A recent industry survey of 100 IT decision-makers from large companies showed that 68% of IT departments use public cloud infrastructures. Of these, 80% have moved at least a quarter of their information to the public cloud. Amazon Web Services, Microsoft Azure and Google Cloud Platform battle for market share. As a result, competitive pricing, improved features and better terms have attracted companies looking for ways to streamline their IT. Cloud providers are offering nearly anything as-a-service, with various IaaS, PaaS and SaaS deployment offerings. While these can create a secure, cost-effective and seamless way for companies to manage data and run critical business applications, they also introduce unexpected software license management issues.
“More and more businesses are moving to the cloud – and sticker shock is setting in.” - ZDNet
As CIO notes, variety within price, business requirements and features may force IT leaders to engage more than one cloud vendor. Others may want the flexibility of multiple cloud vendors to meet distinct business goals. These might include general-purpose operations versus application development or real-time analytics and retail personalization.
But more complications emerge when a multi-cloud dynamic sits within a broader public cloud strategy.
One estimate from the IT leader community site Enterprisers Project suggests that companies will waste over $14 billion on unnecessary public cloud infrastructure this year. Resource-saving, cost-optimization planning and cost management practices gets harder as the number of vendors grows. As such, the efforts already made to shut down workloads after hours, right-sizing instances and leveraging discounts, aren't enough.
In similar research, one cloud management consultancy comes to a similar conclusion. They note that it is a strategic failure to assume that public-cloud deployments are de facto cost savers. And that this is the first mistake IT leaders tend to make.
Mor Cohen, cloud CTO at Tubronomic notes in another industry report that “[...]many companies are in the habit of overprovisioning to ensure application performance, but this means they’re typically paying for peak usage 24/7. As a result, they eliminate one of the key points of cloud infrastructure – that it can grow or shrink based on application demand.”
From a software license management perspective, multi-cloud implementations can introduce new requirements that are specific to that public cloud. Companies can therefore end up with complex, expensive and varied tools to operate the various IaaS applications they’re running.
The hook and upsell
In a recent Mad Money interview, Andy Jassey, President of Amazon’s AWS business, made a good point. He suggested that companies can improve speed and agility by using the public cloud to develop ideas. But it’s his follow-on point on AWS's approach to hooking and upselling clients that is most illuminating:
“Because we have 165 services that you can use in whatever combination you want, you can get from idea to implementation in several orders of magnitude faster, so you can innovate much quicker.”
Price-point advertising is what gets customers in the door.
But this is just the beginning.
After engagement, cloud providers persuade companies to adopt yet more services, inspired by messaging around speed and innovation opportunities. Once customers have said ‘yes’ to moving from on-prem to the public cloud, the ubiquity of click-and-deploy marketplace subscriptions, from AWS Marketplace, for example, are an attractive next step. AWS makes it seamless to procure these solutions – with a variety of SaaS contract types – to complement infrastructure investments.
Companies cannot prevent public cloud spend surpassing what was originally scoped unless they implement effective control measures.
Regain license visibility
In a recent article profiling companies’ rush to the cloud, The Wall Street Journal cites common examples of failed business cases driven by poor software license management and overspending:
“By purchasing more cloud computing capacity than they really need – even as a deliberate strategy to safeguard against crashing key systems -- or buying advanced reserves that they will never use, companies across all industries may be overspending on cloud services by an average of 42% [...] That can translate into hundreds of thousands or even millions of lost dollars in IT budgets a year, depending on the size of cloud deployments [...] ”
For some, transitioning IT infrastructure to the cloud often proves to be “too much of a good thing”. That's why it demands a concerted right-sizing effort.
Achieving the cost savings targeted by a public cloud strategy relies on optimization best practices. San Francisco-based Cleanshelf helps clients apply these to regain visibility into overlooked spend. We shore up underutilized cloud licenses and deployments across PaaS, SaaS and IaaS purchases. Take a look at our recent article on Microsoft Office 365 optimization to get an idea of how we can help.
Our team has worked with dozens of startups and enterprises to right-size licenses. We make it our business to find your unused, idle or unattached resources. Reach out to us today to help you maximize – and then maintain – the ROI on your public cloud plan.
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