In the absence of a planned cloud strategy, adopting a multicloud approach may lead to higher spending. A long-term value vs cost perspective will help enterprises realize higher benefits.
The pandemic-driven push to digital transformation and remote working has increased cloud adoption at a higher clip than ever before, suggests various research studies. The current trend indicate that enterprises are likely to continue investing in cloud in 2021.
Citing one of the reasons for this adoption as the dominance of mega-vendors in the market, Gartner, Inc., predicts that by 2022, about 75% of enterprise customers using cloud infrastructure as a service (IaaS) will adopt a deliberate multicloud strategy, up from 49% in 2017. IDC’s FutureScape research supports these figures when stating that by 2022, 70% of enterprises will deploy unified hybrid/multi-cloud management technologies, tools, and processes.
Gartner’s VP Analyst Michael Warrilow says, “Most organizations adopt a multicloud strategy out of a desire to avoid vendor lock-in or to take advantage of best-of-breed solutions. We expect that most large organizations will continue to willfully pursue this approach.”
The need to distribute workloads and minimize the risk of downtime or data loss often drives enterprises to adopt more than one cloud. Many also want to increase computing power and storage, avoid vendor lock-in and achieve governance and compliance mandates.
The danger in assuming cost savings
While saving costs may not be the prime motive for all cloud users, it might easily be expected to lower the IT costs. Multicloud users may also believe that having more than one cloud provider might mean benefitting from competitive discounts. IT departments are then taken aback when their cloud bills balloon.
Whether an enterprise adopts multicloud through either public or private deployments, it will certainly have to manage the usage well to avoid complexity and possibly higher costs. With different and flexible pricing models (based on a consistent amount of usage for a term), it is challenging to keep usage or costs under control.
As many companies may have inadvertently gone the multicloud route or taken on one-too-many vendors organically (when various departments operate in siloes), much of the huge cloud spending is likely to go to waste. Various estimates suggest an average of 30% of enterprise spend on cloud, accounting to several billion dollars, is wasted every year, either from over provisioning or from underutilizing compute resources.
Little wonder then that optimizing cloud costs is among the top priorities for 61 percent of the organizations surveyed in the Flexera State of the Cloud report. Other top priorities include security, governance, and expertise.
Cloud cost savings linked to consistent usage
Part of the reason enterprises assume they would optimize cloud spend if they moved their workload on to two or more clouds is because they think they will play off one cloud provider against another in a highly competitive market to get a good deal. That’s a fallacy because competition ensures that cloud provider charges are quite similar and the better chance of discounts comes from using more of each provider’s service.
Commitment-based discounts, such as with AWS Savings Plans, for example, are directly related to usage. AWS offers up to 72% of savings for a commitment to a consistent amount of usage for a term of 1 or 3-years.
So, distributing workloads across multiple providers may actually lead to higher price as usage declines per cloud. Even if one provider has a lower price, the total cost of engineering the solution may exceed expectations.
What enterprises rarely consider is the cost of complexity. Even with a single cloud provider, a global enterprise will find it challenging to manage multiple accounts along with security and governance issues across different stages of development. Migrating to multiple clouds means using a plethora of tools from each cloud provider, leading to a kind of lock-in. The cost of multicloud management in terms of complexity is thus, often unexpected.
Enterprises are now increasingly turning to microservices and containerization with Kubernetes or Docker to help create ease of deployment while lowering costs. Some of them adopt automation to shut down workloads when not used to save costs. Or, they use multicloud platform with cloud management tools for better visibility, security, and control of the IT systems.
A multicloud strategy vacuum will raise cloud spend
While there are ways to manage costs as outlined above, it’s imperative to understand that only a cloud strategy that is dovetailed with the organization’s business objectives, such as modernization, efficiency, agility, etc., will help an enterprise keep costs under control. In fact, if cost optimization is a strategic business goal—and not just a mere expectation—then multicloud adoption will deliver cost savings.
Enterprises must design their cloud strategy with a flexible architecture platform from the start so that the enterprise can change plans along the way to suit business needs. Inflexibility can be costly.
The long-term value perspective
As with any large budgetary outlays, an enterprise will need to make a short-term cost versus long-term value benefit analysis before deciding to go multicloud. The long view is crucial in a crisis like the one induced by the COVID-19 pandemic when enterprises were prone to adopt a slash and burn approach to costs.
While most businesses consider cloud as the foundation for accelerating digital transformation, they still need to understand that it will take at least a couple of years before they can fully realize all the benefits from cloud. Hence, organizations must use the value lens rather than evaluate the costs alone, wherever applicable.
A simple example of value versus costs perspective is deploying mission-critical applications on multiple clouds to ensure business continuity. Multicloud would increase costs, but the value of protecting the company’s reputation and preventing major financial loss due to an outage exceeds the costs.
Similarly, leveraging the cloud provider’s network for multicloud connectivity instead of one’s own network will be expensive, yet the benefits of higher security and better performance and seamless user experience will balance the costs.
In fact, as enterprises need cloud-based solutions and superior computing power to build and scale applications and get to market faster or run advanced analytics to generate insights from data and innovate at speed, it’s almost unnecessary to fret over costs. These advantages are priceless to survive and also thrive amidst disruption.
All enterprises need to do is to establish configuration, governance and security processes, assess their applications landscape by moving to cloud-native applications, if needed, and leverage a cloud management platform or cloud-provider managed services. Using a DevSecOps operating model, with its focus on integrating security across all stages of the SDLC, could also add to the success factors in moving to the cloud.
Innominds integrates multicloud in business to help client achieve 28% cost saving and 100% up time
Take the case of our client—a US-based financial services sector voluntary initiative. They wanted to extend industry capabilities to save and restore data securely in the event of an outage. The client needed a multicloud architecture for load balancing and to ensure the availability of applications across geographies and protect end-client data.
The client was able to migrate to multicloud cost-effectively and secure data through DevOps practices. Along with achieving 28% of total cost benefits, Innominds also helped ensured zero downtime.
Enterprises can bet on cloud to survive and thrive amid disruptions. However, migrating to cloud or managing well on multicloud can be a complex endeavour. A multicloud strategy that is aligned with an organization’s business objectives and architecture landscape and that addresses governance and security issues can help make the journey smooth and cost effective.
Innominds helps enterprises and ISVs meet the challenges and complexities of cloud. Our team of over 300 certified cloud professionals and our extensive ecosystem of partners, combined with our deep expertise in apps and analytics, can help you build effective cloud strategies, and seamlessly and securely manage your cloud applications.