In today’s fast-paced digital environment, organizations continue to face the issues of cloud cost overruns and inefficiencies. While cloud services are frequently viewed exclusively as an IT function, the key to successful cloud optimization goes far beyond technology.
In an interview with Dirk Ras, Architect in the Office of the CTO and Practice Lead for Cloud at Dariel, a prominent software solutions provider, he defines cloud optimization as a combination of financial governance, operational efficiency, and technology.
Many organizations fall into the trap of thinking that once workloads are migrated to the cloud, optimization is no longer necessary. “Cloud environments need continuous monitoring, right-sizing, and financial oversight to stay cost-effective.” Without a dynamic approach, inefficiencies accumulate, leading to increased costs.
The price of optimisation procrastination
How widespread is the challenge of cloud cost inefficiencies?
The scale of cloud inefficiencies is striking. According to a Gartner study, up to 70% of cloud costs are wasted due to overprovisioning, idle resources, and inefficient usage. A 2023 survey by Gartner of 200 IT leaders revealed that 69% faced budget overruns in their cloud expenditures. In contrast, 31% of respondents who managed to stay within budget attributed their success to accurate forecasting, proactive monitoring, and effective optimisation.
What are the main issues around cloud optimization?
Lack of visibility and governance in cloud management as a core issue. “Finance teams often don’t have real-time insight into cloud usage. They only get the bill at the end of the month, and by then, the damage is done.” Without continuous tracking of cloud usage, businesses often end up paying for idle resources, such as EC2 instances that remain underutilised.
Another common issue is the tendency for businesses to over-provision cloud resources out of caution, rather than scaling dynamically as needs evolve. “It’s much better to under-provision and scale up when needed than to over-provision and pay for unused capacity.” Over-relying on on-demand pricing and failing to leverage reserved instances, auto-scaling, or proper storage management contribute significantly to unnecessary costs.
What hidden costs should organizations be aware of?
Data transfer costs can add inefficiencies, often overlooked in cloud strategies. Moving data between services impacts costs. If you don’t design your cloud environment with these factors in mind, you could be spending far more than necessary.
A Cross-Functional Approach to Cloud Optimisation
Ras argues that for cloud optimization to be truly effective, it must be a company-wide effort rather than a siloed IT function. “Cloud isn’t just an IT concern. If finance doesn’t know what IT is provisioning and IT doesn’t know how costs are being allocated, you end up with uncontrolled cloud spend.”
Collaboration across departments is essential. He stresses that finance, operations, and IT must be aligned to ensure cloud usage remains efficient and cost-effective.
Any recommendations for tackling these challenges?
To tackle these challenges, I recommend using cloud monitoring tools such as AWS Cost Explorer and Azure Cost Management for real-time cost visibility. Organizations should concentrate on right-sizing and auto-scaling their cloud resources so they match with actual demand.
In addition, treating data governance as a cost-control strategy is essential to ensure businesses implement proper lifecycle management for their cloud storage and data usage.
Auditing the cloud
What’s the most crucial step in cloud optimization?
The most important step in cloud optimization is knowing what you need from the start. The quicker and more effectively a client can communicate what they want and what they actually need, because those aren’t always the same thing, the better the optimization process will be. Picking the right technologies from the beginning makes a big difference.
How do you approach optimizing an existing cloud environment?
When optimizing an existing cloud environment, the first step is always an audit. This involves reviewing whether allocated resources match actual usage. There’s no point in running a massive instance for a web server that only gets a couple of hits a day. Once that’s done, the different optimization points can be tackled, whether it’s autoscaling, instance right-sizing, or adjusting storage.
