COVID-19 and Cloud Cost Optimization: What Has Changed

More organizations are taking their business to the cloud. From digital learning to remote work support, cloud initiatives are accelerating and will continue to do so in 2021. 

According to a recent Gartner survey, 70% of organizations using cloud services plan to increase their cloud spending in the wake of the disruption caused by COVID-19. 

A Gartner research VP acknowledges that the cloud conveniently addresses several important needs that many organizations are facing during the pandemic: preserving assets and optimizing IT costs, supporting and securing a remote workforce, and ensuring resiliency.   

The sudden surge in cloud spending also means that many businesses and organizations are likely dealing with cloud cost sprawl. Managing cloud costs should be a top priority but it comes with its challenges. 

The Rush Toward Cloud Adoption 

Due to the pandemic, many organizations have had to rush to get up and running on the cloud without factoring in unintended consequences 

For example, there is the possibility of growing “unbudgeted” or unmanaged spending; businesses and organizations may not have been able to anticipate their exact cloud costs given the speed at which COVID-19 impacted their operations and the subsequent surge in demand for cloud usage. 

Many businesses are likely adopting cloud computing for the first time (or adopting a multi-cloud strategy for the first time) and can’t predict what their first cloud bills will look like. Unlike other IT expenditures that are set in long-term contracts, cloud spending is more flexible, which is why managing cloud costs can get out of control.  

How To Address Challenges of Unmanaged Budgets 

Because the cloud already makes it easy to provision new resources, it should, in theory, also be easy for organizations to shut down resources they don’t need. But this is not always the case.  

As mentioned, many organizations are dealing with cloud sprawl and are unaware of idle resources either due to a lack of consistent cloud governance or a lack of cloud cost optimization strategies in place. 

During such unprecedented times, it’s very likely that we will see patterns of cloud usage speed up or slow down, so it’s crucial that your organization is capable of managing and reducing cloud costs efficiently.  

While there are immediate steps that can be taken toward cloud cost optimization, such as removing idle resources and downsizing overprovisioned resources, it doesn’t end there. You can also refer to cloud cost optimization tools to automate certain optimization processes, from setting up alerts to applying a given budgeting recommendation.  

Where Is Cloud Spending Focused On? 

According to Gartner, the largest segment within public cloud spend is SaaS (Software as a Service). This comes as no surprise, as even before the COVID-19 pandemic took flight, many organizations were already using the cloud for their daytoday operations. 

The pandemic has only amplified the use of cloud-based applications and software. More than ever, businesses and organizations across industries are utilizing all kinds of cloud-based services, including video conferencing tools, to support a new remote workforce.  

With the unexpected growth of SaaS-based IT, software purchasing has transformed significantly. Traditionally, when software was hosted on-premise, the IT department managed everything — from purchasing software to its implementation and deployment.  

The purchasing power has shifted to individual stakeholders, who purchase cloud-based software with less input from their IT department and even finance teams. This can create a slew of problems, especially when you’re trying to optimize your cloud costs.  

Organizations will often miscalculate their actual software needs and, for example, buy more licenses than required, possibly leaving some software to go forgotten. A study analyzing SaaS trends and SaaS application usage of thousands of brands found that “nearly three-quarters of companies with 100+ employees have ‘orphaned’ SaaS subscriptions, in which there is no billing owner — typically because the billing owner left the company.” 

This kind of scenario is can very easily occurand it results in organizations overspending on SaaS. 

What You Can Do 

Optimizing your cloud will continue to be a challenge during and after the COVID-19 pandemic. IT teams will be looking to make cost cuts whenever possible, especially during the pandemic. Thankfully, there is something you can do about it right now.  

Cloud cost optimization tools can help provide the insight and recommended steps to lower your cloud costs. Especially for SaaS cost optimization, cloud cost optimization tools can help you keep control of any software license spending and management by identifying and eliminating unused software. Cost optimization is not limited to SaaS.  

Ready to start cutting down your cloud costs? Talk to one of the Grumatic experts today. 

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