By Hemanta Banerjee
Like cars for everyday use, speed is not the only metric with which cloud services should be measured. In the same way that drivers look at fuel efficiency, businesses should also consider the cost efficiency of their cloud platforms.
Thring on the cloud requires balancing costs while accelerating digital transformation. IDC estimates the local public cloud market will expand to USD 17.8 billion by 2027, fuelled partly by the demand for generative AI-hungry enterprises. While generative AI can be the competitive edge many companies seek, bloated IT budgets have the opposite effect. According to an EY-FICCI cloud report, local organisations spend nearly 20 percent of their cloud budgets yearly on cloud infrastructure in support of their Generative AI initiatives. So, aligning the running cost on the cloud with the business value is critical for long-term sustainability.
How enterprises leverage their cloud platforms, including how they maximise the value generated from their cloud investments, can be categorised into three levels: cloud-aware, cloud-mature, and cloud-fluent.
To enhance cloud cost-effectiveness, businesses can study the three groups, identify where they belong w.r.t their peers, and assess better cost-optimisation strategies.
Right-sizing, cost-cutting, and other traditional methods
Cloud-aware organisations view the cloud as just another data centre. They migrate their applications to the cloud without significant modernisation efforts. However, with operations still anchored on traditional data centre principles, these organisations typically spend more than anticipated after migrating their workloads to the cloud.
And this is reflected in their cost-reduction strategies. These companies focus on decreasing their cost per compute resource by eliminating excess provisioning of server instances. They also typically negotiate discounted pricing through reserved instances, savings plans, and enterprise discount programs. Companies well-versed in cloud technology can substantially reduce costs by committing to specific usage levels. However, since they are not leveraging the native elastic and on-demand nature of the cloud services, their gains will plateau.
Automated methods for cost-cutting
Whether operating solely in the cloud with cloud-native technologies or transitioning to cloud operations, cloud-mature organisations have more comprehensive avenues for saving costs. For example, they can utilise serverless components such as Lambda architecture and API gateways to re-architect their applications to be cloud native. This makes them more agile, allowing them to use DevOps methodologies to bring new capabilities sooner while enhancing application reliability and scalability.
Cloud-mature organisations also proactively manage cloud computing resources through automation and DevOps, leveraging the cloud’s on-demand and auto-scaling capabilities. This includes optimisation, such as removing inactive resources, creating on-demand environments to test specific application features, and automatically enforcing budget controls.
FinOps Frameworks and Strategic Decision-making
Meanwhile, with their high level of proficiency, cloud-fluent organisations are best placed to utilise cloud-powered cost-efficiency. These companies actively adhere to a functional FinOps framework to lower cloud expenditures and align their cloud spending with business outcomes.
By monitoring the return on investment of cloud costs, business leaders can make strategic business decisions, such as aligning the SLA and, hence, the cloud spend based on the revenue generated from the product line. Cost visibility dashboards offer the necessary data to inform these business choices for optimising cloud infrastructure expenses and overall business value.
Powering the future of businesses with the cloud
As organisations progress in their cloud adoption journey, the opportunities to optimise costs and enhance business value increase. By evolving their architecture, procedures, and governance to leverage the flexibility and scalability offered by cloud services fully, enterprises gain the two-fold advantage of increased computing power for use cases such as generative AI alongside better cost-efficiency.
(The author is Hemanta Banerjee, Vice President of Public Cloud Data Services at Rackspace Technology, and the views expressed in this article are his own)
