How cloud optimization can fight rising costs [Q&A]

Cloud costs have been rising of late, making it vital that enterprises get a grip on their cloud networks and ensure they’re optimizing them to get the best value.

We spoke to Atif Khan, CTO of infrastructure on demand company Alkira, to discuss how businesses can manage their cloud assets and keep spending under control.

BN: What are some ways that any enterprise can go about optimizing their cloud assets?

AK: Optimizing cloud assets is paramount for enterprises seeking to maximize cost-efficiency, performance, and security, especially with the recent surge in cloud costs. As cloud services become increasingly complex and expensive, particularly for small to mid-sized enterprises, the need for strategic optimization grows more critical.

One vital approach is to closely monitor and identify areas where resources are regularly being wasted or underutilized. Were your initial expectations way off the mark, have business demands changed dramatically, or is there some other reason you're paying more than you need to? Being honest about the reasoning and taking this proactive step to analyze your cloud assets, are crucial to enhancing the value of your cloud investments. According to G2, over one-third of businesses exceed their cloud budget by up to 40 percent, which highlights the urgency of these optimization efforts and that enterprises are still trying to get a grasp on how to maximize the cloud.

Additionally, utilizing cloud cost optimization tools offered by providers and third-party vendors can help identify real-time cost-saving opportunities and streamline cloud infrastructure. However, it's important to combine these real-time insights with a wider, long-term view, so you can get a sense of emerging patterns over time.

By focusing on resource optimization, cost management, and security enhancements, enterprises can achieve better performance, cost-efficiency, and security posture in their cloud operations, ensuring sustainable and strategic cloud utilization. Ultimately, cloud services are not only indispensable for enterprise operations, but also form the foundation for modern businesses to quickly scale and expand. However, businesses should always weigh out the costs and benefits first.

BN: Why does enterprise cloud spending keep going up and can enterprises do anything to reverse this trend?

AK: Enterprise cloud spending continues to increase due to several factors, with growing adoption of cloud services and infrastructure being a major contributor. More enterprises are embracing cloud computing for its scalability, flexibility, and agility. This heightened adoption leads to an increased migration of workloads and applications to the cloud, subsequently driving up usage and spending. According to Synergy Research Group, cloud spending increased by $5.6 billion from Q3 to Q4 last year, marking the largest quarter-over-quarter increase ever.

However, enterprises can take proactive steps to manage and potentially reverse this trend. The first step is understanding cloud costs, which typically fall into four main categories: compute, storage, network, and licensing/support. To address escalating expenses, enterprises can invest in cloud management and optimization tools, so they can better learn about the cloud resources required for their businesses to function effectively.

Additionally, enterprises can optimize resource usage by regularly assessing and right-sizing cloud resources, implementing automation where appropriate, and utilizing auto-scaling mechanisms based on usage patterns. Implementing these strategies, enterprises can mitigate increasing cloud spending and achieve better cost-efficiency while leveraging the advantages of the cloud.

BN: Why is Q1 a key indicator for cloud usage and spend for the remainder of the year?

AK: Q1 serves as a crucial indicator for cloud usage and spending for the remainder of the year, setting a solid baseline for your business. Firstly, the escalation in cloud costs, as highlighted in the U.S. government's Q4 inflation index, underscores the urgency for enterprises to comprehend and optimize their cloud assets. This trend is particularly significant for small to mid-sized enterprises that benefit from the cloud but have less padding for unexpected spikes in cloud usage.

Furthermore, with the growing utilization of generative AI, these challenges are poised to exacerbate rapidly. Therefore, Q1 is a pivotal period for enterprises to understand their cloud patterns, take control of their cloud networks, and ensure they're optimizing and laying the groundwork for a successful year ahead.

Enterprises must leverage this time wisely so they can implement successful strategies for the remainder of the year that allow them to benefit most from their cloud assets, while reducing unnecessary costs. By doing so, they will be able to serve their customers more efficiently and drive better overall outcomes for their organizations.

BN: What questions should IT leaders be asking about their cloud assets that will better prepare them for the future?

AK: According to IDC, 64 percent of CIOs reported that they were spending more on the cloud than budgeted, and over 50 percent of CEOs expressed concern about cloud spend. To better prepare for the future, IT leaders should engage in a thorough examination of their cloud assets by asking pertinent questions.

Firstly, they should evaluate current cloud usage patterns, discerning how these patterns have evolved over time, and where they may be going. This analysis can shed light on areas of optimization and potential inefficiencies, as well as determine if they are maximizing the full spectrum of features and services offered by their cloud providers, or if there are areas that require attention to enhance efficiency. This is a rapidly evolving ecosystem, and the more questions you can ask about why and how things are working, the better prepared you’ll be for the future. People tend to only ask questions when concerns come up, and it’s important to build the habit of asking questions all the time if you want to future-proof your business.

Security and compliance are also paramount concerns; thus, leaders should probe for any vulnerabilities or risks within their cloud infrastructure and explore avenues for enhancing security and compliance measures where they can. Security and compliance are critical areas for modern enterprises and being proactive about them, rather than reactive, can have a dramatic impact on a business. By asking tough questions and addressing these areas pre-emptively, organizations can strengthen their security posture and maintain regulatory compliance.

Ultimately, by asking the right questions and taking proactive steps, IT leaders can better position their organizations to navigate future challenges and capitalize on emerging opportunities in the dynamic cloud landscape.

BN: How can enterprises benefit from generative AI without spiking their cloud spend?

AK: Generative AI tools have the power to hold a lot of promise for enterprises but due to the associated costs, there are often formidable obstacles. While initial costs may seem daunting, pay-as-you-go models offer flexibility and affordability in accessing this technology. Although expenses for computing, infrastructure, storage, and data management are notable, embracing a pay-as-you-go approach allows enterprises to tailor their usage according to their needs and budget. By strategically navigating these considerations, organizations can harness the full benefits of generative AI while optimizing their resources effectively.

Additionally, enterprises can make it a point to regularly monitor and optimize cloud spending and performance metrics. By continuously fine-tuning resource allocation based on evolving requirements and technological advancements, enterprises can ensure efficient utilization of resources, thus mitigating unnecessary expenses.

Furthermore, adopting a selective deployment approach is prudent. Not all tasks require the complexity of generative AI models. Often, simpler models or traditional algorithms may suffice for certain use cases. Deploying generative AI selectively for tasks that truly demand them, allows for enterprises to minimize excessive overhead costs.

Ultimately, leveraging cloud cost management tools can provide valuable insights into resource usage patterns and identify areas of overspending. These tools enable enterprises to make informed decisions regarding resource allocation and optimization strategies, thereby maximizing cost-effectiveness.

By integrating these strategies into operations, enterprises can harness the benefits of generative AI while effectively managing their cloud spending.

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