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APAC companies are struggling with wasteful cloud spending, according to a study conducted by Forrester Consulting. In addition, cloud cost management initiatives and tools are introduced too late or without a complete picture of their environment to be very effective.
In a recent study, commissioned by IPaaS provider Boomi in December 2023, it was found that 87% of APAC companies have exceeded their set cloud budgets in the past two years, and 69% expect their cloud budgets to be exceeded during the current fiscal year. .
The results come as regional cloud workloads are predicted to grow rapidly over the next two years. Workloads for applications in IT ops (51%), hybrid work (55%), software and device creation platforms (42%) and digital experiences (40%) are expected to rise the fastest.
Challenges with cloud cost management and optimization tools
Forrester Consulting’s survey, which involved 420 cloud and real-time data decision makers worldwide, found that most APAC companies in the survey sample exceeded their cloud budgets despite using cloud cost management and optimization tools.
Globally, the survey found:
- Only 10% of companies say their CCMO tools enable them to maximize cloud cost savings.
- On average, a quarter of cloud spending will still be spent among global respondents.
A Forrester Consulting study puts this down to the growth of cloud workloads and tools often only show part of the cost picture after the fact. “They don’t proactively enable cost optimization at the cloud architecture level, where choices about service adoption and integration can have a far-reaching impact on cloud costs,” the report said.
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Issues with timing of CCMO initiatives and tool deployment
Part of the problem appears to be the timing (Picture A). APAC companies have realized that introducing cost control management and optimization measures too late in the cloud development process leads to later difficulties in managing and reining in costs. The study found:
- Only 5% of APAC decision makers report their cloud cost remediation strategy is as proactive as possible, and only four in 10 contain costs at the solution architecture stage.
- APAC respondents now prioritize CCMO tactics ahead of cloud development (62%), but most companies lack a proactive strategy at the previous architecture level.
Problems with the visibility offered by existing CCMO tools
Organizations say they have trouble tracking different areas of cloud spending with CCMO tools. Of the pool of global survey responses that labeled the area “fairly difficult” or “very difficult,” data management was the most difficult to track with the CCMO tool (Figure B).
In APAC, this result is mirrored. APAC companies also saw egress costs – charged when data is moved in and out of the cloud – and the time and resources required to build and maintain app integrations as the second and third most difficult areas to track.
This is seeing APAC companies implement cost management strategies “blindly”, says Boomi, due to a lack of visibility at the architectural level. About six in 10 APAC respondents (63%) believe CCMO recommendations are only as good as the data companies can provide.
Another problem with the CCMO tool
Nearly half (44%) say third-party CCMO tools are inconsistent with reporting requirements, while 35% say remediation recommendations provided by tools are too late in the development process.
In addition, 27% of global respondents said that CCMO tool recommendations do not address the main drivers of cloud costs in their organization’s architecture design, while 19% said they do not trust the original CCMO solutions offered by major cloud providers.
Global results show only 14% of organizations have no challenges with CCMO tools.
FinOps practice is hamstrung by lack of visibility
FinOps practices have emerged as a key way for organizations to keep cloud costs under control in a cost-constrained environment. A Forrester report shows that the FinOps Foundation in the US has grown rapidly, with 48 Fortune 50 companies now participating.
However, FinOps practices are ineffective because they reduce costs.
The survey found:
- In APAC, 59% of survey respondents are still having trouble getting the cost and data visibility they need to be effective in their FinOps practice and role. APAC respondents were more difficult than North American respondents (43%) and European respondents (40%).
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- Respondents in the APAC region also noted that the lack of cloud architecture that supports the spread of costs at the level of integration prevents 37% of leaders from continuing FinOps practices, thus limiting their ability to control costs.
Containing cloud spending is a key strategic priority
Reducing cloud spending has become one of the highest priorities on the global cloud strategy agenda; the only higher priority named in the report by respondents was the execution of modernization initiatives and the consolidation of data for analysis.
However, while APAC organizations know they can optimize cloud costs at the solution architecture level, less than half actually have a strategy to solve the common problems they face that drive costs. Common problems named include too much storage (52%), lack of integration strategy (44%) and bandwidth consumption (42%).
Modernization and integration are recommended
Forrester Consulting says modernization and integration are the solutions. “Seventy-two percent of decision makers indicated that cloud architecture integration and modernization initiatives have the potential to transform their company’s ability to reduce cloud spending,” the report said.
“Successfully executing these initiatives at the solution architecture level helps avoid unnecessary cloud spending and also allows companies to better align with FinOps best practices, shift resources to innovation, and increase cloud ROI,” he concluded.