Are You Overspending on Cloud?

April 21, 2022

MSE Public Cloud Spending Pitfalls

When most midsize enterprises listed their considerations for moving to a public cloud, cost-saving was a significant factor. Unfortunately, many MSEs do not realize the full savings benefits. Per Gartner’s research, “organizations without a plan for cloud cost management may be overspending by 70% or more”. Developing and updating a cost management plan can save your organization money while still benefiting from moving to the cloud.

Effective Governance

It starts with effective governance. Do you know the total amount you are spending on the cloud, or is it divided between different departments? Many MSEs do not understand their “total” spending. Cloud spending may even be recorded in cost centers unrelated to IT. These dispersed and often underutilized environments can rack up excessive monthly charges without governance. Implementing governance puts all of the data in one place, providing an overall view. 

Five Warning Signs that Your MSE has a Public Cloud Spending Problem

Below are common warning signs that may indicate your MSE is spending too much on the cloud.

Multiple Public Cloud Accounts

No one is accountable for the number of public cloud accounts you have open. The average enterprise is now maintaining multiple accounts at multiple cloud providers. Make sure your company has an inventory of these accounts and owners.

Lack of review or explanation of monthly cloud bills

The average monthly invoice from AWS, Azure, or Google cloud can run into thousands of lines and include different service names, instance types, and regions that are not self-explanatory. Although reviewing the bills can be tedious, it becomes a monthly comparison looking for unexpected entries once you have a baseline.

Spend on non-approved initiatives

Accounts may aggregate usage from different teams, projects, and budgets. Make sure your teams use the tagging mechanisms provided by the public cloud providers to track spending. If tagging is not in place and you identify regular expenditures that no one can explain, your tracking processes are insufficient.

Purchasing everything “on-demand”

This may not be the cheapest model if you purchase all of your compute capacity at on-demand prices. Although “pay as you go” capacity is the simplest to buy, it is also the easiest way to overspend. Implementing a blended purchasing model can save you money. 

Not reviewing consumption efficiency

Per studies, the average utilization level of a running virtual server instance in the public cloud is typically 55% to 65%. If you don’t know your resource utilization levels, you can’t spot where you are overprovisioned.

Dewpoint is here to help if you need assistance in reducing your cloud costs or rethinking your cloud strategy. Contact one of our pros today who understands the midsize enterprise market. 

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