Businesses Struggling to Control Cloud Costs, Manage Cloud Visibility

Nearly half of businesses are finding it difficult to get cloud costs under control amidst a cloud visibility crisis, according to a study from business monitoring company Anodot.

The survey of 131 U.S-based IT directors and executives revealed that 54% of respondents believe their primary source of cloud waste is a lack of visibility into cloud usage.

A fifth of respondents said they can't manage their cloud budget due to insufficient cloud visibility, with 44% of executives admitting their company wastes at least a third of cloud spend each year.

The survey also found more a third of participants (37%) have been surprised by their cloud costs or had an incident related to cloud costs.

Top Challenges to Controlling Cloud Costs

More than half (53%) of the survey respondents said gaining visibility into their cloud usage and costs is the top challenge in controlling costs and reducing waste.

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Anodot's CEO and co-founder David Drai explained that the COVID-19 pandemic greatly accelerated many companies' shift to the cloud — and that the transition is continuing as businesses continue to tap into the agility and scalability the cloud provides.

"As the current economic volatility puts pressure on businesses to cut costs and shore up revenues, reducing cloud spend and minimizing waste are more urgent than ever," he said.

However, organizations are finding it hard to gain visibility into every aspect of cloud usage and costs when the overall cloud environment is so complex, and often stretched over multiple providers.

For companies with a multicloud strategy, managing and optimizing costs across providers is nearly impossible due to dissimilar pricing models.

"To businesses to make sense of complex cloud resource payment schemes, they must align all departments and stakeholders to develop and enforce hierarchy and tagging policies to enable any meaningful analysis of cost data via dashboards and reports," Drai said.

Because systems and approaches are often inconsistent within companies and across the teams managing each cloud service provider, it is extremely difficult to get a handle on costs.

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Another factor making cloud cost optimization challenging is the cost generated across multiple teams without accurate allocation and inaccurate budget forecasts, according to Drai.

"Unless costs are managed carefully, it's quite easy to lose track of cloud usage and spend —  especially for organizations with large development teams that move quickly and tend to try new things," he noted.

Misconfigurations, overprovisioning, and forgotten resources that have been provisioned but abandoned make cloud cost management extremely challenging for DevOps teams.

"Unfortunately, for many organizations, surprise costs only show up when the invoice arrives, and even when they do show up in the invoice, they are not understood until long after," Drai said.

Taking Steps to Reduce Cloud Waste

The survey also found more than 90% of IT executives believe it's possible to address cloud waste through operational and strategic improvements.

The first step in reducing cloud waste is determining where it originates, according to Drai.

"A review of any cloud bill will point to three areas: services, utilization, and unit price," he explained. "Facets of each element can be wasteful when not managed properly and when costs are not aligned to business needs."

From Drai's perspective, data is key to understanding the intricacies of cloud spend.

"Specialized and automated cloud cost management solutions help solve the problem of resource waste by providing real-time visibility and intelligence into cloud spend across multicloud environments with granular visibility into containerized environments," he said.

Poor Cloud Visibility Hurts the Bottom Line

Drai warned that companies that don't improve their visibility into cloud costs and get a handle on managing them will see their bottom lines suffer as waste and suboptimal usage continue.

The survey supports this concern, with more than three-quarters (78%) of respondents saying they believe cutting cloud costs can contribute to their company's bottom line.

By gaining true clarity into cloud costs across providers and multicloud environments, companies could better determine whether an increase in cloud costs corresponds to an increase in revenue, and if not, why.

"Thus, cloud costs are no longer just an IT line item, and it is an IT leader's responsibility to manage cloud costs such that they don't detract from the company's business objectives and resources," Drai said.

He added that with economic clouds on the horizon, businesses large and small are taking urgent steps to shore up revenue growth and reduce costs — for most organizations, cost savings and efficiency improvements are the major focus.

"Because cloud is one of the most significant expenses for most businesses, often second only to payroll, cloud spend is a prime candidate for savings, with the potential to make a huge difference in gross margins, and this is reflected in survey responses," Drai said.