How To Transform Your Cloud Budget Into an Asset

According to Statista, 60% of all corporate data lives in the cloud as of 2022, up from 30% in 2015. Statistics like these indicate a couple of things. 

For starters, the cloud’s seamless scalability and utility seem to have alleviated early fears about cloud adoption -- including perceived security risks, loss of control, integration obstacles and talent gaps. Second, it’s clear that cloud architectures must consistently expand to accommodate massive amounts of organizational data. 

Therein lies a major concern about modern cloud adoption: Cloud environments must expand as data increases. But constant expansion is expensive, leaving many CIOs’ budgets in the red, even as their cloud allocations habitually increase. According to McKinsey, the average company will spend 80% of its IT-hosting budget on cloud environments this year. 

With the right mindset and approach to cost optimization, leaders can encourage a harmonious relationship between their budget and cloud spending. The key to doing so is an adaptive approach to the cloud. 

The Steep Cost of Hesitation 

First, an important note. From a cost perspective, avoiding cloud migration is counterintuitive. Cloud migration unlocks up to $1 trillion in business value by delivering immense strategic value, including: 

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These benefits far outweigh initial cloud-related expenditures. Furthermore, leaders who adopt cloud solutions have easier access to innovative technologies like AI, machine learning (ML) and automation. It’s no surprise that resource-intensive AI tools like ChatGPT operate in the cloud. Several SaaS-based AI and automation technologies enable organizations to leverage similar GenAI algorithms interoperably -- if the organization has migrated to the cloud. 

When Did Cloud Computing Get So Expensive? 

Cloud adoption has gained significant momentum as digital interactions and transactions have become more popular. Many organizations invested heavily in cloud adoption post-pandemic, with 65% of IT leaders indicating their annual cloud budget increased due to COVID-19. Why? Because the cloud provides the perfect playground for remote workers and shoppers. It scales and loads far more efficiently and reliably than on-premises legacy architectures. 

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However, as digital interactions increase, data generation skyrockets. By 2025, global data storage will reach 180 zettabytes -- more than double the amount of data stored by 2020. Handling and storing this data in the cloud requires more resources, driving up costs. 

Additionally, as cloud servers expand, security and compliance become even more critical. After all, if you’re storing a massive amount of organizational data in the cloud, you want to keep that data safe, secure and compliant. 

The source of security-related expenditures may differ. For example, costs may arise from contracting with a more stringent and expensive cloud partner. Or perhaps a 3-2-1 backup data strategy necessitates a multi-cloud approach. Each of these actions increases cloud-related costs. 

How to Control and Scale Your Cloud Spending Effectively 

Luckily, leaders can take steps today to reduce the burden of cloud spending without jeopardizing the benefits of cloud computing: 

1. Consider a hybrid or multi-cloud strategy. 

An “all or nothing” approach to the cloud isn’t necessary. In fact, using a combination of public and private clouds is often more cost-effective. By using multiple clouds, leaders can create effective disaster recovery (DR) plans without investing in a dedicated DR site. Furthermore, organizations reliant on a single cloud provider may incur higher costs due to vendor lock-in, especially when scaling or requesting additional services. In this instance, a multi-cloud strategy becomes leverage for negotiation. 

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Meanwhile, in a hybrid cloud approach, IT leaders may opt to store sensitive data on-premises and less critical data in a public cloud. By adopting cloud and on-premises models, organizations can (1) take proper storage precautions with sensitive data and (2) scale less sensitive data needs easily. 

2. Prioritize data hygiene. 

Maintaining proper data etiquette before, during, and after cloud migration is critical. Before adoption, leaders should cleanse and organize their systems by eliminating redundant, obsolete, or trivial (ROT) data. The more data in storage, the more expensive a transfer will be -- so organizing your system before migration pays steep dividends. For context, 33% of all organizational data is ROT -- and 52% is “dark” or otherwise unknown. 

3. Invest in a cloud management partner or tool. 

Much like cloud computing, management partners require an upfront cost that dissuades some leaders from adopting. Yet organizations can significantly reduce their cloud spend by working with a cloud management or managed service provider (MSP). An MSP will perform a detailed analysis of a client’s cloud usage to identify and eradicate inefficiencies. Through regular review and optimization of cloud resources, MSPs right size data, make suggestions about under-used resources and automate the cloud scaling process to ensure clients only pay for what they need. 

4. Adopt AI, ML and/or automation. 

An organization’s interactions with its cloud environment create several impressions for AI and ML algorithms to unpack. By adopting automation-based AI systems, leaders can ensure these impressions lead to process improvements. For example, AI and ML algorithms can continuously analyze cloud usage patterns and make suggestions about adjusting resources adequately. Similarly, these algorithms can detect early signs of usage spikes. 

Automation improves the efficiencies provided by cloud computing. Process automation ensures that routine tasks like backup creation, software updates, and maintenance activities are performed autonomously and routinely, enabling more robust software security with less manual oversight. That makes for a significant cost difference -- and a significant process improvement. 

Your Cloud Strategy and Budget Can Be Friends 

Opting out of the cloud isn’t an option, but that doesn’t mean your budget must suffer. Leaders who think outside the box and adopt a hybrid or multi-cloud approach will realize significant cost savings, especially when this choice is compounded by other smart moves -- like hiring an MSP, employing automation-based tools, and focusing on better organization-wide data practices. 

Remember, the cloud and your budget don’t have to be like oil and water. With the right strategy, they can blend as smoothly as coffee and cream.