Telecom & Technology Consulting
CEOs count on their technology leaders to improve productivity, drive growth, and facilitate marketing and sales initiatives. At the same time, they also have to be aware of costs, and keep spending as lean as possible.
The costs of the cloud are one primary area where CTOs and CIOs can cut the fat. In fact, tech leaders often waste money on cloud services that would be better spent on other mission-critical projects.
Overspending on the cloud often occurs due to inefficient resource management and a lack of optimization. This means you’re either underutilizing or overprovisioning resources. For example, you’ve paid for unnecessary storage or database capacity, which is the result of overestimating what you actually need for a given initiative. To avoid this issue, be proactive and continually measure your cloud requirements against what you’ve paid for.
Artificial Intelligence (AI) can also prove more costly than necessary. Specifically, you can overspend while learning how to properly develop and manage AI models and agents in the cloud. Planning is critical, as developers may not account for the memory and processing demands required to operate private AI models in cloud services. And without proper forethought, the overall price tag can skyrocket.
Every organization, to some degree, is undergoing a digital transformation. But the strategy of this transformation can drive excessive spending on the cloud. The reality is that you can underestimate the complexity of managing cloud resources, which can ultimately cause overspending. When migrating to the cloud, be aware how workload requirements and the optimization of database architectures can lead to overprovisioning. As such, be sure to integrate tools that monitor and manage costs across multicloud or hybrid environments.
Speaking of strategy, cloud costs can unnecessarily soar without a well-defined plan for your cloud initiative. From the beginning, conduct a thorough total cost of ownership analysis, which helps to maximize the business value of cloud investments. In addition, a smart cloud strategy delivers business rationale for financial implications, key motivators, and projected business outcomes. Doing so allows you to align key cloud decisions with organizational goals.
Inefficient cloud spending can also occur due to vendor lock-in, and when you don’t perform an ongoing assessment of that relationship. Do your homework: When putting cloud costs for multiple vendors side-by-side, don’t only focus on upfront pricing – look at other key issues like operational efficiency, and the potential danger of having your digital hands tied by a specific vendor.
Assess if workloads can be easily moved between vendors. Determine if you can scale across different platforms. Analyze total cost of ownership across different uses cases. Perhaps more importantly, evaluate your cloud services quarterly, and perform scheduled audits to reveal areas where you can reduce costs.
To be sure, there can be significant financial consequences if you choose the wrong cloud provider. First, don’t assume that it’s a commodity service and that pricing is relatively the same among vendors. Also, don’t be fooled that legacy systems can be migrated without changing the pricing structure.
Be clear about your specific requirements and the vendor’s pricing. This is the only way to avoid overspending. Of course, vendors do have complex pricing models, but it’s your responsibility to educate yourself about these models. If you ignore criteria such as data transfer fees or volume discounts, you may more often than not pay much more than required for your needs.
Just as tech leaders need to keep up with the latest innovations, they must also stay current with cost-cutting measures. That’s a combination that makes every CEO smile.
