Transparency Leads to Cloud ROI
Having demonstrated cloud's flexibility and agility, IT departments now are tasked with reining in costs and centralizing control over often dispersed deployments of cloud across their organizations.
After all, enterprises that negotiate and commit to longer term contracts, thereby helping providers plan capacity and ensure capital for infrastructure investment, can reap savings of up to 44 percent versus on-demand payers, according to the most recent 451 Research Cloud Price Index. Partnering with providers – versus shopping solely on price or responding to an ad – benefits both provider and customer, said Dr. Own Rogers, senior analyst at 451 Research's Digital Economics unit, in a statement.
"The reality is there is no cloud price war. There are battles being fought over certain cloud services, particularly compute, where providers are seeking publicity and market share in return for price cuts. But cloud providers are more than just compute – considering 50 percent of our typical web application’s costs relate to cloud databases, it’s easy to see how sales of more value-adding services can offset declining margins on basic services,” he said.
Centralized purchasing helps with preferential pricing and building partnerships. Indeed, 92 percent of those surveyed by Dimensional Research for Cloud Cruiser are adopting cloud primarily to improve IT efficiencies and reduce costs; 72 percent are tracking cloud usage and cost is extremely or very important to their IT function, the "Managing the Business of Cloud" report found.
"Our view is that a lot of cloud services are spun up through a business user. I don't need to go to our IT guy to source them but ultimately IT owns the IT budget overall and has a dotted line to the CFO, so ultimately an enterprise needs to know, 'What is our IT spend on cloud resources across the company? Are we efficient?'" said Deirdre Mahon, chief marketing officer at Cloud Cruiser, in an interview. "Our belief is, especially in enterprise solutions, the buyer should be IT because, ultimately, they own the budget."
Source: Cloud Cruiser/Dimensional Research
This eye on centralizing costs and management has generated a number of developers offering tools designed specifically for IT departments. These solutions typically offer an array of features such as managing service level agreements (SLAs); tracking and auditing public, private, and hybrid clouds across the enterprise, including those purchased independent of IT; providing insight into pricing, and delivering analytics on performance, usage, and other key metrics.
Cloud Cruiser, for example, offers enterprise software for hybrid cloud consumption-based management, designed to provide IT professionals with insight into usage and costs, said Mahon.
"They want clarity and control," she said. "Now they can optimize which cloud, even to the point where they can turn off some services late Friday and turn it on early Monday. A lot of companies just leave everything running over the weekend. The user, the business users, the shadow IT guys, just care about getting access. They're not thinking about what is this costing the business. The accountability doesn't lie with the user. It lies with IT."
Clarity is increasingly crucial to enterprises, Lilac Schoenbeck, vice president of product marketing at cloud service provider iland, told Enterprise Technology last month. Organizations need access to their cloud metadata – information about performance, configuration, workload, and other key metrics – so they can optimize costs, ensure SLAs are met, demonstrate compliance, and maintain performance, she said. Without this knowledge, 100 percent of companies surveyed for iland by Forrester reported they suffered a negative business impact such as outage, wasted resources, unexpected expense, or difficulty reporting to management.
