January 13, 2023

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Reduce your cloud costs!

Interest in cloud costs has increased sharply recently and in this blog post we have tried to highlight the most common questions and how these can be addressed.

  1. Is it worth it to review our cloud costs?
  2. Are we paying too much for our current cloud services?
  3. How do we know we have the right cloud services?
  4. How do we go about reducing our cloud costs?
  5. How do we know that we have the right support agreement?

1. Is it worth it to review our cloud costs?

The answer to this question is of course highly individual, but if we stick to little-known key figures, we can at least answer it in an overall sense.

The general IT budget is normally 2.6% of turnover and the average share for cloud services is 5.7%, while the share of cloud services is expected to grow by 18.8% in the coming year. We in Sweden are normally classified as “early adopters” so it is reasonable to assume that our numbers for cloud consumption are significantly higher than that and cloud costs a significant budget item.

In general, a review with associated optimization usually means a saving of between 10–30%, but then we must remember that it is an ongoing saving over time, so a particularly high consumption is not needed for this to pay off.

2. Are we paying too much for our current cloud services?

The simple answer to the question is that if you haven’t actively negotiated discount structure, commitment time, reserved instances or reviewed possible overconsumption in the last 18 months, you are probably paying too much for your cloud services.

In addition to this, there is another parameter and it is the manufacturers’ price adjustments or changes in the price model that make it extra important to act before certain cut-off dates. In order not to miss these opportunities, a proactive partner is needed.

“For example, Microsoft has recently announced a price increase from April 1, 2023 in Sweden of 15% based on the USD trend. The price increase therefore affects not only Sweden but all countries that do not have USD as their standard currency, even if we in Sweden are hit hard.”

3. How do we know we have the right cloud services?

Again, the simple answer is that if you have been consuming cloud services for more than 18 months and have not actively implemented any changes to match the current offering with your needs, there are usually big savings to be made.

The most common efficiencies come from infrastructural changes such as, for example;

  • Uses services instead of migrated “legacy”.
  • Identify functions and resources that are no longer used in order to then phase them out in a controlled manner.
  • Matching of users and services to ensure that the right services are allocated to the right users and that no unnecessary services are left on inactive accounts.
  • Correctly dimensioned instances with associated reservations.

Usually these measures provide at least 10% in ongoing savings while the effort is minimal. However, cloud services are “evergreen” and continuously come with new and improved services. Therefore, it is important to see these changes as an ongoing project and not a “one off” effort.

4. How do we go about reducing our cloud costs?

As part of our offer for “Cloud Cost Control”, we normally carry out these investigations in Workshop format together with you and the product is a report where it is clearly stated what measures can be taken and what savings they would mean for you.

Depending on your setup and complexity, a Workshop takes between 2-4 days and spans 1-2 weeks in the calendar. About 50% of the time is spent together with you and the rest is analysis and report writing. In the report, potential measures are listed with grading with regard to how easy it is to implement the measure.

After the final report, you can choose to implement selected measures yourself or if you want our help or support to get the savings in place as quickly as possible. We also help in developing your cost strategy for the cloud, such as KPIs to monitor the cost.

5. How do we know we have the right support system?

Depending on the manufacturer and service, the support arrangements look a little different and it is not uncommon for partners to create specially adapted support arrangements, which makes a benchmark regarding price / performance relatively complex.

The support system is part of our Workshop for “Cloud Cost Control” where we go through your existing system in relation to the needs and requirements of the business to highlight any differences and alternatives.

“We at House of Clouds advocate transparency and have therefore developed a support plan for 24 x7 x365 support that is both clear and competent while also being included at no extra cost for customers with higher consumption. Support can also be purchased as an add-on for customers with slightly lower consumption, but who want the same security as larger companies.”

Do you want to know more about how you can reduce your cloud costs? Then just contact us for an initial discussion!

Written by Mathias Ahlm