Cloud Costs are Soaring. Here’s How to Improve Your Cloud ROI.

Cloud costs routinely balloon beyond what companies budget for, limiting cloud ROI. But there are steps you can take now to improve your ROI this year and beyond.

How high is the typical cloud ROI for enterprise storage teams?

For a long time, most people assumed cloud ROI to be high thanks to its subscription structure – a budget boon for teams accustomed to costly storage hardware purchases. 

So you might be surprised to learn that one recent Gartner report discovered that cloud costs for businesses are typically 2-3 times higher than anticipated. 

Numerous other surveys have proven the same, including one that showed more than one-third of businesses routinely exceed their cloud budget by up to 40% – and some by even more.

This is a problem for everyone. 

After all, nearly everyone is in the cloud. 88% of IT decision-makers called the cloud the “cornerstone of [their] digital strategy” in a recent Deloitte survey, and Gartner analysts have predicted more than 85% of organizations will embrace a cloud-first strategy by 2025.

But as more infrastructures have expanded into the cloud, it has not turned out to be the money-saver some executives thought it would be.

“The dirty little secret of cloud spend,” says FinOps Foundation Executive Director J.R. Storment, “is that the bill never really goes down.”

Cloud Visibility = Cloud Savings

Does that make the cloud a bad strategy for cost-conscious IT teams? 

Of course not. 

It does, however, mean that forward-thinking cloud and storage architects need to take a hands-on approach to preventing cloud sprawl and improving cloud ROI. 

Fortunately, organizations can easily start optimizing cloud costs and improving return on investment with just some basic steps.

In fact, Google has shown that even taking minimal steps towards cloud optimization can result in up to 10% savings per service in two weeks.

Often, all you need to start optimizing is good visibility into your storage infrastructure. 

With the help of a good visibility and monitoring tool like Visual One Intelligence®, there are at least four ways you can improve cloud ROI right now:

1. Don’t pay more for something in the cloud than you would on-prem
2. Stop paying for cloud storage you don’t need
3. Right-size your workloads
4. Use capacity planning to right-size cloud contracts

Cloud ROI Tip #1: Don’t Pay More for Something in the Cloud Than You Would On-Prem

Cloud providers like AWS and Azure typically offer different tiers of storage. Just like storage hardware, the highest performance (“hot”) tiers are the most expensive while archive tiers are the cheapest. 

However, just because a lower cloud tier is less expensive doesn’t mean it’s the cheapest option for what it’s storing. There are lots of factors that impact cloud pricing, including how often you need to access the data. Context is key.

Sometimes, the most cost-effective option is to keep certain workloads on-prem. 

For example, some data archives make more sense on disk or tape where you’ll never be charged for accessing them. While cloud archive-level tiers have low storage costs, they typically tack on significant charges for data access – a problem if you might need to access archives (for example, regulatory data or medical records). 

We recommend our clients use Visual One Intelligence®’s cost data comparisons both before and after doing data migrations. 

By comparing costs, users instantly see how much any given workload costs on their on-prem storage as well as how much it would cost in the cloud (users can input their own cloud contract pricing to ensure accuracy). 

And it works both ways: if the workload is already in the cloud, you can view its current cloud costs as well as what it would cost on-prem. That way, you’ll know if you’re getting the ROI you expected – or if you need to make an adjustment.

Cloud ROI Tip #2: Don’t Pay for Cloud Storage You Don’t Need

Similarly, there are always unneeded data copies that are ready to be re-tiered (or even deleted).

File analysis gives a view of which data is untouched – the kind of data that should be reserved for lower cloud tiers or archival. For companies with a lot of data in pricy high-performance cloud tiers, re-tiering these workloads can ultimately reduce costs. 

If teams do either of these kinds of analysis before migrating, they spend less on overall storage volume and avoid incurring costs in the future should they choose to move the data back off the cloud. 

And even after moving to the cloud, it’s important to run these assessments yearly when planning for your next cloud contract and updating your architecture.

Cloud ROI Tip #3: Right-Size Your Workloads

Cloud pricing can get complicated, but one huge benefit to cloud pricing is that companies only pay for the storage they actually use.

No more paying huge up-front costs for hardware that never reaches full capacity!

However, you can still end up paying for storage you’re not using – and most companies do. 

How? Let’s say you provision memory and CPU on VMs that you end up not filling. You might not be using it, but your cloud provider doesn’t know that. The provider sees the provisioning and charges for it.

In other words, provisioning resources is the same as using resources in the eyes of cloud providers. 

These kinds of inefficient workloads waste money and result in far less ROI than what you’re paying for. 

Then, we calculate proprietary capacity scores for every workload, helping teams quickly identify workloads with unbalanced CPU / memory / disk allocations. 

Finally, we show the optimal path to balancing each workload – all on the same screen.

Cloud ROI Tip #4: Use Capacity Planning to Right-Size Cloud Contracts

In addition to balancing workloads, you can improve ROI by forecasting your usage with enough certainty to better negotiate contracts and avoid overage charges.

In other words, companies can increase cloud returns by:

• Using capacity planning to potentially reduce cloud capacity limits in their contracts;
• Ensuring they don’t use too much cloud storage and trigger overage charges.

Everyone does some capacity planning (at least in theory), but truly effective capacity planning will identify likely capacity needs over a 6-12 month timespan with an exceptionally high degree of certainty. 

For example, our clients use Visual One Intelligence® to:

• Model capacity trends and forecast future outcomes based on those trends;
• Add hypothetical data changes to those forecasts in order to predict the impact of changes in the trends;
• Do both layers of forecasting at multiple levels including VM, cluster, and data store. 

Are you in the midst of cloud migration plans? Or are you already in the cloud and trying to optimize your architecture? Visual One Intelligence® can help – sign up for a free demo webinar to see how!