Insights

In recent months, Amazon, Apple, Google and Microsoft all announced significant rounds of redundancies blaming economic uncertainty. In fact, Meta too has just announced a further 10,000 jobs are to be cut as part of its “year of efficiency”. This is the second wave of redundancies the company has made in the last half-year. But as these enterprises reduce headcount, they certainly aren’t easing up on spending. Just days after Microsoft announced 10,000 layoffs, it was reported that they were also investing $10 billion into OpenAI, the firm behind ChatGPT. Likewise, Meta is still pouring money into its own iteration of virtual reality.  

No company makes redundancies lightly. However, there may be less-obvious ways to gain efficiencies which companies simply aren’t optimising. Particularly for companies that underwent rapid digital transformation over the last few years or those that over-hired during the pandemic in anticipation of changing audience behaviour. 

For the vast majority of enterprises, costs can be saved by optimising the cloud. Cloud flexibility is underutilised by some of the biggest adopters and advocates of the technology, and through better use, organisations will find efficiencies that could relieve pressure to make significant cuts.

What has cloud optimisation got to do with saving money?

While salaries make up a significant proportion of business costs, compute and storage costs can also be vast and tend to tend to always increase over time, especially when companies go through a rapid growth period. As companies expand, services can be thrown together with hastily coded applications running on infrastructure that makes poor use of the network, thereby adding additional and unnecessary costs to a company’s overheads. Ad hoc services created like this might already be redundant, or could even still be running without anyone knowing about them. Even small changes to the efficiency of those resources can provide some buffer against needing to make substantial layoffs, especially in times when there is a squeeze on the bottom line. 

Organisations often think that they’re powerless to manipulate the productivity of their cloud platform – but it’s entirely possible to make those assets work harder. This means that businesses can get a better service, while using less infrastructure, which results in a lower monthly bill. The cloud is designed to be flexible in this way, which is why it’s been such a game changer to the way businesses run. 

In order to deploy cloud optimisation to reduce costs, organisations need to develop a mindset surrounding cloud elasticity. This means being prepared to flex your platform and understand exactly how to do it as the business priorities change. But it’s easier said than done, and there are multiple reasons why organisations struggle with this – the primary one being a lack of in-house skills.

The top three savings to be made in cloud optimisation

In first place, the biggest savings in cloud optimisation are driven by application design. Some organisations view this as a black box, which shouldn’t be interfered with in any circumstances. The second saving is found in overcoming the fear of making changes. Often companies think their infrastructure might be too fragile to experiment with, but nothing will break if optimisation is undertaken expertly. Finally, the third biggest saving comes in overcoming the misconception where organisations think that as their cloud needs to grow at the same rate as their business.  

These aren’t complex obstacles to solve. And once solved properly, enterprises unlock an engine that can buffer the organisation against future cost pressure. Another common misconception is the use of forward commits in isolation. We are seeing these being increasingly used as a mitigation against inflation and rising costs. This is because cost optimisation is often seen as a purely financial tactic – getting the same compute for less money. But this isn’t the right approach. True optimisation, which is 400% more effective, involves engineering and efficiency. Without technical efficiency, forward commits are just a commitment to be more wasteful.

Optimising the cloud is easy, but it does require the right mindset  

Cloud optimisation doesn’t need to be difficult, especially as observability and monitoring tools are on the rise. Cloud optimisation is a data driven activity, and most organisations are already collecting this data. In our experience, the reason that most companies don’t manage optimisation is more of a cultural issue. Organisations have to adopt a creative mindset, where they appreciate that making small changes and measuring the result leads to the delivery of foundational savings.  

If you are a company that jumped into the cloud headfirst, taking the time to optimise existing processes is a way to reduce infrastructure costs and free up OPEX for more pressing matters. Hopefully, if companies take the time to optimise the cloud applications and infrastructure they have in place, more value can be added to the business in the future as a result.