By Granville Triumph
Small and midsized businesses are moving more workloads to the cloud in order to support remote and hybrid work models, reduce IT management and maintenance requirements, and improve business resilience. While increased cloud migration delivers obvious operational benefits, SMBs must be aware of potentially costly downsides.
By shifting data processing, storage, backup, business continuity and collaboration to the cloud, small businesses are able to relieve the burden on limited IT staffs while also increasing productivity and efficiency. In the rush to achieve such benefits, however, SMBs run the risk of wasting resources and letting costs skyrocket.
Cloud costs are growing steadily, and nearly half of the average company’s technology budget is now spent on cloud. According to the 2022 Flexera State of the Cloud Report, 53 percent of SMBs now spend more than $1.2 million annually on the cloud — up from 38 percent two years ago. The report anticipates a further 29 percent increase in cloud spending next year.
Haphazard Spending
However, waste remains way too high. According to Flexera, the average company exceeds its cloud budget by 13 percent, with a whopping 32 percent of those dollars wasted on overprovisioned and underutilized cloud assets.
While some organizations purposely overprovision cloud resources to ensure they can meet capacity, availability and performance requirements, wasted resources often result from a poor cloud management strategy. One recent study found that only about a quarter of companies have a centralized strategy for cloud usage, while nearly half acquire cloud resources on an ad hoc basis. Essentially, anyone with an Internet connection can spin up new infrastructure, applications and services as the need arises.
That sort of impromptu approach makes it extremely difficult to track and manage cloud resources. IT professionals say a lack of visibility into the cloud environment is their biggest impediment to controlling spending and reducing waste.
A formal cloud governance program is the key to understanding what cloud resources you have, how those resources are being used and which may not be needed. Governance programs establish rules, policies and processes that formalize how the organization will access, use and retire cloud resources.
Governance is Crucial
Industry experts say organizations should begin their governance efforts by creating a team of representatives from across the organization. In conjunction with IT staff, the governance team can develop an overarching view of your company’s cloud requirements and define usage best practices.
Once established, the team should conduct a thorough assessment of your environment to determine how many cloud applications and services are being used, who is using them and how they were provisioned. This process is critical for identifying cloud resources that may be unused, underutilized or duplicated.
Next, the team should prioritize which applications and workloads are best bets for cloud migration, what security measures should be developed, and who should have administrative privileges. Administrative access should be limited to very few people in order to maintain central control of updates, configuration changes and new service requests.
Smaller organizations with limited IT proficiency may feel ill-equipped to take on this process. In such cases, working with a managed services provider (MSP) can prove beneficial. MSPs usually have specific expertise in cloud solutions, along with a deep understanding of the tools and techniques for optimizing usage.
Cloud resources can help companies improve efficiency, accelerate innovation and rapidly adapt to changing business conditions. However, cloud usage can quickly spiral out of control if not properly managed. A cloud governance program can help you right-size resources, eliminate waste and ensure your investments are delivering the value you expect.