Cloud spend spinning out of control
As the world emerges from the shadow of the Covid-19 pandemic, one significant development that can't be overlooked is the accelerated cloud migration and digital transformation necessitated by new remote working realities.
Though often veiled under an array of flashy buzzwords, the reality remains - we're now in an era of rising Cloud-related spending. This unexpected increase has left many decision-makers grappling with budget overruns, comparable to trying to seal a rapidly widening crack in a dam.
So, how did we end up here? The general consensus attributes this surge in spending to the cost of progress. To create business agility and maintain a competitive edge in a volatile global market, increased investment is viewed as an inevitable expense.
While there's truth in this assertion, we must challenge this simplistic perspective. Yes, progress is vital for any organisation to thrive, but it should come within the confines of a sound financial management framework - something conspicuously absent in today's cloud spend era!
The Shift in Budget Planning and Spending Control
Traditionally, organisations budgeted for tangible resources: hardware, software, floor space, electricity, and services. Costs were predictable, with multiple vendors vying for their business. The approach was simple: budget, purchase, operate.
Fast forward to the cloud era, organisations now rely on a single major vendor such as Microsoft, AWS, or Google for a comprehensive suite of services. This shift from numerous competitive vendors to a single mega-vendor has fundamentally changed budgeting dynamics.
Moreover, the conventional blend of CAPEX purchases with controllable OPEX has morphed into a 100% OPEX model based on relentless consumption of virtual services billed monthly, leaving little room for control or moderation.
This is the CFO's new reality in the cloud era - a loss of control with no straightforward way to regain it.
The Path Ahead: A Call for Change
There are no silver-bullet solutions to this escalating challenge. However, acknowledging the problem is the first critical step. CFOs must adapt and re-educate themselves in response to this change.
Reverting to old ways isn't an option. But regaining financial control over cloud spending is crucial for the organisation's survival, just as digital transformation is pivotal for IT. As we navigate this new era, effective financial management of cloud spending must be prioritised, not as an afterthought, but as an integral part of the digital transformation journey.
If you have questions or need assistance in steering through this new landscape of cloud spending, please feel free to reach out to us. We are here to support and guide you on this journey.