Creating a mature cloud economics strategy for your organization

Organizations were moving their workloads to hyperscale public-cloud platforms even before the COVID-19 crisis, but the pandemic lent new urgency to this trend.

The race to make a wholesale transition to the public cloud continues into 2023 as organizations seek to modernize their IT infrastructure. Managed Public Cloud solutions are being developed to help organizations manage and optimize their investment in public cloud. For some, the key driver is the ability to dynamically scale up and down in tandem with their business requirements. For others, being able to accelerate their time to market for new services is the most compelling benefit.

Don’t get caught out on cloud costs

However, cloud cost management remains an enterprise problem. Many organizations overestimate the extent to which they require public-cloud capabilities while gravely underestimating the cost. Some workloads, especially those that are relatively static and predictable, can be run more cost-effectively in a private cloud or even on-premises, so there’s no need to transform them to become public-cloud-ready.

Others miscalculate the time it would take to transform certain applications to run effectively on a public cloud. This holds back the potential large-scale cost savings that come with public-cloud deployment.

Similarly, pursuing an all-hyperscaler strategy without a meticulous governance and spending strategy in place – one that includes fine-tuning workload consumption settings, for example – can quickly cause IT costs to snowball.

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Modernize your infrastructure as you go

Fortunately, organizations are learning to control their spending by deploying a phased infrastructure and application modernization program. This helps to prime their IT environment for the cloud before they begin their migration efforts.

With a multicloud model, dynamic and less predictable workloads can be moved to a hyperscaler’s platform immediately, to take advantage of the public cloud’s native features. This helps organizations accelerate their time to market for new services.

Meanwhile, legacy or more static workloads can continue to run in the company’s physical data center, on a private cloud or in a shared hosting facility while infrastructure and application architecture modernization efforts continue in tandem.

Be selective for a clearer return on investment

Going with a phased and measured approach allows organizations to fully capitalize on what’s known as hyperscaler reserved instances (RIs) or saving plans. An RI essentially grants organizations discounted public-cloud costs in return for their commitment to using an agreed amount of the cloud provider’s resources during a stipulated period.

The return on investment of an RI depends on several factors but can often take at least eight months to achieve. So, it may not make sense to use RIs for legacy applications that you plan to rewrite or retire as part of your modernization roadmap.

However, RIs make sense for static workloads that you have no plans to change and expect to continue running for the foreseeable future.

Control cloud costs with organizational alignment

As organizations move to the public cloud, a lack of alignment between internal business units can create significant barriers to effective cloud resource management. For example, cloud spending can quickly escalate if departments such as marketing or HR decide to deploy their own cloud workloads without informing their IT.

In such situations, it falls to the IT department to gain visibility and control of these workloads and make departments take responsibility for their respective budgets.

The good news is that there are cloud-native and third-party tools that can help segment, classify and assign disparate internal cloud spending. However, these tools need to be correctly deployed and configured to deliver real value.

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Align your cloud infrastructure with your business strategy

Finally, unless your cloud infrastructure is properly aligned with your long-term business strategy, it will ultimately place your resources and your organization at risk. There will be times when an increase in cloud spending will be justified, but it makes no sense to spend excessively on applications when there’s no clear link to business revenue.

Infrastructure and operations leaders who are responsible for the cloud have to optimize cloud functionality continually to drive the desired business outcomes. This requires IT and finance to work in lockstep – and to enlist specialist help where their internal capabilities are lacking.

One option is to rely on the expertise and experience of a managed cloud service provider (MSP) like NTT to manage your cloud spending. We have experts who can help to optimize the multicloud environment from a cost and performance perspective.

In 2023, small to midsize organizations are increasingly engaging seasoned MSPs to ensure they have a constant set of eyes on their cloud spending. The MSPs’ specialist engineers can help manage the multicloud environment using the best visibility, observability and segmentation tools available.

Engaging expertise in this way pays for itself, as it delivers outcomes that put CIOs, CFOs and CDOs in a position to fulfill their mandates.

Read more about NTT’s Multicloud as a Service.

Mark Paterson is Senior Vice President: Managed Cloud Services Portfolio at NTT