Navigating the Rising Cloud Costs Challenge

Jul 27,2023 by Taniya Sarkar
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Cloud-smart organizations are out in front in delivering value through multi-cloud apps while controlling cloud costs.

Contemporary business leaders are confronted with a fundamental dilemma in today’s digital economy. They acknowledge the necessity of driving app-centric innovation in the cloud to engage customers and stand out from competitors. However, numerous organizations are currently grappling with escalating cloud expenses, which adversely impact their profitability.

This predicament becomes more pronounced as businesses increasingly rely on multiple cloud platforms to carry out their day-to-day operations. Recent research conducted by VMware highlights that 95% of organizations perceive multi-cloud architectures as crucial for achieving business success. Yet, 76% of these organizations utilizing multi-cloud systems express a pressing need to enhance control over their cloud expenditure. In simple terms, organizations recognize the criticality of multi-cloud adoption, but many face challenges related to cost management.

In contrast, among cloud-smart organizations that possess greater maturity in managing multi-cloud operations, only 32% report struggles in controlling their cloud expenses. These insights are documented in The Multi-Cloud Maturity Index Research Report, a comprehensive global survey commissioned by VMware and conducted by market-research firm Vanson Bourne, encompassing nearly 6,000 organizations.

Multi-Cloud Goes Mainstream

Different cloud providers offer different strengths and capabilities, so businesses can cherry-pick the best service. With this freedom of choice, the vendor lock-in risks can be mitigated and seamless migrations or integrations with other platforms can be accomplished as needs change. Among these organizations, app-development teams have been particularly proactive in embracing the multi-cloud approach, with 90% of them reporting the existence of “multi-cloud apps” or applications that can span across multiple clouds.

Rather than perceiving public clouds as rigid entities where they must fully commit or completely avoid, app teams are encouraged to assess specific services offered by different clouds and third-party providers. They are advised to consider how well these services align with their needs. VMware’s Chief Technology Officer, Kit Colbert, explains in Forbes that the concept of selecting the best-in-breed services allows app teams to view clouds and third-party providers as collections of services that can be combined as per the team’s requirements. This approach offers greater flexibility to app teams, enabling them to achieve optimal experiences and functionality in developing and operating their applications.

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Organizations that have adopted multi-cloud apps reported several tangible benefits associated with their multi-cloud strategy. These advantages include enhanced speed to market, better fulfilment of customer requirements, and improved ability to attract and retain top talent.

Businesses are embracing multi-cloud apps as a strategic approach to optimize their operations and propel innovation. By leveraging the strengths of multiple cloud platforms, organizations can unlock a plethora of benefits that drive agility, scalability, and competitive advantage.

Enhanced Resilience and Redundancy: Multi-cloud apps distribute workloads and data across multiple cloud platforms, reducing the risk of service disruptions or downtime. By leveraging redundant infrastructure, businesses can ensure high availability and resilience, even in the face of provider outages or network failures. This robustness guarantees uninterrupted operations, safeguards critical data, and instills confidence in customers, enhancing overall business continuity.

Flexibility and Vendor Independence: Adopting a multi-cloud app strategy empowers organizations with unparalleled flexibility.Different cloud providers offer different strengths and capabilities, so businesses can cherry-pick the best service. With this freedom of choice, the vendor lock-in risks can be mitigated and seamless migrations or integrations with other platforms can be accomplished as needs change. The ability to mix and match services empowers organizations to tailor their cloud infrastructure to meet specific requirements and drive optimal performance.

Optimal Performance and Scalability: Different cloud providers excel in specific areas, such as computing power, storage, or data analytics. Multi-cloud apps enable businesses to leverage these specialized capabilities, optimizing performance for different workloads. Moreover, organizations can scale their infrastructure effortlessly by tapping into the scalability features offered by various cloud platforms. This elasticity allows businesses to meet fluctuating demands efficiently, ensuring optimal performance, and enabling seamless growth.

