Cloud spend

Enterprises currently operating in the cloud have over 35% wasted cloud spend.

Monthly bills keep getting higher and spending on cloud services is not going to slow down any time soon, quite the opposite.

That is why ‘Cloud Cost Optimization’ is once again the top priority for most enterprises.

So why not do something about it?

Flexera published their Flexera 2020 State of the Cloud Report (previously known as  RightScale State of the Cloud Report), compiling responses from 750 technology professionals which states that over 93% of those asked say their enterprise uses cloud. For the first time in the history of the report, none of the organizations reported that they lacked cloud plans.

Although cloud certainly has its advantages, increased cloud activity also has a much less reported downside. Unused services and inflating monthly bills are major concerns for enterprises which is why cloud cost management is being prioritized.

While cloud pricing can seem very reasonable at first, the size of the monthly bill ballons as adaption grows and more data moves through cloud services.

Many services are underused and keeping track of what services are in use can be difficult.

Responders to the survey estimated that the amount of wasted cloud spend was about 30% but Flexera, the publishers of the survey, predict that actual waste is 35% or even higher.

Despite that, cloud spend continues to skyrocket. In fact, Flexera expect cloud spend to increase by 47 percent next year.

20% of enterprises surveyed spend more than $12 million a year on public cloud and 74% spend over $1.2 million annually. It is a large increase over last year in which 13% of enterprises reported an annual spend of more than $12 million, and 50% reported yearly spend of more than $1.2 million.

Even though many enterprises are prioritizing cloud cost optimization and have an increased focus on cloud cost management, only a minority of companies have been able to address these issues.

Staying on top of the dynamic changes in cloud costs and services is very complex and really beyond human capability.

Cloud cost optimization with AI

That is why Kostner uses AI and Big Data to offer cloud cost management as a service, giving you actionable solutions to optimize cloud spend.

By using AI, Kostner is able to analyze the millions of possibilities available to find the best possible way to run cloud based on specific needs, keeping costs down in the process.

Managing cloud properly is not only time consuming but keeping up with services, price models, consumption offerings, and licensing options can be extremely challenging.

That is what makes Kostner’s AI a valuable tool for anyone tasked with cloud cost management.

If you and your enterprise are prioritizing cloud cost optimization in 2019, book a meeting with Kostner and get actionable solutions to kick off the new year the right way. 

Interested to learn more about optimizing cloud costs? Subscribe to our blog or follow us on LinkedIn.

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Gartner latest IT spending forecast predicts spend on cloud services will increase by almost 60% through 2021 (Read the full report here).

Global IT spend is set to reach $3.8 trillion this year, a 3.2% increase from 2018.

Businesses are moving to cloud, shifting away from traditional systems and this trend is already having an impact on IT budgets and markets in the coming years. 

The report further suggests that IT spending in general, will continue to rise through 2022 and that cloud computing will play a significant role in increased expenditure.

Cloud system infrastructure services alone account for $39.5 billion of worldwide IT spend and will rise to $63 billion by 2021.
With the shift to cloud being a key driver of IT spending, enterprise software will continue to grow, with worldwide software spending projected to increase by 8.5% in 2019. 

It is expected to grow another 8.2% in 2020, totaling $466 billion. 

This shows that organizations are increasing their spend on enterprise application software and that more budget is being made available for software as a service. 

“IT is no longer just a platform that enables organizations to run their business on, it is becoming the engine that moves the business.”

John-David Lovelock, Research Vice President at Gartner

Senior PR director at Gartner, Christy Pettey, said that the move to cloud services come with “both great risk and great opportunity.”

As many enterprises adopt a cloud-first approach due to the many opportunities with cloud, it is vital to also acknowledge the risks and challenges that come with moving to cloud.

As cloud costs continue to rise, many organizations are being faced with the difficult task of managing and containing costs related to cloud.
Managing cloud costs is easier said than done due to the dynamic nature of cloud costs and services.

To ideally manage costs and keep cloud services running optimally organizations have the daunting task of constantly staying updated on the changes to cloud services.

Tracking the millions of possibilities available with cloud services to tailor to an organization needs is beyond human capability.

