Flexing the cloud to combat economic anxiety
By Sameena Hassam, Chief Executive Officer, Capacitas
The picture of the current economy is a mixed one. While stock valuations are still very much near their peak, a glance at the newspapers and tv screens paints a very different picture. The war in Ukraine is still raging and OPEC quota cuts are keeping energy prices at unsustainable levels, meaning that inflation is stubbornly resisting all efforts to be tamed. This level of persistent uncertainty affects investment confidence, muddies demand forecasts and places constraints across the supply chain.
But of course, it’s not a completely pessimistic picture. Business still goes on, and Microsoft has since invested over $10 billion into OpenAI despite releasing 10,000 employees. Given the inevitable pressure on budgets company-wide, in particular within IT, it seems sensible to consider some kind of belt-tightening measures. For most companies, particularly amid the current skills-crunch, decimating the workforce is not a desirable option. Luckily, we don’t need to look further than our cloud infrastructure and applications, and making the most of its inherent flexibility, to discover areas where we can cut costs and increase performance simultaneously. It’s a sensible path to delivering business value that rapidly funnels OpEx back into the business without impacting services to the company or to customers.
Cloud flexibility is key to delivering value across the IT estate
There are some business costs which have always been high and come with the territory of running a successful business, such as a salaries. However, compute and storage costs are increasingly vast and tend to increase over time, especially when companies go through a rapid growth period.
During growth cycles, services are assembled with hastily coded applications running on infrastructure that wasn’t designed with efficiency in mind. Ad hoc services created in this way may no longer serve a purpose and are unlikely to scale optimally. Even small adjustments to the efficiency of those resources can provide a buffer against needing to reduce headcount during funding cuts.
An optimised cloud environment will cost less to manage, maintain and scale than an inefficient sub-optimal cloud. This is true in terms of resource costs reflected in the monthly bill, and also a reduction management overhead.
Face your fears to fund your future
So why aren’t we seeing more organisations seize the cloud as tool for financial security? In my experience, the root cause is fear and misunderstanding. The biggest savings in cloud optimisation are driven by application design, which many organisations see as a black box. However, in some of our most successful engagements, the code is exactly where the problems were. A great example was a software company where we discovered that an authentication call was executed as part of every transaction, adding up to millions of unnecessary code executions, each consuming cloud resources. Embracing the application as a source of optimisation is a necessary step of the journey.
Secondly, organisations are fearful of making changes to platforms, due to the risk of introducing instability Of course, making changes to a production platform is a risk and that must be mitigated, but fortunately the cloud is designed to be flexible. We are no longer shackled to our data centres and we can spin up environments almost instantaneously to try out code or configuration tweaks. This is a fantastic technological advancement and we need take advantage of it.
Finally, cloud optimisation is overlooked due to the misconception that as revenue grows, cloud cost must grow at the same rate. It is just accepted as the status quo. However, true cost optimisation occurs when you influence the shape of the cost trajectory, breaking down the link between cost and revenue and achieving economies of scale.
These are not complex obstacles to solve, and once solved properly, enterprises unlock an engine that can protect against future cost pressure. Another common misconception is the use of forward commits in isolation. We are seeing these being increasingly used as a mitigation against inflation and rising costs. This is because cost optimisation is often seen as a purely financial tactic – getting the same compute for less money. However, true optimisation, which is up to four times more effective, is about engineering and efficiency. Without technical efficiency, forward commits are just a commitment to be more wasteful.
Optimising the cloud is easy, but it does require the right mindset
Most companies will already be collecting the data they need to optimise their cloud environment as the upward trend in observability and monitoring tools continues. Fundamentally, cloud optimisation is a data-driven process, but it also requires a particular mindset. Estates that have trodden off the path of efficiency tend to do so for specific reasons. Building a mindset of efficiency when it comes to provisioning and manging cloud services delivers value for the business not only by reducing unnecessary costs today, but by ensuring that the right frameworks and structures are in place to keep costs and efficiency nailed down in the future.
Uma Rajagopal has been managing the posting of content for multiple platforms since 2021, including Global Banking & Finance Review, Asset Digest, Biz Dispatch, Blockchain Tribune, Business Express, Brands Journal, Companies Digest, Economy Standard, Entrepreneur Tribune, Finance Digest, Fintech Herald, Global Islamic Finance Magazine, International Releases, Online World News, Luxury Adviser, Palmbay Herald, Startup Observer, Technology Dispatch, Trading Herald, and Wealth Tribune. Her role ensures that content is published accurately and efficiently across these diverse publications.