Visibility into Costs Critical for Cloud Migration Success

Multiple recent surveys have confirmed the obvious about cloud migration. Costs can easily get out of hand due to a lack of visibility into those costs. In fact, most companies do not have tools in place to monitor cloud expenses in any systematic way.

Certainly, the cloud providers offer companies detailed billing statements. But it is impractical or impossible to tie those billed costs back to specific projects, departments, or business units. 

See also: Why is Cloud Repatriation Happening?

The scope of the cloud cost problem was quantified in several new industry surveys.

A McKinsey & Company report on the missteps taken by businesses during the cloud migration phase projects that in three years, $100 billion could be lost in wasted spend. 

A survey of approximately 450 CIOs and IT decision-makers found that 75 percent of businesses were over budget on their cloud migration. Twenty-eight percent of respondents were 20 percent over budget, and only seven percent of businesses said they were under budget. 

In terms of planned timeline, 38 percent said they were behind schedule, with 13 percent behind schedule by more than three quarters. Sixty-three percent were ahead of schedule, however, so while the project may come over budget, a lot of the organizations are managing to reach a stage of completion on time.

See also: Why Observability is Needed in Cloud Migrations

Another recent survey of 750 senior enterprise IT professionals conducted by Pepperdata found that more than one-third of businesses have cloud budget overruns of up to 40 percent, and one in 12 companies exceeds this number.

The study noted that while the cloud offers both the benefits of a pay-as-you-go model and the ability to be elastic on-demand, enterprises almost universally see a rise in costs. The reason: IT often lacks sufficient visibility into cloud performance and does not have the tools to optimize applications.  

Sixty-four percent of respondents noted that cost management and containment is their biggest concern with running cloud big data technologies and applications. And a majority of respondents said the desire to better optimize current cloud resources was their highest priority big data cloud initiative.

These points were echoed in yet another recent ESG Observability Survey of 357 IT, DevOps, and AppDev professionals responsible for evaluating, purchasing, managing, and building application infrastructure. The survey was conducted by the Enterprise Strategy Group for Yotoscale.

In the survey, 84% of organizations said that tracking costs and cloud cost allocation is burdensome and time-consuming, especially in tech industries, where 33% find it extremely burdensome. Additionally, 64% agree that the adoption of public cloud or multiple public cloud providers has made observability significantly more difficult. The survey results highlight a strong need to gain better visibility into cloud costs while reducing the burden on the affected teams that are responsible for those costs.

“Gaining visibility into cloud costs is the first step for enterprises who want to optimize the cost of their cloud infrastructure,” said Scott Sinclair, Practice Director for ESG, who led the research study. “Organizations need to operate on average 57% faster than three years ago. Trying to optimize cloud costs at that speed without the aid of a third-party tool leaves many enterprises ill-equipped to have total visibility into their cloud spend and cost attribution, especially for today’s modern architectures and containerized applications.”

 The survey also noted that as multi-cloud adoption has accelerated – 71% of organizations leverage more than three cloud infrastructure providers – it has become significantly more challenging to track, understand, and properly attribute cloud costs to their appropriate teams.

Bottom line

The desire to make data more available and applications more accessible has driven the move to cloud. The ease and speed at which IT, developers, and business units can allocate and use cloud resources makes the use of cloud services highly desired.

Unfortunately, what gets lost in the mix is the tight control that organizations had when everything ran on-premises. A casual approach to cloud migration and use will lead to a lack of accountability and vast overspending.

As a result, businesses need to place a high priority on monitoring and managing cloud costs through greater visibility into each organization’s cloud activities.

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