Partners: Curb COVID-19-Spurred Cloud Overspending

Channel partners now have a new responsibility: helping clients curb COVID-19-spurred cloud overspending. The spread of COVID-19 continues to ramp up the number of global cloud deployments as organizations seek to provide full-fledged work-from-home capabilities to suddenly remote employees. In fact, the coronavirus pandemic will fuel 2020’s cloud IT infrastructure spending past last year’s. The figures will rise 3.6% over 2019’s $66.8 billion, for a total of $69.2 billion, according to research firm IDC.

The channel remains vital to those efforts — managed service providers, VARs, ISVs and other partners have proven essential in implementing and overseeing new cloud tools for clients. But the responsibility extends beyond typical administrative efforts; it also must include the financial side of the house. Worldwide, enterprises, nonprofits and government agencies are experiencing unprecedented economic pressures. They have to support as much ongoing work as possible while spending as little money as possible (and defending the money they do spend). Never has cost control been a more important initiative than it is now. The channel sits in the ideal position to help address this challenge, especially regarding the most in-demand technology: cloud.

Indeed, one could argue responsibility lies with partners to make sure customers avoid cloud overspending. After all, shifting capex expenses to the opex budget and trimming IT spending in general constitute two of the main reasons organizations generally choose cloud over on-premises counterparts. And clients turn to the channel for the most informed and unbiased advice about which platforms to use and why. Thus, partners must also take it upon themselves to offer the expertise, resources and recommendations that empower organizations to prevent unnecessary cloud consumption that translates into higher charges.

Overspending Estimates

Enterprises’ monthly cloud overspending ranges from 20%-50%. That’s the compiled estimate from six sources, comprised of analysts, expense management vendors and cloud-centric MSPs. Perhaps not surprisingly, much of the waste occurs within late adopters.

Ensono’s Ben Wood

“They have less familiarity and knowledge around keeping cloud costs down,” said Ben Wood, vice president of advisory and consulting at Ensono, an Amazon Web Services Advanced Consulting and Microsoft Gold Hosting partner.

App Associates’ Bill Saltys

This sounds an alarm for partners. Organizations that have scrambled to get into the cloud amid COVID-19 may overlook critical areas. For example, overspending risks will increase “relative to the governance and control policies and methods in place,” said Bill Saltys, senior vice president, alliances at Apps Associates, an AWS Premier Consulting Partner, Oracle Platinum Partner and Salesforce Silver Consulting Partner. The takeaway? The channel must step in as guides, correcting cloud problems before they get out of hand.

Reasons for Cloud Overspending

There are myriad factors, typical and not so typical, that lead to cloud overspending. Partners working to identify the exact causes may have to invest a fair amount of time determining the causes. Plan to conduct as in-depth an investigation into the client environment as possible while adhering to social distancing and other COVID-19 safety precautions. With any luck, this section will help speed up the discovery process.

Common Cloud-Overspending Scenarios, Solutions 

Apps Associates’ Pete Salamanca

Overprovisioning. Organizations often will build out virtual machines without undergoing the requisite due diligence — and then find themselves with more resources, at more cost, than they really need. With the cloud, services are so easy to turn up and down that “the ease of access may result in companies utilizing services that aren’t necessarily needed for their business,” said Pete Salamanca, vice president, cloud services, at Apps Associates.

Sean Feeney, cloud practice director at Nerdery, which teams with AWS, Microsoft Azure and Google Cloud, agreed.

“It’s easy to choose a general-purpose instance type and maintain a similar vCPU/memory sizing as worked on-prem, but doing so may not be the most cost-effective or performant choice,” he said.

Avoiding overprovisioning is tough, especially because cloud providers release new products and services all the time. This can make it harder for IT teams to understand what might make an optimal cloud choice from one day to the next, said Elissa Livingston, senior vice president of growth and strategy at cloud management vendor CloudCheckr.

“It is difficult to keep up, and overspend occurs when older, less efficient resources are deployed instead of the new,” Livingston said. “Complete freedom, without a comprehensive understanding of…