Why are enterprises overspending on the cloud?

Cloud dollars

Cloud services have grown exponentially in recent years, with businesses embracing the solutions to provide scalability, agility, and access to new applications. Most organizations have already embraced the cloud or are planning to do so -- and the increased movement of infrastructure to the cloud is described as “inevitable” by 95 percent of enterprises polled recently.

Despite this momentum, enterprises are growing frustrated with some limitations of cloud services and are starting to wonder if more can be achieved. Cloud is not always meeting businesses’ expectations, with inadequate management tools, issues with accessing data, and inflexible pricing plans often resulting in dissatisfied customers. 

These problems aren’t just inconvenient, they’re also putting businesses out of pocket. Couchbase’s research finds that these factors are unnecessarily adding more than 35 percent to cloud costs. So how can businesses stop their cloud costs from soaring?

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What’s behind the cloud movement?

From giving large businesses increased scalability and agility, to providing smaller firms access to services and applications that they would never have the resources to implement in-house, migrating to the cloud has enabled businesses to go the extra mile with their digital transformation.

Cloud has transformed the way that businesses access, store, and share information. It offers firms the levels of security, availability, control, performance, and collaboration that they need to implement digital projects, as well as streamline workflows and improve communication.

It’s clear that businesses have faith in the cloud, which is reflected in their investment. Recent research from Gartner reveals that public cloud computing spend is even set to overtake spending on traditional enterprise IT by 2025.

Costs creeping up

Enterprises are optimistic about the cloud, but the truth is that they could be getting even more from it. Given that a typical enterprise spends over £27.5 million a year on cloud services, this means more than £7 million could be saved or spent elsewhere if cloud challenges are solved. Enterprises and cloud service providers must prioritize addressing inefficiencies in the cloud; failing to do this will mean firms could struggle to meet their overall business ambitions.

Despite the huge number of resources being channeled into the shift to the cloud, there are several complications and costs attached. Couchbase’s research found that 56 percent of enterprises said that past cloud decisions had made digital transformation projects more difficult in 2021, and 48 percent confirmed it had become more expensive.

Inflexible pricing plans and issues with vendor lock-in are also creating budget challenges, as businesses struggle to achieve the level of control they need to keep cloud costs low. Businesses do not have enough insight into where their cloud spend is going, or how to optimise these costs. Without being able to monitor costs, it is difficult to know how to budget or allocate resources properly.

Service limitations are also causing challenges. Many businesses find that cloud services cannot scale enough to meet demand, are only able to use tools specified by their service provider, and are "locked in" to using specific infrastructure providers. This is forcing businesses to hold back, with 61 percent of enterprises reporting that they’ve had to restrict their digital transformation ambitions with cloud services. Cloud customers are often left frustrated and footing a costly bill.

Getting it under control

Many of the key inefficiencies that exist with cloud services relate to sprawl, as businesses often lack visibility or control over their cloud computing resources. It’s critical that cloud customers get more control over their data, including where it’s stored, how it’s managed, and how it’s shared. This will give businesses the confidence that their data is secure and will help to ensure that their cloud services are future-proofed, with costs kept under control.

Switching to consumption-based pricing rather than a fixed pricing plan can also help businesses to budget better. With a flexible pricing strategy, businesses can reallocate cloud resources to areas where it can be spent better. Enterprises don’t want to be locked-in to any one cloud provider; this is costly, inflexible, and reduces control over data. Instead, they should look to select a cloud provider that enables them to roll over any unused cloud assets, so they only have to pay for the data they use. Businesses can also opt for a provider that allows them to put controls in place to monitor cloud spending, helping to ensure that cloud costs do not skyrocket without their knowledge.

Meeting businesses’ expectations

Businesses want everything that the cloud can offer -- but it needs to deliver on its sky-high promises.

Addressing businesses’ frustrations with cloud starts with service providers embracing the agility and scalability that the cloud offers, rather than forcing businesses down a rigid pathway. Firms need to be able to manage setup and infrastructure, giving them the freedom to channel their resources in the most efficient way. Meeting these demands will allow businesses to provide the best services for themselves and their customers, without being hit by an unexpected bill. Armed with control over their data, businesses can optimise their cloud costs and stop throwing unnecessary cash out the window.  

Photo Credit: ImageFlow/Shutterstock

Rahul Pradhan is VP Product, Cloud Databases at Couchbase.

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