CIOs Confront Surging Cloud Costs With a Strategic Approach
IT Leaders Share Strategies for Optimizing Cloud Spending at CIO.inc Summit
Although cloud promises economic advantages, enterprises grapple with managing migration, modernization and platform development expenses as they increasingly embrace this technology. CIOs are tasked with navigating this complex landscape to ensure cloud investments deliver tangible value.
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Cloud service costs are rising across the industry, according to a recent Civo report. Based on a survey of more than 500 organizations, the report showed that 59% experienced increased cloud bills in the past year and nearly 40% found the cloud less cost-effective than anticipated. Smaller organizations, in particular, felt the pinch, with 32% reporting monthly cloud bills exceeding $10,000.
The session titled "Economics of Cloud: Optimizing Spend by Avoiding Ignorance" featured expert panelists Sreeni Venugopal, CIO and CISO of Aster DM Healthcare, and CyberEdBoard member; Arvind Prithvinath Singh, chief technology and product officer and executive vice president - IT of Puravankara Limited; and Nyan Tun Zaw, CISO of Athena Dynamics. Arvind Sivaramakrishnan, CIO of Karkinos Healthcare, moderated the panel discussion.
The panelists explored strategies to optimize cloud costs and governance and discussed the need for refining cloud implementation to avoid reverting to on-premises solutions. The crucial first step for any organization, they agreed, was to gain a comprehensive understanding of the real costs associated with its IT operations, which not only includes the cloud but also the entire technology infrastructure. For instance, Aster DM Healthcare conducted thorough analyses of cloud-native billing tools to create a detailed, component-by-component view of potential spend outliers.
Strategies for Optimizing Cloud Spending
"In the healthcare industry, system availability and transaction accuracy are critical. We are exploring how to leverage the cloud while ensuring the right outcomes," Venugopal said. "Healthcare is very data-intensive - especially with radiology, CT scans and MRIs. The right architecture is essential for handling sensitive health information while ensuring security, encryption and resilience."
"The architecture, cloud choice and governance model must all work in unison to justify the cost and meet business outcomes," he said.
With the rise of SaaS models, organizations find the need to adopt a cloud strategy. Security management presented another challenge, given the limited control over various aspects, Singh said. "While some workloads may perform better in a hybrid or on-premises data center, the shift to the cloud is inevitable, especially for digital-first companies that can better utilize cloud resources than traditional organizations. There is a significant cost associated with not fully utilizing the cloud or failing to monitor usage effectively," he said.
He also said that migrating into and out of the cloud, or between cloud providers, could be an expensive process.
While companies could use modern FinOps and observability tools to enhance cost controls and establish a comprehensive management console, redesigning processes and ensuring security were prerequisites for effective cost management.
In SaaS environments, many decisions are in the hands of cloud providers to ensure a secure environment. "Poor cloud usage design can quickly lead to spiraling costs. There are at least 10 to 15 key elements that need to be addressed to design an efficient cloud environment. Many of these elements can be complex," Zaw said. "For instance, if your organization plans to use certain services on a SaaS model, establishing the right SLAs with cloud service providers is crucial, though managing costs can still be challenging."
Cloud Monitoring Is Essential for Cost Optimization
Effective cloud monitoring proved essential for cost optimization, particularly for resource-intensive operations such as cloud storage and data management.
"One of our cost optimization strategies involves analyzing data retention over time. If data isn't immediately needed, we move it to cloud storage. This data tiering strategy has resulted in significant cost savings," Venugopal said.
Singh advised business leaders to take a tripod approach to resource utilization. "When starting a project, we configure cloud resources based on certain assumptions. Regular monitoring helps assess if those resources are being used efficiently," he said. "Collaborating with the cloud provider, integration partner and CIO brings diverse expertise, ensuring value for money."
Cloud providers offer native tools to track usage and costs, often with automated alerts for threshold breaches. "Implementing AI-based tools, such as auto-scaling during peak or low periods, helps align cloud provisions with business growth, avoiding overprovisioning for ideal scenarios that may not align with reality," Zaw said.
Balancing technology with business growth and cloud provisioning is crucial. While cost optimization is a priority, it must not compromise security, the panelists agreed. Effective security measures are vital, especially in the cloud environment where many aspects are unknown and expertise varies.
Balancing reserved instances with pay-as-you-go models is crucial. Cloud providers often incentivized reserved instances with lower costs and upfront commitments. Careful management of these options is necessary to avoid overprovisioning and ensure optimal resource allocation, Venugopal said.
"Cost savings begin with the right workload placement, accurate cost models and integrated tools. Observability across the technology landscape enables product, engineering, procurement and finance teams to identify potential savings and capture the business value expected by the CEO," Sivaramakrishnan, the panel moderator, said.
