Companies often turn to the cloud to save money, but many of them are spending more than they need to on cloud services. Find out why companies overspend and how to avoid doing so.
Businesses have whole-heartedly embraced the cloud. Ninety-six percent of companies now use at least one cloud service, according to RightScale’s 2018 “State of the Cloud” report.
Companies often turn to the cloud to save money. However, many businesses spend more than they need to on cloud services. Analysts have found that companies overspend by an average of 35%.
Why Companies Overspend
There are several reasons why companies spend more money than necessary on cloud services. For starters, companies often overprovision. They pay for more storage space than they require, features they do not need, and high-powered virtual machines when less powerful ones will do. Perhaps they were unsure about their cloud computing needs when they moved to the cloud, so they took a “better safe than sorry” approach. Or perhaps they did not fully understand the cloud service pricing options, which are often numerous and complex.
Another common reason why companies overspend is that they do not optimize their systems before moving them to the cloud. As a result, they incur higher costs because they are consuming more of the cloud service providers’ resources.
Ways to Avoid Overspending
To get the biggest bang out of your cloud services buck, you need to avoid overspending. Toward that end, you should
- Know the details about the IT system you are putting in the cloud. For instance, if you want to store your business’s data in the cloud, you should know the types of data being used in your business and, for each type, how much you have and how often employees access it. When you know the details, you will be better able to select the most appropriate cloud service plan.
- Avoid the mindset of getting more “just in case”. This mindset was born out of need in on-premises IT environments. For example, companies had to build IT infrastructures that could handle the occasional spike in demand, so they purchased servers with large amounts of CPU power and memory. Keeping that mindset when using cloud services leads to overprovisioning. In the cloud, you should provision based on average consumption and allow the cloud service provider to deal with the occasional spike, according to cloud experts.
- Make sure you understand the available cloud services options and their costs. Clouds service providers typically offer many options. While it is good to have options, they can sometimes be overwhelming and even confusing. This is especially the case when it comes to virtual machines. The cost of an instance can vary widely based on its CPU power, amount of memory, the region in which it is located, and other factors. If you are not sure which options would be best for your company, ask for more information.
- Find out what is and is not included in the recurring service fee (usually a monthly fee). There might be hidden fees, which can add to the cost. For example, some cloud backup service providers charge a retrieval fee whenever customers need to access their data.
- Take advantage of available discounts when they are appropriate. For instance, some cloud service providers charge a lower price if you reserve resources such as virtual machines.
- Optimize your systems before you put them in the cloud and periodically thereafter. For example, if you are storing data in the cloud, you should get rid of duplicate data and data that your company no longer needs.
Time Well Spent
Overspending on cloud services does not make good financial sense. Thus, it pays to take the time to understand and optimize your systems as well as learn the specifics about cloud service providers’ offerings. We can help on both fronts if you need assistance.