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Cost Optimization and Efficiency: Multi-cloud apps offer opportunities for cost optimization and efficiency. By selecting the most cost-effective services and pricing models from different cloud providers, organizations can optimize their cloud expenditure. Additionally, businesses can allocate workloads to the most suitable cloud platform based on performance requirements and pricing structures, optimizing resource allocation and driving cost savings. This financial flexibility ensures that businesses can scale their operations while maintaining budgetary control.

Geographic Reach and Data Sovereignty: With multi-cloud apps, organizations can leverage the geographic reach of various cloud providers, enabling them to expand their operations globally. This distributed infrastructure allows businesses to serve customers in different regions, ensuring low-latency access and localized data storage. For industries with strict data sovereignty regulations, multi-cloud apps provide the flexibility to host data in specific jurisdictions, ensuring compliance and meeting regulatory requirements.

Innovation and Future-Proofing: Multi-cloud apps position organizations at the forefront of technological innovation. By leveraging multiple cloud platforms, businesses gain access to a wide range of cutting-edge services and tools. This empowers them to explore emerging technologies, such as artificial intelligence, machine learning, and blockchain, fostering innovation and driving competitive differentiation. By staying adaptable and embracing the latest advancements, organizations can future-proof their operations and maintain a competitive edge.

Confronting Cloud Costs

Business leaders are increasingly aware that as they invest more in app innovation in the cloud, they face growing pressure to effectively manage and control their cloud expenses. Their IT budget is also greatly affected by these expenses, which eat away at their profits.

Gartner predicts 18.5% growth for public cloud services in 2023, a significant increase over the 17.9% growth in 2022. According to IDC data, 45% of organizations believe cloud and data center infrastructure is overspent. The findings from The Multi-Cloud Maturity Index Research Report align with these concerns. Among organizations that have adopted multi-cloud apps, a staggering 79% admit to grappling with cloud bills that exceed their initial expectations. In comparison, only 57% of organizations without multi-cloud apps face similar challenges.

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There are notable differences between organizations struggling with cloud chaos and those that have achieved greater maturity and sophistication in their cloud strategies. A closer examination of the difficulties faced by the former highlights the significant financial advantages that they may be missing out on when compared to their cloud-smart counterparts.

Final Thoughts

As the digital economy advances, businesses recognize the need for app-centric innovation in the cloud to stay competitive. However, escalating cloud expenses have become a pressing concern, impacting profitability. The Multi-Cloud Maturity Index Research Report reveals that while multi-cloud adoption is considered crucial for success, many organizations struggle to control their cloud expenditure.

Cloud-smart organisations that exhibit maturity in managing multi-cloud operations stand out, with only a fraction reporting difficulties in controlling costs. This highlights the importance of developing a comprehensive cost management strategy to maximize the benefits of multi-cloud adoption.

The global survey conducted by VMware demonstrates the mainstream adoption of the multi-cloud model, with a significant increase in the utilization of public clouds. App-development teams, in particular, have embraced multi-cloud apps, leveraging the flexibility and functionality offered by combining services from different cloud providers.

Organizations that have adopted multi-cloud apps reap numerous benefits, including accelerated speed to market, better customer satisfaction, and improved talent attraction and retention.

Addressing the challenge of cloud costs is crucial. Forecasts indicate continued growth in public cloud services, placing more pressure on businesses to effectively manage their cloud expenses. The findings from The Multi-Cloud Maturity Index Research Report highlight the financial advantages achieved by cloud-smart organizations compared to those struggling with cloud chaos.

To navigate the rising cloud costs challenge successfully, organizations must prioritize developing robust cost management strategies, leveraging the flexibility of multi-cloud environments while ensuring optimal utilization of resources. By doing so, businesses can strike a balance between driving app innovation and controlling cloud expenses, ultimately boosting profitability and maintaining a competitive edge in the digital landscape.

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