Many businesses unaware of the hidden costs of Cloud services are faced with unexpectedly high bills at the end of the month. A growing priority for CEOs of organisations using Cloud services is to overcome this bill shock and maintain predictable and manageable expenses while lowering the total cost of Cloud ownership (TCCO).
Cloud services have been around for some time and most organisations have enough experience with them to know that the much-hyped cost savings aren’t always forthcoming. When organisations move workloads to the Cloud, they expect reduced costs and to gain greater control of IT budgets. However, many find that their monthly bills are unpredictable and significantly higher than anticipated.
CEOs and CFOs looking to lower their TCCO need to understand the hidden costs of Cloud services so they can be sure of what to expect when the bill arrives. They should look for Cloud services that self-optimise and automatically scale compute load down (to give just one example) when the business isn’t using it. This can actively reduce the cost of the Cloud solution.
Racking up excessive charges is easy when the organisation is unaware of what they’re paying for and how much. It is easy for organisations without proper advice on resource management to over-provision their Cloud allowance, which leads to unnecessary charges. It’s like leaving a shower running when no one is going to use it.
When CEOs and CFOs experience bill shock they are often discouraged to take advantage of the flexibility of Cloud, as they are concerned about receiving more big bills. Accordingly, they often impose limits on how employees may use the Cloud. In many cases this can be sensible but, when it comes at the expense of providing better services to customers, it could simply be counterproductive.
Furthermore, organisations need clear policies in place around how Cloud resources can be utilised.
Choose a Cloud provider that offers a dashboard that lets you continually assess where Cloud resources are spent, and can predict what your monthly bill will be — in advance. This will help you stay on top of budgets and identify whether resources are being used optimally.
Cost alarms can also be set up to notify key decision-makers when the business is getting close to budget limits. This means they can be agile in how they manage budget and avoid overruns.
CEOs should also avoid letting employees use Cloud resources however and whenever they like. Instead, implementing procedures that see users directed to non-Cloud resources first will help minimise unnecessary use. Setting guidelines and caps can also help to effectively manage usage.
Reviewing your Cloud service provider’s pricing model can also be worthwhile. Many CEOs and CFOs are initially reluctant to commit to cheaper, long-term contracts because they’re unsure sure how much capacity they will need. Other CEOs decide to maximise their Cloud capacity just in case the business may need it. Either way, costs can be reduced immediately by changing the arrangement.
CEOs and CFOs should ensure the organisation adopts an enterprise Cloud that line-of-business users can deploy as needed, whilst being supported by reasonable budgets and security policies. This provides employees with the functionality and flexibility they need without having to place pressure on internal IT teams to deliver their IT needs.
Shadow IT crops up when users can’t get what they need from the business’s official IT procedures. In many cases, employees will use company credit cards to buy Cloud-based services online meet their their needs. These aren’t necessarily processed as IT expenses but they do add to the overall cost of IT and Cloud services. It can also increase the organisation’s threat surface and introduce security vulnerabilities. For this reason it’s important for decision-makers to be aware of shadow IT and how to minimise its occurrence.
CEOs and CFOs that take steps to gain more visibility into how their organisation is using Cloud services, choose services that self-optimise and bill based on workload used, and introduce policies and processes to reduce costs, can avoid bill shock and significantly reduce their TCCO.