Cloud cost optimization tools are not enough to control “uncontrolled” cloud spending

Companies in Asia Pacific are struggling with wasteful cloud spending, according to a study commissioned by Forrester Consulting. Additionally, cloud cost management programs and tools are introduced too late or without a complete understanding of their environment to be very effective.

The new research, commissioned by IPaaS provider Boomi in December 2023, found that 87% of Asia Pacific companies exceeded their set cloud budgets in the past two years, and 69% expected to exceed their cloud budgets this financial year. Budget.

The results come as regional cloud workloads are expected to increase rapidly over the next two years. Application workloads in IT operations (51%), hybrid workloads (55%), software creation platforms and tools (42%), and digital experiences (40%) are expected to grow the fastest.

Challenges facing cloud cost management and optimization tools

Forrester Consulting’s survey of 420 cloud and real-time data decision-makers around the world found that despite widespread use of cloud cost management and optimization tools, the majority of Asia Pacific companies in the survey sample exceeded their cloud budgets.

Globally, the survey found:

• Only 10% of companies said CCMO tools can maximize cloud cost savings.
• On average, global respondents still see a quarter of their cloud spend being wasted.

Forrester Consulting’s research attributes this to the growth of cloud workloads, and tools often only reveal part of the cost picture after the fact. “They are unable to proactively optimize costs at the cloud architecture level, and service adoption and integration choices can have a profound impact on cloud costs,” the report states.

SEE: Australia and New Zealand’s cloud strategies are facing new-era pressures

Timing issues for CCMO initiatives and tool deployment

Part of the problem seems to be a matter of timing (Figure A). Enterprises in the Asia-Pacific region have realized that introducing cost control management and optimization measures too late in the cloud development process will lead to difficulties in later management and control of costs. The study found:

• Only 5% of APAC decision makers say their cloud cost recovery strategy is as proactive as possible, and only four in 10 include costs in the solution architecture stage.
• APAC respondents now prioritize CCMO strategies in the early stages of cloud development (62%), but most companies lack proactive strategies at early architecture levels.

Existing CCMO tools provide problematic visibility

Organizations say they are encountering problems using CCMO tools to track cloud spending in different areas. From a pool of global survey responses that labeled areas as “moderately difficult” or “extremely difficult,” data management was the most difficult to track using CCMO tools (Picture B).

In the Asia-Pacific region, this result is also reflected. Companies in Asia Pacific also ranked egress fees (charged whenever data is moved into and out of the cloud) and the time and resources required to build and maintain application integrations as the second and third hardest areas to track, respectively.

Boomi said companies in Asia Pacific are running “blind” cost management strategies due to a lack of visibility at the architectural level. About six in 10 Asia Pacific respondents (63%) believe CCMO advice is only as good as the data their company can provide.

Other issues with CCMO tools

Nearly half (44%) of respondents said third-party CCMO tools do not meet reporting requirements, while 35% said tools make remediation recommendations too late in the development process.

Additionally, 27% of global respondents said CCMO tool recommendations do not address the root causes of cloud spending in organizational architecture design, while 19% said they do not trust native CCMO solutions from major cloud vendors.

Global results show that only 14% of organizations face no challenges when using CCMO tools.

FinOps practices are hampered by lack of visibility

FinOps practices have become a key way for organizations to control costs in the cloud in cost-constrained environments. Forrester’s report pointed out that the FinOps foundation in the United States has grown rapidly, and 48 Fortune 50 companies are currently participating in it.

However, FinOps practices are not as effective as they could be in controlling costs.

The investigation found:

• In Asia Pacific, 59% of survey respondents still struggle to gain the cost and data visibility needed to effectively implement FinOps practices and roles. Respondents in the Asia-Pacific region face more difficulties than those in North America (43%) and Europe (40%).

See: IT leaders address budget pressures with finance transformation, FinOps

• Respondents in Asia Pacific also pointed out that 37% of leaders are unable to advance their FinOps practices due to the lack of cloud architecture that supports integrated level cost control, thus limiting their ability to control costs.

Controlling cloud spending is a strategic priority

Reducing cloud spending has become one of the top priorities on the global cloud strategy agenda; the only higher priorities cited by respondents in the report were executing modernization measures and integrating analytics data.

However, while APAC organizations realize they can optimize cloud costs at the solution architecture level, less than half actually have strategies in place to address the common issues they face that drive up costs. Common problems include too much storage (52%), lack of consolidation strategy (44%) and excessive bandwidth consumption (42%).

Recommend modernization and integration

Forrester Consulting says modernization and consolidation are the solutions. “Seventy-two percent of decision makers say cloud architecture consolidation and modernization initiatives have the potential to change their company’s ability to reduce cloud spending,” the report states.

It concludes: “Successfully executing these measures at the solution architecture level can help avoid unnecessary cloud spending and also enable companies to better align with FinOps best practices, redirect resources toward innovation, and improve cloud ROI. .