Partners: Curb COVID-19-Spurred Cloud Overspending

Cloudcheckr’s Elissa Livingston

…the many hundreds of available options, opens the door to inefficiency and overspend.”

Partners can assist by right-sizing clients’ cloud assets, regardless of how long those assets have been in operation, she noted.

Apps Associates’ Saltys further recommends partners help customers by instituting good change management and business justification. In addition, build a governance model that automates monitoring and send notifications of policy violations and budget overspend.

If a client spun up more cloud platforms because of COVID-19 without calling on a partner, and especially if any shadow IT activity is occurring, chances are there will be room for adjustment.

Resources lying fallow. The cloud makes keeping non-production, shadow IT and other platforms online around the clock all too easy; this puts them at risk of underuse. In other cases, organizations forget they have a certain resource altogether — and the meter just continues to tick.

The fix is simple: “Enterprises can now save significantly by turning off or destroying non-production systems when they’re not actively in use,” said Nerdery’s Feeney.

Achieving this end requires thorough investigation from the partner, but it will pay off. Fallow assets “may not represent the largest source of spend but [they] will be low-hanging fruit,” said Apps Associates’ Saltys.

Putting all workloads into the cloud. Thanks to the hype surrounding cloud, many executives now think all applications have to run in the cloud. This “is simply not the case,” said Ensono’s Wood.

Analysts at Enterprise Strategy Group concur. For example, “static” programs, whose information does not change, do not need to live in the cloud, said Kevin Rhone, senior partnering consultant at ESG.

ESG’s Mark Bowker

Mark Bowker, senior analyst at ESG, added that some IT leaders field mandates to move to the cloud but they do not perform initial assessments that verify the validity of such a decision. This can lead to shifting a workload back to an on-premise model, which is costly and time-consuming.

“When IT operations, application developers and information security teams are not aligned, businesses suffer with spending time, resources and investment in cloud that could be avoided with improved organizational synergies and team communication,” Bowker said.

The channel is well situated to provide guidance about which workloads make sense to operate in the cloud and which to keep in-house.

Overlooking volume discounts. “At least 50% of enterprises are overspending on cloud each month if they’re not fully leveraging committed-use discounts,” said Nerdery’s Feeney.

Cloud vendors offer significant discounts to enterprises that pledge to spend a specific amount of money over a specific amount of time. This enables the providers to better plan their data center capacities, and it helps organizations do more with less, Feeney said.

“The single biggest mistake enterprises make is not fully taking advantage of these discounts,” he said. “Any time a workload will be online more than half the time, it’s a good candidate for these discounts, which come in one- and three-year terms.”

Plus, he added, cloud vendors have grown more flexible with these discounts over time. Google Cloud, for instance, automates them via Sustained Usage discounts, “while AWS allows for instance changes and even abstracts the discount from the region and workload specifics.”

The catch, of course, is that discounts don’t extend from one vendor to another.

“Selecting a single or preferred cloud provider with which to aggregate resources and spend will create significant and unmatched opportunity for cost savings,” CloudCheckr’s Livingston said. “In the absence of private pricing or commit-based agreements, companies are more likely to pay on-demand list rates; the delta between the two is overspend.”

Channel partners will need to pinpoint which cloud makes the most sense for a discount commitment.

Tangoe’s Robert Tammaro

Failing to tag. Lastly, not tagging resources creates one more opening for cloud overspending, said Robert Tammaro, director of channels at Tangoe, an expense management vendor. Tammaro encourages enabling cost center allocation and expense management tagging. There is more to the process, though. The more tags in place to categorize cloud assets and their volumes, the greater the results, said Nerdery’s Feeney.

“Tagging is at the core of how you make sense of your bill and organize these budgets and alerts, so you’ll need to determine how the organization wants to segment cloud…