Maximizing business value through strategic cloud spending

When evaluating cloud services, speed is not the be-all and end-all. Just as many drivers value fuel efficiency in their cars, companies also try to optimize the cost efficiency of their cloud platforms.

Those embarking on the cloud journey must balance cost management and digital transformation. According to IDC, the managed cloud services market in Asia Pacific is expected to more than double from $8.7 billion in 2022 to $20.2 billion in 2027. This growth will be driven by the increasing adoption of multi-cloud, hybrid cloud and cross-cloud architectures as organizations seek flexibility and resilience.

Understanding the three levels of cloud competency

Let’s explore how enterprises leverage their cloud platforms and maximize the value of their cloud investments. Generally, enterprises using cloud platforms can be divided into three categories: cloud aware, cloud mature, and cloud competent. To improve cost efficiency, enterprises should identify which category they fall into and then plan strategically to achieve better cost optimization and value realization.

Cloud-aware organizations often treat the cloud like just another data center environment. They migrate applications to the cloud before significantly modernizing it. However, because their operations remain tied to traditional data center thinking, these organizations may spend more than they expected after cloud migration. Their cost-cutting strategies focus on reducing the cost per compute resource by avoiding overprovisioning server instances. They also often negotiate lower prices through reserved instances, savings plans, and corporate discount programs.

While companies that are familiar with cloud technology can achieve significant cost savings by setting certain usage levels up front, their benefits eventually stagnate because they do not fully exploit the elasticity and on-demand nature of the cloud and its capabilities.

Cloud-savvy organizations, whether they are using exclusively cloud-native technologies or moving from legacy systems, have greater opportunities for cost savings. They could use serverless components such as Lambda architecture and API gateways to completely rethink applications for the cloud. This shift increases organizational agility and enables faster, iterative delivery of new features through DevOps practices, while improving application reliability, scalability, and resiliency.

However, the organizations best positioned to maximize cloud cost efficiency and achieve optimal business value are cloud-savvy organizations with advanced cloud competencies. These leaders actively adhere to robust, functional financial operations (FinOps) frameworks to intentionally reduce overall cloud spend while aligning spend with targeted business outcomes.

Strategic cost management and business value

Business leaders can make strategic decisions by closely monitoring return on investment metrics for cloud spend. For example, they can dynamically adjust cloud spend based on the actual revenue generated by each product line. Sophisticated dashboards that provide detailed cost visibility can help continuously inform and guide these key optimization decisions, improving infrastructure costs and overall business results.

As enterprises progress in cloud adoption and move more workloads and systems to the cloud, opportunities to optimize costs while improving business agility, scalability and value creation increase. By evolving and modernizing their application architecture, development processes, operational practices and governance models, enterprises can take full advantage of the inherent flexibility and scalability of cloud services. This approach offers two key benefits:

• First, it provides increased, virtually unlimited computing power for demanding, new use cases such as generative artificial intelligence.
• Secondly, it improves cost efficiency and optimizes expenses.

Optimizing cloud usage is not a goal, but an ongoing process. Companies must remain proactive and continually revise their strategies, operating methods and budgets as requirements and market conditions change and new offerings from cloud providers become available. Companies can manage this process more effectively by seeking expert advice and continuously adapting to new developments in cloud technology.

Rethinking performance metrics in cloud adoption

In summary, while performance indicators such as speed are still important, focusing solely on them when strategically adopting and maximizing cloud services can be short-sighted. Organizations can fully realize the revolutionary potential of their cloud journey by implementing a balanced, comprehensive strategy that focuses on cost efficiency and value maximization. This includes adopting robust FinOps practices to ensure continuous financial monitoring and optimization, aligning cloud spend with business objectives, and continually adapting to evolving needs and market conditions.