Cloud cost management is not working

Asia/Pacific companies are struggling with wasteful cloud spending, according to a commissioned study conducted by Forrester Consulting. The study found that cloud cost management initiatives and tools are being introduced too late and without a full picture of their environment to be very effective.

The study, paid for by IPaaS provider Boomi, found that 87% had exceeded their set cloud budgets over the past two years and that 69% foresee exceeding their cloud budgets during the current fiscal year. In other words, we’ve spent too much money on the cloud and will continue to spend too much. I can’t imagine that going over well in the executive meetings, having sat through a few of those.

It’ll get worse before it gets better

The results come as regional cloud workloads are predicted to increase significantly over the next two years. Workloads for applications in IT ops are predicted to grow 51%, hybrid work 55%, software creation platforms and tools 42%, and digital experiences 40%; these will be the fastest areas to grow.

Furthermore, I don’t think companies have done the AI math yet. I’m seeing estimates of cloud resource usage doubling in the next three years. I’m unsure how those numbers will work with current budgets and budget planning. However, enterprises are down with AI, and their first few implementations at least will exist on cloud platforms. This is based solely on my anecdotal information and seeing patterns emerge.

The Forrester study highlights a critical gap in cloud cost management and optimization (CCMO) tools. They are being used too little, too late, and without an understanding of the business problems they must address.

Indeed, only 10% of global companies reported that these tools enable them to fully maximize cost savings. This is with a quarter of cloud spend still going to be used. The tools complicate this inefficiency in cost management by providing only partial visibility into expenses. More often, those expenses have already been incurred.

This is like a car computer telling you you’re about to crash, 10 minutes passing, and you crash. You cannot be proactive to avoid the negative outcome, and tracking cloud costs with this type of latency is no different.

Too little, too late

One of the study’s key findings relates to the timing of implementing CCMO initiatives. Most of the studied companies adopted cost management measures too late. Many occur after deployment in the cloud. Only 5% of decision-makers reported that their strategies for cloud cost remediation were as proactive as possible.

The Forrester report illuminates significant visibility challenges when using existing CCMO tools. Tracking expenses across different cloud activities, such as data management, egress charges, and application integration, remains a challenge. Finops is normally on the radar, but these enterprises have yet to adopt useful finops practices, with most programs either nonexistent or not yet off the ground, even if funded.

Then there’s the fact that enterprises are not good at using these tools yet, and they seem to add more cost with little benefit. The assumption is that they will get better and costs will get under control. However, given the additional resource needs for AI deployments, improvements are not likely to occur for years. At the same time, there is no plan to provide IT with additional funding, and many companies are attempting to hold the line on spending.

What needs to get done?

Despite these challenges, getting cloud spending under control continues to be a priority, even if results do not show that. This means major fixing needs to be done at the architecture and integration level, which most in IT view as overly complex and too expensive to fix. As I’m having these tough discussions, the conversation quickly goes to: “Is there any tool I can buy to fix this now?” The circle of stupidity continues.

Unfortunately, there is no other way to go. These strategies promise reductions in cloud spending over the long run and align well with cloud finops best practices. This, in turn, fosters a shift towards more strategic resource allocation and improved cloud return on investment, which again, is what most enterprises don’t want to hear.

If I look at one of the single most troubling things that I see in the world of cloud computing, it’s this. Enterprises have accepted inefficient cloud deployments and they’re coming back to bite them in the butt. The fix is going to be long and costly.

There really is no alternative here, and no new tools that promise to save some money. As you can see by the study, we tried those and they did not work. Hopefully, we’ll begin to get a clue.

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