Cloud computing largely supported commerce and employee activity during the coronavirus pandemic, and will continue to be a top priority for companies in the pursuit of market stability, and cost savings in 2022. In fact, a survey conducted shows that the global cloud services industry is projected to be over $623 billion by 2023, with an annual growth rate (CAGR) of 18%.
How companies today benefit from cloud cost optimization
Cloud cost optimization, enables businesses to gain a clear understanding of, transparency, and centrally manage all costs associated with cloud technology to help maximize ROI. Cloud cost management is not only about reducing costs, but also a strategic move.
Ways in which cost management helps companies plan for and control costs include cost analysis, budgets, recommendations, and exporting cost management data. Companies can use cost analysis to explore and analyze organizational costs. Managers can view aggregated costs by category to understand where costs are accrued and to identify spending trends. They can see accumulated costs over time to estimate monthly, quarterly, or even yearly cost trends against a budget.
Budgets help companies plan for and meet financial accountability in an organization. They help prevent cost thresholds or limits from being surpassed. Recommendations show companies how they can optimize and improve efficiency by identifying idle and underutilized resources. When acted upon, recommendations can change the way companies use resources to help save money.
If companies are using an external system to review cost management data, they can export the data from their cloud or hybrid clouds like MS Azure, AWS, Alibaba, Kubernetes and others.
Easy scalability and deployment are attractive advantages of the cloud, but they also make it easy for IT and Devops teams to run resources without understanding the cost considerations. The cloud itself often makes it difficult to achieve visibility, and form decisions about cloud costs. A sound cloud cost management strategy can help companies better plan for future cloud consumption and costs.
Here are some strategies companies use to manage cloud costs:
- Budget control – organizations establish budgets for cloud services and ensure employees are aware of them
- Right sizing – helps companies ensure that their compute instances and storage volumes are provisioned at a level that is required, to avoid cloud resources from being provisioned yet not fully utilized.
- Autoscaling – Companies scale resources up and down based on application demand, so they only pay for extra cloud resources during peak usage.
- Scheduling – Some cloud services are not required 24/7 and can be scheduled to shut down when not needed.
- Detecting unused resources – Organizations should be able to scan their cloud deployment and eliminate unused resources to conserve costs.
- Applying discounts – Discounted pricing models can significantly drive down cloud costs if they are used appropriately.
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A look at cloud strategy trends in 2022
Important trends are becoming evident in 2022 and are helping companies stay on top of the cloud management to make cloud strategies more successful. Below we take a closer look at some of these trends:
1. Multi and hybrid cloud environments will continue to grow
Businesses recognize that cloud data management isn’t about having one specific cloud platform or infrastructure, it’s about choosing the solution that’s right for the job at hand. IDC affirms this in their report stating that in 2022, over 90% of enterprises rely on a hybrid cloud solutions model that includes on-prem, dedicated private clouds, multiple public clouds and legacy platforms.
2. Retaining compliance in a complex environment
Businesses need to have a vendor-agnostic approach and look for SaaS solutions that reduce blind spots. Visibility and transparency are more important than ever, ensuring that organizations can achieve the same level of insight across the board, in various instances and platforms, without gaps. This includes service patterns and reliability, to measure and execute the right kind of optimizations and workload placements. It is a critical step to ensure companies are making the right tradeoffs.
3. Organizations make cloud savings a priority
A record-breaking 60% of organizations are using an external cloud provider’s managed services offering going into 2022, doubled from 30% in 2018. This clearly shows that growth is an undeniable trend in the cloud computing market.
Companies are quickly realizing their infrastructure is overprovisioned, and running when not needed, so much so that the annual dollar amount has now reached $26.6 billion. By making optimization a priority, companies can reallocate wasted spend and achieve more with their budgets. Similarly, IDC predicts increased investment in public cloud cost management through 2022 as enterprises seek to cut cloud waste by 50%.
4. FinOps based approach to cloud management
The path toward bullet-proof cloud cost management requires tight collaboration among departments and teams from engineering to operations, to finance and R&D to be successful.
Today, there exists an approach to cloud cost management that has taken optimization a step forward. It is one that is based on FinOps principles, and brings together financial, technical and business functions to create a cost-conscious culture for cloud cost optimization. It is taking the complexity out of controlling costs for public, private and hybrid clouds by enabling companies to find the right balance between cost, agility and quality to achieve optimal business outcomes.
A FinOps based cloud cost management approach maps spending data to the business itself, helps to set strategies to organize costs, allocates shared costs, and recommends cost take-outs from companies’ cloud platforms. This includes automated cloud consumption and cost monitoring as well as establishing cloud governance and cloud usage controls.
Establishing KPIs to ensure agility and risk elimination with cost optimization and aligning it for business value is imperative. This requires commitment from the various stakeholders from IT Ops, DevOps, CloudOps, business leaders and finance. It focuses on key spending areas, tagging strategies to organize cloud costs, and cost avoidance and cost reduction strategies to manage usage, control rates and recover costs. It also puts governance and cost control mechanisms in place. With a good cloud cost optimization framework and FinOps, businesses can quickly start to realize the cloud’s true value.
5. Solution-focused partners
As businesses continue to move their infrastructure using SaaS, PaaS and IaaS, a huge cloud trend is a continued need for third-party vendors who specialize in meeting specific use-cases and problem-solving cloud challenges. These external partners must have a strong insight into how cloud computing and its associated technologies work, and be well-versed in how to get the best solutions on the cloud for unique organizational needs.
What’s next in 2022?
The next level of trends that we’re going to see as we move into 2022 is organizations getting ahead of the challenges of compliance and security, and partnering with smart, innovative external solutions. These companies will already have a deep understanding of the new hybrid reality, and therefore allow forward-thinking customers to see an immediate benefit from their targeted skills and expertise.
Optscale plays a huge part in this next level of trends by offering a smart and innovative solution to optimizing cloud costs. With Optscale, companies can easily implement FinOps principles by engaging engineering teams in optimization and cost-saving processes. OptScale is designed to establish a long-term FinOps process by providing full cloud cost transparency, identify wastage and gives saving recommendations to maximize cloud cost optimization, at a time in which this is so critical for companies.