Cloud Optimization is Key to Managing Costs and Driving Digital Transformation

Cloud Optimization is Key to Managing Costs and Driving Digital Transformation

By Matthew Vulpis

The rapid rise of digital transformation has helped push the boundaries of innovation, enabling enterprises to adopt and leverage new technology that add ease and optimization to their daily processes. Organizations are now emphasizing and prioritizing the addition of innovative devices and applications, like IoT and AI, in attempts to maximize efficiency.

However, among the variety of technology seeping into nearly all industries and sectors, cloud computing, and the associated devices and services, is still the most prominent. Even though the technology pre-dates the digital revolution by almost two decades, the rise of technology has made cloud computing a necessity for the modern-day business.

Currently, 80 percent of organizations are using multiple public or private clouds, while out of those that don’t, 48 percent plan to migrate at least half of their applications to the cloud in the next year, and 20 percent intend to move all their applications to the cloud.

Now, with 2022 coming to a close, it appears the cloud computing market value will end at about $545.8 billion. Experts predict the market to grow at a CAGR of 17.9 percent, estimating the market value to hit $1,24 trillion by the end of 2027.

“While the cloud is experiencing unprecedented growth, and more enterprises than ever are beginning to leverage the technology, there are still some challenges for organizations, including MSPs and MSSPs,” said Ben McGahon, founder and CEO of Kalibr8, a cloud optimization platform provider. “Apart from technological know-how and IT skills to use the cloud properly, many companies are finding that they actually may have bought too much of a good thing. Inefficient, and overall wasteful spending is becoming one of the more common problems among cloud-using enterprises today.”

Worldwide expenditures on public cloud services will balloon to $362.2 billion in 2022 from $257.5 billion last year, a 41 percent increase, according to Gartner. Money channeled to the cloud will represent 14.2 percent of total IT spending by 2024 compared to 9.1 percent in 2020, Gartner said.

However, the typical company wastes as much as 35 percent of its cloud budget, with SMBs being especially prone to excessive spending. These numbers would have $126.77 billion of worldwide cloud expenditures under the category of inefficient spending.

“Things like overspending early on when developers are building and testing software, wrong sizing production requirements, and suboptimal design and implementation are some of the most notable factors driving cloud overspending,” McGahon said. “While cloud computing is an enabler for the business, and more usage means greater productivity, cloud servers are often left running after they’ve been used and more. Today, it is entirely possible for organizations and the MSPs that serve them to dramatically reduce cloud costs simply by enlisting a cloud optimization platform, like ours.”

To minimize the risk of sprawl, in general, enterprises must establish proper visibility into their cloud environments with infrastructure and application monitoring and management tools. Companies can set up company policies on how and when to decommission cloud resources that are no longer needed and use automated provisioning to shut down old workloads.

“For enterprises still in the midst of transitioning fully to the cloud, one way to get ahead of the game before falling behind in budget is to migrate to the cloud in stages,” McGahon said. “Many companies migrate their infrastructure, data, and workflows to the cloud all at once, and that overwhelms engineering teams and product developers. One of the greatest advantages of modern cloud optimization technology, with automation and AI built in, is that it can be used in the planning and budgeting process. Our customers are forecasting migrations of certain applications to determine the best path forward, while instilling an ongoing discipline that will forever control costs and drive the most value for money.”

The cloud has been one of the most revolutionary technological developments in recent memory and, as the digital age proliferates to every corner of the world, the cloud is only going to rise in importance. Enterprises must be sure they are taking the right steps and practices to control cloud spending and keep the use of their resources as efficient as possible.

“By overspending on the cloud, enterprises could very well not have the financial resources to capitalize on whatever the next major technological advancement digital transformation holds,” McGahon concluded. “The right cloud optimization solution also optimizes digital transformation when used strategically.”

Edited by Erik Linask
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