SERVAAS VERBIEST (SV): Welcome to IT Availability Now, the show that tells stories of business resilience from the people who keep the digital world available.
I'm your host, Servaas Verbiest, and today I'm joined by Erik Krogstad, Principal Cloud Architect at Sungard AS, and we're going to be discussing the challenges of controlling your organization's growth and cloud costs.
How are you doing today, Erik?
ERIK KROGSTAD (EK): I'm doing great, Servaas. How are you?
(SV): Good, good, good. This is a topic I really enjoy talking with you about because we address it with so many clients when we engage with them, right? And really, to set the stage, when organizations look to incorporate cloud technology, they typically focus on the technical engineering or the technological components. The switches, the bells, the whistles - all the features and functions that are available, but we often find they lose track of a really critical component that makes up really a core pillar that you see within a lot of these cloud providers. And that's the financial element or specifically, financially engineering a solution to meet the requirements.
There's a great report that gets released by Flexera every year and in this year's report, The 2022 State of the Cloud, it's shown that organizations waste around 32% of their cloud spend. That means there's 32% of that spend that could be optimized through making changes to the environment or adopting different financial models. That's up 2% from last year, which doesn't seem like a lot, but when you start to look at the marketplace and the sheer volume of cloud resources that are consumed, that translates into a ton of money.
So Erik, why do you think so many businesses are struggling to manage these cloud costs?
(EK): I can't believe it's only 32%. I figured it would be more. But it comes down to the environments not being set up correctly from the beginning. You know, a lot of people like to keep a datacenter mindset, keep things running just like they are within their control. But when you're adopting a new technology, you want to evolve with the technology. You know, the technology itself has evolved. You need to go with it because having a quick transition into the cloud doesn't always mean it's been efficient. So putting your expenses into things like better databases and more application-driven, not server-intensive applications that can be done as a service, instead of as a physical device. There's a lot of things to consider on how to get rid of that waste and what I just call bloat. You know, having big machines just sitting in the cloud really isn't making you more efficient. Using the cloud in a productive way makes you efficient.
(SV): And it seems like a simple concept and an easy one to follow. That same report I referenced sets the expectation that cloud utilization is going to increase over the next year by around 29%. And if I'm an executive, I'm staring at the fact that on average, businesses waste around 32% of their spend, and there are market conditions that are going to drive me to consume more.
Specifically, when you see things around supply chain shortages, conflicts that are impacting energy prices, which are driving up costs of data centers, how can you expect an organization to be willing to lean in? Because technically, that would mean they'd have a greater amount of waste, right?
(EK): Yes, and if you're set up like that, you probably will. I’d like to see something like that TV show “The Biggest Loser” if you can remember that. Put it in terms of IT. Instead of shedding pounds, we’re going to shed bloat and waste in the IT space. It takes a good eye to be able to go in, look at what's running in your environment and see if maybe we can trim that up a bit. It seems to be the highest running cost that we have. How can we do this more efficiently? Does this Dev environment need to be up 24 hours? How about we start setting some parameters? Really start to just go in. Like in that TV show, they focus on a diet and then they focus on an exercise, then they add something, then they add something else.
The idea of constant improvement, the idea of becoming more efficient really seems to me to be the best way to go about that strategy. And that ultimately begins with a vision of what you want your cloud to look like. You know, can it be set up correctly from the beginning? And then, what will it look like in one year? Three years? Five years? Have that growth mind to utilize the cloud and not just get fatter servers.
(SV): No, no, and that was a great analogy. Take a step back and look at setting up that good foundation, and more importantly, maintaining consistent practices to ensure that you're adopting, not what was great for you when you started, but what's great for you based on what's available right now because these cloud services and providers are releasing services while we're having this conversation. And they do that how many times a day, how many days of the year, right?
But would you say that organizations that focus on optimization and efficiency have a better chance of avoiding issues with cloud costs than organizations that start with value engineering?
(EK): Yes. And don't get me wrong, value engineering from the beginning is something that a lot of organizations do because there was a directive that: “you're going to go in the cloud because I've heard it saves money.” And the value they want to do is: “alright we're going to upload everything into, pick your cloud choice, and it's just going to run up there and it's going to be cheaper because we don't have to have a data center.” And it meets a budget.
Now, where value engineering falls on its face is when you actually go do that and you just have these monolithic things sitting in the cloud, and you have to keep feeding them. As new data comes and as new apps come, they just get fatter and fatter. Whereas when you do something from a more pragmatic approach of having that vision of what the cloud will look like, and what you want to get out of it, you can start that journey by saying we're going to spend a little bit more money here upfront on our website, to just put it as an API call with a back end database or no database at all, just Python. Instead of having a form of twelve web servers in every geographic location.
That development work upfront to get it to go to an API may cost more. But in the long run, you're not going to keep adding more and more servers as time goes on. And you see that return on that initial investment throughout the lifecycle of your cloud journey, rather than just trying to get it up there and save the initial money because you're really not solving a long-term problem, just a short-term need.
(SV): Yeah, and it's an investment in the efficiency and optimization of your business, not necessarily looking for just pure cost control. And when businesses look at that, they fall into a trap I see far too often - I'd love to get your opinion on this - where they lock into a cloud provider because of some perceived savings or some connection that they feel comfortable with.
So I mean, is that the best way to choose your cloud provider or do you tend to lean a different direction and kind of focus on all cloud providers?
(EK): Great question. And, obviously, for me, it will be all cloud providers but that initial part of the question: Yes, some people do fall in love with a certain provider, or they're mandated to use that provider from the beginning. That mandate comes down based on if they have enterprise license agreements or certain companies won't allow them to work with them. For instance, Walmart. Once AWS or Amazon bought Whole Foods, Walmart saw them as a competitor and said anybody that does business with Amazon can't do business with us. And that's going back a number of years, but I mean, there was a huge amount of migrations happening.
So those types of ideas of vendor lock ins, they always change. You think you're with one thing, but that is going to change. You bring on new teams. You have a data science team that only runs certain applications and certain platforms. There's Azure BI or whether it's Sagemaker in AWS, you have people in teams that are comfortable with that technology. So as you grow, as new people, new leaders, new types of teams, enter into the fold of your company, you're going to have to adopt that multi-cloud strategy. And having a team of developers behind you that know all the platforms or one really good cloud guy that can work with a bunch of different teams. Or hire Sungard. I'll be happy to show up and tell you how to do it as well. But having that solid foundation in a plan of what you want it to look like, and then having the flexibility to be able to add in new platforms and manage them is really the key to the future of the cloud.
(SV): Yeah, and that's really what it comes down to based on what you said and what I've experienced. Choosing a public cloud provider just because you have one reason that points you there may not guarantee you the outcome you're looking for. And I really appreciate the fact that you've come in today and illustrated some good examples of things you've experienced and more importantly kind of set the stage to say it's really about use case. It's really about setting a good foundation to look to optimize as you integrate cloud to set yourself up to be in a position where you're not going to have sprawl, you're not going to have waste, and you're going to have something that's easy to maintain and optimize over time. So I really appreciate you joining us on the show today.
(EK): Thanks so much for having me. And it was a great talk.
(SV): Awesome. Erik Krogstad is the Principal Cloud Architect for Sungard Availability Services.
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I’m your host, Servaas Verbiest, and until next time, stay available.