That is why Kostner offers Cloud Cost Management as a service.

Using AI and Big Data, Kostner’s Cloud Cost Management service analyzes and simulates the millions of possibilities to find the best possible way to run cloud services based on specific needs, keeping cost down in the process.

KOSTNER’s service works on a subscription basis and is valuable for anyone tasked with cloud cost management. Learn more about the service at kostner.com.

You can also subscribe to our blog or follow us on LinkedIn

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There is no denying it.

Cloud is all the rage.

Nothing suggests this trend will stop anytime soon and while Cloud services do have their advantages, costs have reached higher levels than ever before.

In a Cloud Survey by Syncsort it was found that 70% of over 900 IT professionals use cloud services.

The same report also highlights that 42% said migrations to cloud were typically conducted on an ad hoc basis.

This strategy has proved expensive and organizations are struggling to contain cloud costs, especially those using it beyond initial adoption.

50% those surveyed said that cloud costs were higher than expected with over half of those asked, citing migration and management as the biggest cost challenges.

A Datalink survey found that 40% of organizations with public cloud are now moving back on premises with a majority citing cost/pricing concerns for this move.

Who’s job is it?

Assuming staff and Vendor Managers, responsible for license agreements, will be able to keep cloud spend low is wrong.

That is not because your staff isn’t amazing but because doing cloud right is extremely difficult and complex beyond human capabilities.

Cloud prices and service changes are dynamic, which means it takes a deep level of understanding in order to optimize the way you run cloud.

Gartner describes the Cloud Cost Manager as an emerging role.

We at KOSTNER believe Cloud Cost Management should be a service.

Here are the 7 essential tenants of KOSTNER’s approach to Cloud Cost Management:

Understand cloud cost management:

1. Understand Your Costs

2. Understand Your Consumption Patterns

3. Understand Major Changes and Trends

The first step is to understand your costs when moving to cloud.

This includes who in your organization spends on cloud, whether it’s through subscriptions, product groups or something else.

The next step is to understand what the money is being spent on. Consumption is non-obvious and could be on anything from websites, servers, AI, storage and so on. There are few valid rules-of-thumb.

On top of this, staying updated on all major changes and trends to cloud is essential if you want to avoid unexpected jumps in costs.

Optimize cloud cost management:

4. Ideal Consumption Model

5. Ideal Licensing

6. Geography

7. Correct Choice of Service Type

Optimizing cloud is very complex and requires a deep understanding of the various possibilities available but is crucial when it comes to running cloud to best fit needs while keeping costs low.

Choosing an ideal consumption model like reserve instances for example can help run cloud more optimally.

The consumption model you choose should be based on the needs you have for it and the experience of how people run it.

Next, choose a licensing that fits your needs, be it mobility, azure hybrid benefits, red hat cloud connect or something else.

Geography can also play a big role in cutting costs.

If the placement of your servers is not a priority, the costs can vary 35% from the cheapest to the most expensive region.

This could be development workloads or other workloads not impacted by higher latency and legal requirements for data placement.

Finally, it is important to understand that the type of service you choose makes a difference for your overall spend and flexibility.

Some services come with unlimited traffic or operations, others charge for these.

Knowing when to use what is key.

Too much data and complexity for humans.

AI is our answer.

The dynamic nature of cloud costs and services makes applying these steps complex.

Instead of making a one-time decision on the many choices involved with using cloud, organizations have to stay up to date consistently to manage costs and keep it running optimally.

KOSTNER uses AI to do exactly that.

Final thoughts

KOSTNER’s Cloud Cost Management service analyzes the millions of possibilities available with AI to find the best possible way to run cloud based on your specific needs while keeping costs down.

It is time consuming and difficult to keep up with services, price models, consumption offerings, and licencing options, and sheer scale puts it beyond human capability to apply these rules to even a medium-sized environment.

This makes KOSTNER’s AI a valuable tool for anyone tasked with cloud cost management.

Interested to learn more? Visit kostner.com, Subscribe to our blog or follow us on LinkedIn

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We look forward to helping you optimize your cloud future.