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With an estimated 71% of organizations expecting an increase in their cloud spend, cloud expense management is more critical than ever.
While cloud budget growth saw a drastic increase during the pandemic and then slowed down for the past two years, it’s anticipated that 2024 may see a resurgence of cloud investment.
According to Gartner, global spending on public cloud services is forecasted to increase by 20.4% in 2024. Additionally, six in ten organizations spend more than expected on cloud expense management.
Between rising power costs, the effects of AI, more stringent expectations for sensitive data management, and increasing cloud demand, organizations need ways to contain cloud spending.
Here are six cloud expense management strategies for 2024.
#1. Consider Cloud Repatriation to Reduce Costs
Public clouds offer flexibility and scalability, however, they’re not the best fit for all workloads. In recent years it’s become increasingly common for companies to shift to the public cloud and be faced with unexpected costs or infrastructure limitations.
Cloud repatriation, which is the process of moving from the public cloud back to the private cloud, offers organizations agility in a rapidly changing market. For mission critical applications or those such as machine learning requiring high performance and low latency, private cloud is often the best possible option.
While repatriation can be complex, the benefits can be significant in terms of agility, flexibility and cost savings.
#2. Be Proactive with Rightsizing
With so many options available, deciding which cloud resources are best for your organization can be challenging. Rightsizing is worth the effort to ensure cloud expense management is in check.
Whether it’s a decision that led to choosing the incorrect instance size or a developer forgetting about compute resources they’ve left idle in the cloud, seemingly small decisions made in isolation can lead to costs spiraling out of control.
Rightsizing helps ensure your resources match your applications and workloads. Overprovisioning drives costs up, and under provisioning can lead to performance issues and constant adjusting.
By focusing on rightsizing —and getting an expert resource involved in the decision-making if needed — you can identify and eliminate wasteful spending.
#3. Optimize Software Licensing Spend
If you tackle cloud expense management, looking at what you’re spending on software licensing is a must. These fees often account for a large portion of your technology operating costs. Unfortunately, it’s too easy to have some of these costs fall through the cracks.
Often, companies lack a strong and vigorous process for managing and tracking the use of each software license, which results in paying for unused licenses or even licenses you don’t know about.
By finding and cutting unused or unnecessary licenses, you can reduce software costs and positively impact the bottom line of your cloud expense management.
#4. Choose the Right Storage to Drive Cloud Expense Management
There are multiple options for your cloud storage, so ensuring you’re leveraging the right ones can also help with cloud expense management.
For example, block and file storage are generally more expensive than object storage. This means you need to know what type of storage you use the most to ensure you’re not spending in the wrong places. Amazon S3 is the most commonly used storage option in the cloud, but there are storage tiers available, so what you’re currently paying for may not be what you need.
To optimize your cloud expense management, you need to understand the storage tiers available and plan to monitor which ones are used the most and least continuously. This will allow for an informed decision when selecting a storage tier.
#5. Automate Infrastructure Rightsizing
Regarding your cloud expense management strategy, automation is your friend.
Cloud operating models are designed to build your infrastructure quickly. To ensure your cloud function is optimal, leveraging tools like AWS Cloud Formation will enable you to create the infrastructure you want through automation versus doing it manually and risking human error.
Automating your infrastructure will also assist with rightsizing, which, as we mentioned earlier, can dramatically impact overall cloud expense management.
#6. Continually Monitor Costs
Although it’s the last on our list, continuous monitoring is one of the most critical aspects of your cloud expense management strategy.
With an estimated 78% of cloud-based businesses not noticing variances in cloud usage until later than expected, this opportunity for cost containment is often missed.
Variations in cloud usage due to the usual ebb and flow of your business are common, but ongoing monitoring will allow you to find any anomalies that happen quickly. Sudden, unexpected spikes that go undetected can impact your bottom line, but you can’t address that if you don’t even know it’s happening.
You can quickly pivot and make changes to keep costs in line by monitoring and tracking your cloud expense management.
Cloud Expense Management: What’s Your Plan for 2024?
Getting your cloud expense management strategy in place doesn’t have to be overwhelming — especially if you can get support from the right people.
The Bridgepointe Lifecycle team offers end-to-end technology lifecycle management services, including Technology Expense Management. Contact us today to get started.