COVID-19 Pandemic Forces Reckoning with Cloud Costs

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In the wake of the COVID-19 pandemic, many organizations are accelerating the rate at which they are moving application workloads to the cloud.

A survey of more than 100 cloud-focused IT directors or above in companies with at least $500 million in annual sales and IT budgets of at least $50 million per year conducted by 2nd Watch, a provider of IT services, found that 59% plan to increase their cloud budgets in the next 12 months, with more than a third (34%) accelerating migrations to the cloud.

Less transparent is what the true cost of those migrations will be as IT organizations start to analyze their cloud computing expenses. Nearly half the respondents (48%) to the 2nd Watch survey noted cloud computing turned out to be more expensive than they initially anticipated.

A full 93% of respondents said they currently employ at least two cloud platforms. More than three quarters (78%) acknowledged the COVID-19 pandemic has forced them to alter their cloud strategy. A total of 79% said they are also still concerned about the impact COVID-19 will have on their IT strategy, with only 50% saying they are very confident in the ability of their organization to handle it. Not surprisingly, three quarters of respondents (75%) also said they are prioritizing cloud security.

Efforts to control cloud migration and operating costs 

While cloud applications are both more accessible and more resilient than on-premises applications, the cost of migrating applications to the cloud is substantial. In the wake of the economic downturn brought on by the pandemic, there’s naturally now a lot more focus on those costs. To help IT organizations better assess those costs, the Linux Foundation has launched the FinOps Foundation, a consortium dedicated to identifying best practices to rein in IT costs.

Despite initial perceptions, cloud computing in a lot of instances winds up being more expensive than on-premises IT environments, especially when it comes to running application workloads that run for extended periods of time. Those costs are one of the main reasons the bulk of enterprise applications continue to run in on-premises IT environments, even though cloud computing platforms have been available for more than a decade, notes FinOps Foundation President J.R. Storment.

“The cloud is the more expensive option,” says Storment.

Founding members of the FinOps Foundation are Apptio, Cloudeasier, Cloudsoft, CloudWize, Contino, Kubecost, Neos, Opsani, ProsperOps, Timspirit and VMware. The Technical Advisory Council for the foundation includes representatives from Apptio, Google, VMware, Atlassian, Nationwide and Pearson.

The FinOps Foundation is also vetting technology vendors that provide software that enables IT organizations to embrace financial management best practices. Launch partners for this program include Apptio Cloudability, CloudHealth by VMware, CloudWize, Kubecost, Opsani and ProsperOps. 

There is also a FinOps Certified Service Provider (FCSP) program that identifies services providers that have been vetted. Launch partners for this program include Apptio, Cloudeasier, Cloudsoft, Contino, Neos and Timspirit.

Finally, the FinOps Foundation has recognized a select group of training partners, including Apptio, Cloudeasier, Contino and VMware. The foundation is also making available a free Introduction to FinOps course.

Working from home could make cloud apps happen faster

Costs, of course, are only one factor to consider when deciding what platform to employ for different classes of workloads. Performance, security and compliance issues also play a role. At a time when many employees will be working from home for the foreseeable future, cloud applications have also proved to be more accessible. With many organizations now re-evaluating their entire approach to IT, however, it’s not just IT leaders that are focusing on these issues, notes Storment. C-suite executives and boards of directors are all weighing in, he says.

Making apples-to-apples comparisons between IT platforms has never been easy. IT platform vendors and cloud service providers go out of their way to make that difficult. However, as more scrutiny is applied to the cloud, it should become more apparent to all what the total cost of cloud computing really is. That doesn’t mean application workloads won’t continue to migrate to the cloud. There are plenty of good reasons to deploy applications in the cloud. It’s just the decision to migrate which applications to the cloud and when will hopefully be made with a lot more eyes that are wide open.

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