Over a quarter of cloud spend is wasted
Cloud’s capacity to enable businesses to operate more efficiently and deploy new digital solutions at speed means many have embraced the technology enthusiastically. Yet in the excitement to seize the opportunities, basic housekeeping has often fallen by the wayside. One report [Flexera 2023] estimates that 28% of overall cloud spend is wasted. Our experience backs this up. We know that, by reviewing cloud costs, most organisations can save 20–40% of their spend in this area. In a climate where businesses across sectors are looking to ease cost pressures – and given that typically over half of IT spend is on cloud – this is an opportunity not to be ignored.
Pinpointing overspend unlocks the opportunity
But recognising and realising the opportunity are two different things. Perhaps the biggest barrier to realising savings is understanding precisely where the organisation is overspending, both in terms of costs for set-up and costs for ongoing use. This is because cloud technologies are always part of a complex IT ecosystem. The trend for autonomous agile teams to buy the cloud support they need for the solutions they have developed complicates the picture further.
Another barrier to bringing cloud spend under control is understanding the minimum cloud capacity required to enable the business to continue to function efficiently. The optimum configuration must be calculated carefully. Cloud is so central to operations that slashing capacity too far in a bid to minimise costs represents a real risk.
Even with clear visibility of their cloud spend and minimum capacity requirements, many organisations struggle to turn this insight into a practical plan for realising savings. Which areas should they target first for fastest impact? What cost benefits will each action bring? And how can they avoid inadvertently increasing the total cost of ownership by reducing spend in the wrong places?
Visibility coupled with pragmatism delivers results
These are all questions that we work with businesses to answer, with great results. We have recently been working with a UK retailer where we have identified target cloud savings of £5m against an annual cloud spend of circa £30m.
Addressing cloud overspend is a quick win
As cost pressures in the wider business environment squeeze tighter, reviewing cloud costs and implementing a practical programme to eliminate overspend can yield rapid and often significant savings. Longer-term, reviewing IT spend can also form part of a wider programme to optimise costs across the business, with the aim of strengthening enterprise resilience and maximising value.
Talk to us about bringing down your cloud costs.
To discover other opportunities for reducing costs, explore our new guide, ‘Cost optimisation opportunities for the year ahead.’