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Insights

Organisations are Leaving 80% of Cloud Savings on the Table

28th May 2020 by 
Danny Quilton Insight

Estimated read time: 2.5 Minutes

With large drops in customer demand, many organisations are having a tough time and will be looking to reduce their cost base across IT.

Large organisations with complex IT systems will have significant cloud footprints.Typically teams will implement cost reduction using the FinOps model. But in our experience these will only achieve 20% of the potential savings.

80% of cloud savings are left on the table - even when you have great technical teams

Yes, 80%. Take a look at the data from a recent cloud optimisation engagement:

AdvancedVsHousekeepingBkdown-1That's because these require advanced optimisation techniques that go way beyond FinOps approaches such as right-sizing, negotiation, savings-plans and cost management tools.

Don't get me wrong, FinOps techniques are perfect in technology-as-usual situations but not in the crisis that many organisations face today.

The trouble is, it's hard to win that 80% of savings, even when you have great technical teams.... 

Advanced optimisations are difficult to achieve for 3 reasons:

  1. Lack of methodology & detailed insights to understand how efficiently applications consume cloud resources.
  2. Staff responsible for cloud cost tend to be naturally conservative and risk-averse.
  3. Lack of executive sponsorship means nobody is driving change.

The first point is only possible when you have a highly specialised knowledge base and depth of experience. Something which most organisations don't have and therefore find it hard to comprehend why such massive savings are possible. If you are interested in finding out more, take a look at this webinar.

In our experience, the staff responsible for implementing cost improvements are naturally concerned that any change will impact the stability of the applications. Those who operate FinOps do not have the depth of expertise to assess the trade-off between performance and capacity. With the right methodology and insights, concerns around application stability can be tackled.

Finally, to achieve the 80%, it's crucial to have executive sponsorship to go after the more difficult  optimisations. Understandably, in the past this was not priority.

Now should be the time to commit the resources and time needed.

How to confidently scale back your cloud spend