Cloud service inefficiencies drain IT budgets

71% of IT professionals stated that cloud-related costs make up 30% or more of their total IT spend, according to Aptum.

cloud service inefficiencies

In the current demanding economic environment, organizations are becoming increasingly aware of the financial implications of their business operations. While the cloud has brought benefits such as flexibility, scalability, agility, and cost efficiency to organizations in recent years, there are still unforeseen costs.

IT professionals prioritize ROI analysis for cloud spending

52% of IT professionals admitted their organizations have wasted significant IT spend due to inefficiencies with cloud platforms and services.

In fact, 73% of IT respondents reported that their cloud investment has resulted in higher-than-expected IT costs within the last 12 months, marking a 28% increase compared to 2021 figures. Additionally, 92% of IT professionals stated that they are likely to conduct a full ROI (return-on-investment) analysis of cloud spending, a rise from 89% in 2022. But what is causing these increased costs?

The survey identified several factors, including poor planning, a lack of internal expertise, the acceleration of cloud adoption, and a lack of familiarity with complex cloud solutions. These challenges are considerably magnified when organizations implement a hybrid, multi-cloud strategy that incorporates both on-premises and public cloud services for different data services and workloads.

Developing skills in cloud strategy is crucial

Currently, 62% of respondents agree that a lack of internal expertise has prevented them from expediting cloud implementations. However, to mitigate these escalating costs, developing skills and knowledge in cloud strategy is crucial.

“Many organizations believe they are excelling in the cloud, but in reality, like flying in a cloud, they have to rely on instrumentation, which is usually inadequate to begin with, and piloting experience which takes time to develop,” said Ian Rae, CEO at Aptum.

“It isn’t the cloud that is costly but the lack of observability and governance which hinder management and lead to cost overruns. This shortfall significantly hampers the ability to unlock the cloud’s potential for enhancing operational efficiency while controlling costs,” added Rae.

The cloud adoption challenge for businesses

The results demonstrate that organizations struggle to fully realize the value of their cloud spending as they expand their adoption of cloud services. The lack of a comprehensive, multi-cloud strategy poses a challenge for many IT leaders, preventing them from fully harnessing the transformative capabilities of the cloud.

But continued cost savings rely on a clear cloud investment strategy that focuses on visibility and control of costs – especially for those accelerating cloud investment and moving into more complex, multi- and hybrid cloud environments.

FinOps principles are key to ensuring organizations are operating efficiently in the cloud:

  • Cost visibility and accountability: FinOps helps gain visibility into cloud expenditures, allowing teams to be more conscious of their spending.
  • Optimized resource usage: FinOps practices help identify underutilized or unused resources, leading to termination or downsizing.
  • Enhanced decision-making and forecasting: With clear insights, informed decisions can be made based on usage analysis, reducing the likelihood of unexpected overruns.
  • Cultural change: A FinOps culture encourages cost to be an organizational mindset and a standard part of operational discussions.
  • Continuous improvement: The iterative nature of FinOps ensures continuous improvement to cloud financial management practices, leading to ongoing savings.

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