Cloud Optimization: It’s Not the Same for Everyone

Cloud migration is primarily motivated by scalability, flexibility, and cost savings. It allows businesses to create, deliver, and manage software applications while significantly transforming infrastructure, security, and enterprise services. Gartner predicts that companies will invest a remarkable $679 billion in cloud services by 2024. Additionally, the cloud is expected to become an indispensable aspect of business operations by 2028.

However, it is important to note that migrating an application to the cloud does not guarantee a successful business outcome or a high return on investment (ROI). While cloud computing offers significant benefits, migration-related costs increase as the desired outcomes become more ambitious. Therefore, companies must carefully consider their ROI objectives on a per-application basis. Not every program needs to be redesigned to be cloud-native, as the requirements may vary.

As organizations continue to grow, their cloud strategies must adapt accordingly. This includes considering the concept of cloud repatriation, which involves moving applications or data from the cloud back to on-premises infrastructure or another cloud environment. Incorporating cloud repatriation in cloud strategy and planning is essential to ensure a comprehensive approach to managing resources. 

Cloud Optimization Process

Cloud optimization is a continuous process. After entering the optimization phase, an organization can evaluate its performance against set expectations and track spending by cost center/business unit. This not only enables each team to determine its impact on the overall cloud spend but also allows the business to identify teams driving any cost changes. Besides cost savings, the benefits of cloud migration for businesses include increased revenue, faster project delivery, and innovation. Cloud computing supports innovation by providing businesses with cheap and almost instantaneous access to technology.

Based on a recent IDC CIO Quick Poll, 60% of organizations acknowledged spending more than they initially budgeted. Despite the accelerated adoption of cloud technology, wastage has increased due to the improper management and optimization of resources without considering utilization metrics. Resources must be consistently monitored to ensure they are not oversized. Although there are common solutions to managing cloud costs, such as tagging assets, removing unused resources, and rightsizing, cloud governance and control mechanisms have not kept up with the pace of adoption. Consequently, cloud spending is often classified as “waste” spending that can be optimized.

The rising concern over wastefulness in cloud usage, coupled with limited budgets and the need for efficiency, as driven by finance and ESG teams, as well as broader economic factors like inflation and recession risk, has made cloud costs a critical consideration for organizations. Given that cloud services (including IaaS, PaaS, SaaS, and data clouds) constitute a significant portion of IT expenditure, the effective and optimized utilization of cloud resources has become a top priority.

To ensure the success of cloud migration, the ROI for each application must be evaluated at regular intervals, e.g., every quarter. This will help determine whether the cloud services are suitable for the applications or whether there were any significant flaws in the implementation. In some cases, cloud services may only be used briefly due to compatibility and implementation issues. Certain organizations choose to develop and test their applications in an on-premises environment before running them in the cloud. However, this approach can lead to suboptimal performance in the cloud due to the split between the environments. Therefore, the compatibility and performance of each application must be carefully assessed before cloud migration. By doing so, organizations can ensure their successful migration and maximize their ROI. 

FinOps

FinOps is a practice that ensures financial accountability for the variable spending associated with cloud services. The shift to cloud operations brings about a cultural change that empowers teams throughout the organization to take ownership of their technology choices and financial decision-making, allowing the alignment of their strategies and business objectives. By implementing FinOps, organizations can effectively manage their cloud expenditure and optimize resource allocation. Furthermore, FinOps encourages a culture of transparency and collaboration. It breaks down organizational silos, enabling cross-functional teams to work together toward common goals. This fosters a sense of ownership and responsibility among the team members, as they are actively involved in financial decision-making and are accountable for the outcomes. The introduction of FinOps brings numerous benefits to organizations operating in the cloud. It allows for better cost management and optimization, as teams have a clear understanding of the financial implications of their actions. It also promotes efficiency and agility, as teams can quickly adapt and make informed decisions using real-time data.

Cloud Repatriation

Organizations should develop a formal cloud exit plan with each of their cloud providers. This would serve as a contingency plan in case of any unforeseen circumstances. Having a cloud exit strategy is similar to having a disaster recovery plan in place. Nonetheless, it must be noted that cloud computing is generally considered a reliable outsourcing option. Many cloud computing services are more reliable than alternative hosting options or on-premises systems. Cloud providers rely on their ability to offer secure and dependable IT services to sustain their business model. Therefore, they invest in robust infrastructure and prioritize security and reliability. However, it must be acknowledged that nothing is entirely foolproof. As organizations grow and evolve, their cloud requirements may change. This is where cloud repatriation becomes relevant. Cloud repatriation refers to the process of transferring workloads, applications, or data from the cloud back to on-premises infrastructure or another cloud environment.

Developing a Cloud Repatriation Strategy

Ideally, all applications must have an exit plan before they go live on a public cloud service. Defining unacceptable conditions is the first step, and they may include cloud outages, provider services being less reliable than promised in the service-level agreement, repeated or prolonged outages, rising costs, potential acquisition of either your organization or the cloud provider, etc. Cloud provider bankruptcy or potential acquisition and prolonged performance decline are some of the examples that might warrant an exit assessment. To ensure a successful cloud repatriation, organizations must develop a comprehensive exit strategy. The first step is to evaluate the current cloud environment and identify workloads that are suitable for repatriation. This involves analyzing factors such as cost, performance, security, and compliance requirements. This is a key step in assessing the alternative options in the market or the ability to host the application internally.

Conclusion

Cloud optimization is crucial for organizations seeking to maximize the benefits of cloud migration. While scalability, flexibility, and cost savings are driving factors for cloud adoption, the specific ROI objectives must be considered on a per-application basis. Further, cloud repatriation should be included in cloud strategy and planning to ensure a comprehensive approach to resource management. Effective cloud optimization involves continuously monitoring and managing resources, avoiding wasteful spending, and implementing practices like FinOps to ensure financial accountability. Additionally, organizations must carefully assess the compatibility and performance of each application before cloud migration to ensure success and maximize ROI. With proper cloud optimization strategies in place, businesses can harness the full potential of the cloud and drive efficiency, agility, and innovation.