Why a recession is great for companies with high cloud computing bills
Finding ways to save money on cloud computing bills is advantageous in any economic climate. But it’s an especially smart initiative to undertake during economic downturns.
The reason is not just that businesses often need to scale back financially to remain fiscally healthy during recessions. It’s also that, when demand for cloud services decreases – as it tends to do in times of recession – businesses are in a stronger position to negotiate the best prices for those services. And once they lock those savings in, they can continue to benefit from them even as the economy returns to normal.
So, whether you’re worried about cloud spending because you need to tighten your business’s belt to weather current economic turbulence, or you’re just looking to seize opportunities to get even more value from your cloud while paying less for it, now’s the time to pursue cloud cost-optimization projects. Here’s how:
Understand cloud spending
Cloud cost optimization starts with understanding what you’re spending on the cloud currently, and how much that figure exceeds what you’d spend if you were to implement cost optimizations.
This is important because the extent to which businesses overspend on the cloud can vary widely, and so can the impact of their cloud bills on overall business health. In some cases, companies may overspend by only about 8% to 10% – which is not great, but which is not usually enough to pose a critical threat to the business’ financial stability. But it’s not unusual to see organizations that overspend by as much as 30%. That figure does place a heavy financial burden on the business and severely restricts its ability to innovate, especially during economic downturns.
So, measure your cloud bills today and compare them with what you’d pay if you were able to obtain discounted cloud pricing or change the way you configure and deploy workloads. Although it’s impossible to know exactly how much you’re overpaying until you actually make changes that reduce your spend, you can get a general sense of how serious your unnecessary spending is, and how much more stable your business would be if you reduced your cloud bills so that you could reallocate part of your cloud budget to other initiatives.
Evaluate cloud workloads
Cloud workloads change constantly. Those that were once mission-critical may no longer be. Or, you may have invested in certain types of workload configuration – such as mirroring workloads across multiple cloud regions in order to increase reliability – that are no longer necessary because the requirements of the workloads have changed.
A recession is as great a time as any to evaluate cloud workloads and determine whether any should be decommissioned or substantially modified to deliver savings without compromising on business requirements. In other words, use recession as an opportunity to do some “spring cleaning” in your cloud as one step toward cost-optimization.
Restructuring workloads can save some money on cloud bills. But by far, the biggest opportunity for cost savings in the cloud stems from obtaining discounted pricing from cloud providers.
As noted above, economic downturns create excellent conditions for businesses to negotiate with cloud providers for pricing discounts. When cloud vendors are worried about losing business as companies scale back, they’re more likely to offer deeper discounts.
The fact that the public cloud computing market has become so competitive in recent years only sweetens the opportunity that businesses have right now surrounding cloud pricing discounts. Amazon Web Services no longer dominates the cloud market in the way it once did. The latest data from Gartner shows that AWS is losing market share to competitors such as Google Cloud Platform, which means AWS is keener than ever to retain customers – even if it means lowering its pricing for large-scale consumers of its services. By the same token, platforms such as GCP are eager to claim new customers through pricing discounts in order to maintain their momentum in the cloud market.
By the way, if you think you can’t ask for pricing discounts because you already have an enterprise agreement in place with a cloud provider that won’t expire for several years, think again. Businesses can, and often do, renegotiate their agreements with cloud providers mid-term. Companies shouldn’t be afraid to ask cloud providers for more favorable deals, especially at a time when the clouds face more competitive pressure than ever.
If there’s an upside to recessions, it’s that they present businesses with opportunities to save money that don’t exist in boom times. Organizations have a massive opportunity to reduce their cloud computing bills – and, by extension, free up budget to support other needs – and they should begin capitalizing on it today by assessing their cloud spending, evaluating cloud workloads and then approaching cloud vendors to ask for better pricing terms.
Kris Bliesner is co-founder and chief executive of cloud automation platform Vega Cloud. He wrote this article for SiliconANGLE.
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