Maximising business value through strategic cloud spending

When evaluating cloud services, speed isn’t the be-all and end-all. Just as many drivers prioritise fuel efficiency for their cars, businesses similarly seek to optimise the cost efficiency of their cloud platforms.

Embarking on the cloud journey involves balancing cost management with the drive for digital transformation. According to IDC, the managed cloud services market across Asia-Pacific is expected to more than double from US$8.7 billion in 2022 to US$20.2 billion by 2027. This growth is driven by the rising adoption of multi-cloud, hybrid cloud, and cross-cloud architectures as organisations seek flexibility and resilience.

Understanding the three levels of cloud proficiency

Let’s explore how enterprises leverage their cloud platforms and maximise value from cloud investments. Generally, enterprises that use cloud platforms can be grouped into three levels: cloud-aware, cloud-mature, and cloud-fluent. For enhanced cost-effectiveness, businesses should identify which category they are in, and then strategically plan for better cost optimisation and value realisation.

Cloud-aware organisations often treat the cloud as another data centre environment. They migrate applications to the cloud before significantly modernising them. However, because their operations remain tied to traditional data centre thinking, these organisations may find themselves spending more than anticipated after cloud migration. Their cost reduction strategies focus on decreasing costs per compute resource by eliminating overprovisioning of server instances. They also frequently negotiate lower prices through reserved instances, savings plans, and corporate discount programs.

While firms that understand cloud technology can achieve significant cost savings by committing to specified usage levels upfront, their advantages eventually plateau because they are not fully utilising the cloud’s elastic, on-demand nature and capabilities.

Cloud-mature enterprises, whether using cloud-native technologies exclusively or transitioning from older systems, have broader cost-saving opportunities. They might use serverless components, like Lambda architecture and API gateways, to completely rethink applications for the cloud. This shift boosts organisational agility, enabling faster, iterative delivery of new capabilities through DevOps methodologies, while also enhancing application reliability, scalability, and resiliency.

However, the organisations best positioned to maximise cloud cost efficiency and extract optimal business value are cloud-fluent enterprises with advanced cloud proficiency. These leading companies actively adhere to robust, functional financial operations (FinOps) frameworks to deliberately lower overall cloud expenditures while aligning spending with targeted business outcomes.

Strategic cost management and business value

Business leaders can make strategic decisions by monitoring return on investment metrics for cloud expenditures closely. For instance, they can dynamically align cloud spending with the actual revenue generated by each product line. Sophisticated dashboards that provide detailed cost visibility can help continually inform and guide these essential optimisation decisions, improving infrastructure costs and overall business outcomes.

As organisations progress along their cloud adoption journey and transition more workloads and systems to the cloud, opportunities to optimise costs while enhancing business agility, scalability, and value will increase. By evolving and modernising their application architecture, development processes, operational practices, and governance models, enterprises can fully leverage the inherent flexibility and scalability of cloud services. This approach provides two key benefits:

  • First, it offers increased, virtually limitless computing power for demanding, emerging use cases like generative artificial intelligence.
  • Second, it improves cost efficiency and optimises spending.

The optimisation of cloud usage is not a destination, but an ongoing journey. Businesses must stay proactive, continually revising their strategies, operational methods, and budgets as needs and market conditions evolve, and new cloud provider offerings become available. Companies can navigate this journey more effectively by leveraging expert guidance and continually adapting to new developments in cloud technology.

Rethinking performance metrics in cloud adoption

To summarise, while performance indicators such as speed are still important, focusing solely on them can be shortsighted when strategically adopting and maximising cloud services. Businesses can fully capitalise on the revolutionary potential of their cloud journey by implementing a balanced, comprehensive strategy that prioritises cost efficiency and value maximisation. This includes adopting robust FinOps procedures to ensure ongoing financial oversight and optimisation, aligning cloud spending with business objectives, and continuously adapting to evolving needs and market conditions.