically intuitive as they should be, certainly in a market that will value innovation and doing uncomfortable things.
Those who are clever, are not afraid of downturns, and look for opportunities during changing times will likely drive the market’s recovery. Change can be good or bad, depending on who you are and what you do. Just following the trends and the masses will put you out of business quickly. You need the courage to think differently.
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