Measuring return on cloud investments is a rising concern as organizations actively ramp up cloud migration. According to IDG’s 2020 Cloud Computing research¹, 81% of organizations have shifted at least one application or some element of their computing infrastructure to the cloud, up from 73% in 2018. More than half of cloud-based applications (54%) were migrated from an on-premises environment, while 46% were purpose-built for the platform, the IDG research found.
There’s good reason for the mass migration. Among the myriad functionality, agility and ease of deployment benefits associated with a cloud architecture, a report from Nucleus Research² found cloud deployments delivered four times the ROI vs. on-premises workloads over the period from January 2018 to November 2020. What’s more, organizations were able to recover the cost of their initial investments 2.5 times faster than for on-premises deployments, Nucleus found.
Challenges remain, however, with optimizing cloud costs. As organizations extend their investments across multiple public clouds — the IDG cloud survey found more than half (55%) of organizations employ multiple public clouds, with 21% relying on at least three — IT leaders are dealing with greater complexity in how they manage multi-cloud and hybrid cloud environments. More complexity can lead to hidden costs, and, more specifically, struggles with maintaining a hybrid environment within the promised constructs of a predictable cost structure.
“A well-managed, cost-optimized cloud can be cheaper for most clients than on-premises, but if you skip that step of establishing good cost governance and optimization of cloud architecture, you’re not going to achieve good results,” says Tim Rehac, EY Americas Cloud Infrastructure & Strategy Leader. “An unmanaged cloud is an opportunity to have runaway costs.”