Shadow IT, unused licenses and security issues prevent companies from realizing the full benefit of cloud.
Expense and asset management provider Tangoe recently released a report that takes a close look at the challenges associated with managing multi-cloud environments. The company partnered with CIO Magazine and Foundry and surveyed 200 IT decision makers at large enterprises.
In sum, the report found that cloud is highly utilized – but a variety of issues from cost to security challenges lower its overall benefit.
Let’s take a look at the results.
Greater Spend, But Uncertainty Remains
Cloud computing has obviously been widely adopted and saw an acceleration in growth during the pandemic. It allowed companies to decouple workloads from locations, making it ideal for businesses that have embraced remote or hybrid work – which is almost every company today.
However, the cloud does not guarantee cost savings in all scenarios and it’s important that IT decision makers fully understand how things can go awry with cloud.
The survey found that 82% of businesses plan to increase their spend in software as a service (SaaS), unified communications as a service (UCaaS) and infrastructure as a service (IaaS). But almost that same number, 80%, see costs as a challenge with their current cloud deployments.
This creates quite the conundrum for organizations. There is strong demand for the speed, agility and innovation that cloud brings, but the costs can offset the benefits, making it difficult to calculate a return on investment (ROI). The key findings that highlight the cause of these challenges include:
Clouds Run Amok
The study found that businesses are using dozens of cloud services to transition off of legacy, on-premises systems. The average company uses 14 SaaS apps, 11 UCaaS services and nine IaaS platforms. There is a wide mix of cloud archetypes as well: 39% of respondents are using public cloud services, 31% private and 30% hybrid.
IT leaders had big expectations for cloud but buyers often face a “caveat emptor” situation as less than half of UCaaS and IaaS investments fully delivered the cost savings expected. I have heard this from many IT professionals as there are so many unknown factors in a deployment.
A simple example is with UCaaS, companies often find their WAN needs to evolve to an SD-WAN to deliver the necessary quality of service for voice and video. Also, utilization-based pricing might seem appealing but creates unpredictability for budgeting. The reality is you don’t know what you don’t know until the deployment is underway.
Shadow IT Casts Darkness on Businesses
A whopping 70% of respondents reported shadow IT as their top challenge with cloud apps. Businesses units have become very comfortable buying their own services. This can lead to redundant subscriptions and cause management problems.
Wasted Resources Waste Money
The study found that 29% of cloud resources go unused or underutilized in terms of monthly cloud licenses. Companies spend a lot of time and energy trying to optimize cloud spend but there is no point if the organization can’t rightsized spend first.
More Money, More Blues
Large companies, that is ones that exceed $5B in revenue, are much more likely to experience challenges with existing cloud deployments, such as security, costs, ease of management and performance improvements.
In fact, 68% of larger companies faced significant difficulty achieving cost savings with the cloud, compared to 36% of smaller companies.
The report does provide some guidance as to how businesses can deal with some of these issues. The study prioritizes the following three critical capabilities for cloud management.
- Optimize and right size cloud spend.
- Measure and track all cloud investments.
- Measure the utilization of cloud.
Expense Management Can Lessen Cloud Woes
Given that Tangoe is an asset and expense management vendor, these suggestions align with the company’s products. The study found that 98% of IT leaders would benefit from a single expense and asset management platform to compare costs and evaluate how effectively they are using each service. Sixty-one percent identified cloud optimization and right-sizing among their most important cloud management requirements.
For many organizations, asset and expense management is done using home grown tools and spreadsheets and this can quickly lead to the complexity and the budget waste found in the survey. This happens as cloud deployments typically start small and grow. Initially, manual tracking can work, but as the use of cloud scales, a more automated and holistic approach is needed.