Cloud Services: Why The Costs Are Too High In Many Companies

Inflexible pricing, management tools that do not give users the control they need, and off-site data storage increase companies’ costs for their cloud services by about 35 percent annually. That is according to a recent study by Couchbase.

According to Couchbase’s Cloud Evolution Report, 2022 study, companies spend more than $33 million per year on cloud services on average. They could save around $8.75 million if cloud providers could solve users’ challenges. The global survey of 650 senior-level decision-makers found that cloud services are falling short of expectations. They also cause additional complications and costs. 36 percent of the companies surveyed stated that the cloud services introduced in the last three years had not met their expectations. 56 percent of respondents said previous cloud choices had hampered their digital transformation through 2021. Moreover, 48 percent complained about higher costs.

Factors That Lead To High Spending On Cloud Services

Insufficient insight into spending and a lack of cost optimization opportunities drive up organisational costs. Also, contributing factors are the need to improve security and compliance features and inflexible and inadequate subscriptions. Management tools that do not offer sufficient control are also problematic. In addition, data that is not stored where it would be necessary to meet legal regulations or performance requirements. Lastly, vendor lock-in also incurs higher costs as companies cannot use the necessary cloud infrastructure.

Many companies are struggling with service limitations. 61 percent of companies stated that they had to limit their digital transformation ambitions due to problems with cloud services. According to the survey, 58 percent have chosen services that did not offer the opportunity to scale their business in line with demand. Cloud momentum is unstoppable: 86 percent of respondents said increasing infrastructure shift to the cloud is “inevitable.”

Companies Need To Raise Their Standards

“The influence of the cloud is undeniable. It allows large companies greater scalability and flexibility. For smaller businesses, however, they give access to services and applications that they could never implement themselves”. “Companies think they can get what they need. Otherwise, we would not be seeing this seemingly unstoppable momentum. The question, however, is whether they could not get even more. Because around nine million US dollars are too much as unnecessary operating costs, if companies raised their standards and service providers eliminated inefficiencies, they could open up new opportunities for digital transformation. Alternatively, at least reduce costs.”

Cloud Services Offer Better SLAs Than In-House IT Teams

Companies are optimistic about the cloud despite the costs and challenges they face. Almost all respondents are confident that their cloud services provide them with the required security, availability, performance, cost-effectiveness, control, scalability, and compliance. This also fits in with the increased spending on the cloud: by 2025, companies want to make 58 percent of their IT spending on the public cloud. They stated that they currently had achieved this goal by 56 percent.

When explicitly asked about Database-as-a-Service (DBaaS), companies indicated that cloud services can offer better uptime service level agreements (SLAs) than their in-house team and can better plan their budget if they switch to consumption-based price models. This move, in turn, would allow them to reallocate the resources they currently devote to managing their database infrastructure to more meaningful areas.

When asked about the top concerns related to a new cloud infrastructure, 43 percent of respondents named data security. Followed by managing data in the cloud (33 percent) and future-proofing to meet future digital demands (31 percent). On the other hand, 30 percent worry about how they can keep costs under control in the future.

Cost Transparency Through Control Over The Data

“As costs and concerns continue to rise, more and more companies will struggle to meet their business goals”. “The root of many concerns and the additional costs that businesses face is the uncontrolled proliferation of the cloud. The more control organisations have over their data, including where it is stored and managed, the more confidence they have that their data is secure, their services are future-proof, and their costs are controlled. We know you cannot put the genie in the cloud back in the bottle. Moreover, neither should companies try. Instead, we must ensure that the cloud lives up to all expectations.”

Also Read: Top Cloud Security Tips For Businesses