How to Reduce One of the Largest (Non-Labor) Costs in Your IT Budget

Analysts are reporting that IT budget cuts are expected to continue, dropping 5–8% this year overall. That puts IT departments in a difficult position: what should they cut, and how? While there is no magic bullet, there are places to trim the fat that will require no sacrifice and make no impact on operations.

Public Cloud Spend is High — And Users Want to Optimize

The largest cost in many enterprises’ IT budget is, of course, labor. You already know that the layoffs are happening and that engineering and operations departments are not immune. Whether you’re trying to avoid layoffs or trying to make the most of a reduced budget and workforce after them, you can look at other portions of your budget, including public cloud — often ranked the third-highest area of spend.

Even before COVID-19 wreaked havoc on businesses the world over, cloud customers ranked cloud cost optimization as a priority. Like water and electricity in your home, public cloud is a utility. It needs to be turned off when not being used.

This is made more urgent by today’s economic climate. There’s a lot of pressure in certain verticals, industries, and enterprises to reduce cloud spend and overall operational expenditures.

The Least Controversial Fix: Wasted Cloud Spend

There’s a reason “optimization” is so important: it implies waste. That faucet running when no one’s in the room — there’s simply no reason for the spend, which makes it an “easy” fix. No one will miss it.

The first step is identifying the waste. We estimate that almost $18 billion will be wasted this year in two major categories. The first is idle resources — these are resources being paid for by the hour, minute, or second, that are not actually being used every hour, minute, or second. The most common type is non-production resources provisioned for development, staging, testing, and QA, which are often only used during a 40-hour work week, That means that for the other 128 hours of the week, the resources sit idle, but are still paid for.

The second-largest swath of wasted spend is overprovisioned infrastructure — that is, paying for resources that are larger in capacity than needed. About 40% of instances are oversized. Just by reducing an instance by one size, the cost is reduced by 50%. Or look at it the other way — every size up costs you double.

Other sources of waste not included in this calculation include orphaned volumes, inefficient containerization, underutilized databases, instances running on legacy resource types, unused reserved instances, and more.

How to Activate Optimization

Cutting this waste from your budget is an opportunity to keep the spend you actually need, and make more investment in applications to produce revenue for your business. The people who use this infrastructure on a daily basis need to get on board, and that can be challenging.

The key to taking action to address this wasted spend is to bridge the gap between the people who care about the cloud bill — Finance, IT, etc. — and the people working in the cloud infrastructure every day — the app owners, the lines of business, developers, engineers, testers, people in QA, DevOps, SREs, etc. Those internal “end users” need a self-service tool or platform to take action.

However, app owners have a stack of priorities ahead of cost, and a lack of time to evaluate solutions. Ideally, the cloud operations team will administer a platform, and have that platform enable the app owners or lines of business to take actions, make changes, based on recommendations from that platform. Then you get Finance and IT to see a reducing — or at least flat — cloud bill, with optimized costs.

For an example of how enterprise Cloud Operations departments can approach this, learn from Sysco. They deployed ParkMyCloud to hundreds of app owners and end users across the globe, and used gamification to get them all on board with reducing costs.

Originally published at on June 2, 2020.




CEO of ParkMyCloud

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Jay Chapel

Jay Chapel

CEO of ParkMyCloud

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