What to Expect: 4 Phases of Cloud Adoption

4 Phases of Cloud Adoption

By Chris Blansett

Cloudwiry has been reducing AWS costs for its customers for almost 5 years. This has provided us a unique vantage point on how users, both big and small, adapt to the dynamic nature of the cloud.
Most AWS users experience 4 distinct phases of cost management once they have made the transition from internal data centers to using on-demand cloud assets. Here is an overview of these 4 phases to highlight the need for cloud adopters to introduce cost containment/optimization tools and guidelines soon after the transition to cloud use in order to prevent costs from returning to prior data center levels.

Phase 1- Significant savings are realized.

Substantial time and effort in planning were spent for the transition to the cloud and as a result cloud resources are correctly sized at this time and spending is within the expected range. Overall cost savings vs. the legacy internal data center can be substantial (~50% reduction). Associated data center capex/depreciation is eliminated and cost complexity not to mention associated headaches are greatly reduced for everyone. Straight forward billing from the cloud provider becomes a line item for finance. Satisfaction is typically high from all departments and adoptees tend to think they have a good understanding of managing their cloud services.

savings-realized

Phase 2- Cloud costs begin to trend above forecasts.

In the months following the transition to the cloud spending often begins to trend above forecasts. Organizations that have not kept tight control of assets can quickly see costs rise towards legacy data center levels. Individual users tend to overestimate assets needed or mismanage or forget assets already purchased. As a result, average asset utilization rates can decline substantially resulting in higher monthly costs with no realized benefit. The easy availability of bringing on additional cloud assets for a given user can quickly cause overall organizational costs to rise rapidly if not managed properly.

higher-forecasted-cost

Phase 3- Cloud costs revert back towards data center levels.

For some organizations that use AWS inefficiencies of a large number of individual users can quickly add up causing overall costs to climb back to legacy data center levels. An internal investigation to determine the cause of the higher cost is very common and it begins to be understood that management/policing of the variable cost structure of their cloud environment on a regular basis is necessary. In addition, a realization of the difficulty in managing a large number of variable cost and time dependent assets across multiple users and groups starts to materialize. Sophisticated AWS users will often tackle low hanging cost savings associated with abandoned or forgotten assets, but many users do not have the internal capacity to do so.

cost-revert-data-center-levels

Phase 4- Management of cloud services begins, costs abate.

Daily/weekly/monthly monitoring/policing of cloud resources begins, and cloud costs start to decline. If internally managed, a small dedicated team of highly specialized employees is often needed to stay on top, however a significant amount of cost savings is often left on the table. If managed externally, various models exist creating a wide variance in results and fee related expense. Finance concern declines due to receding cost trends, however costs have structurally increased due to the need for dedicated resources to manage cloud resources. Organizations understand managing their cloud service is a priority, some are able to do this internally but most struggle to perform the task adequately and a significant amount of savings are left on the table.

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Don't be caught unprepared, get the right tools for the job

Cloudwiry’s AWS Cost Optimization Suite enables you to focus on 3 critical areas to help you manage and streamline your optimization process.
1. Monitoring- Keep track of costs from one easy to use dashboard. Choose from 40+ report templates to quickly generate summaries for meetings or presentations.
2. Optimization alerts- Our Recommendation Engine constantly identifies and notifies you of cost savings opportunities so that you can quickly act upon them. Our powerful Recommendation Engine is your cost savings guide that keeps you on course.
3. Automated correction- Our Automation Engine can be configured to automatically right size cloud assets appropriately to make sure you only pay for what you need.
We believe AWS users need to gain visibility on their spending immediately following the transition to the cloud to grow their ability to manage those costs along with their cloud usage. Don’t wait for costs to spiral out of control, let Cloudwiry’s cost optimization help you manage your cloud costs to keep you within budget.

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