With its promise of scalability and access to cutting-edge technologies like AI, the cloud has become the digital backbone of modern business. But this convenience comes with a catch: the potential for runaway costs and the need for cost optimization. According to Gartner, by 2024, companies worldwide are expected to spend a massive $675.4 billion on public cloud services. This represents a significant jump from the $561 billion spent in 2023, highlighting the rapid growth of cloud adoption.
Businesses scramble to optimize their IT budgets in an economic climate where every penny counts, particularly cloud expenditures. And yet, it is clear that enterprises see significant returns from the cloud. In a recent report conducted by Forrester Research, almost two-thirds of respondents said they increased their cloud spending in the last year, up from 56% in 2023.
To shed light on this crucial topic, I talked with Aaron Sandeen, VP of Technology Services at Crayon, an IT company that offers cloud migration support, artificial intelligence, and software asset management services. A seasoned expert in cost optimization and cloud management, Sandeen offers invaluable insights into the challenges and opportunities facing businesses today.
The Holistic Approach: Aligning IT with Your North Star
“In the era of AI and cloud computing,” Sandeen said, “the biggest challenge organizations face is aligning their IT spending with their core business objectives.”
He champions a holistic approach, borrowing wisdom from Jim Collins’ much-lauded book “Good to Great: Why Some Companies Make the Leap… and Others Don’t.” The book describes how companies transition from good to great and how most fail to do so.
“Leaders need to define their ‘Big Hairy Audacious Goal (BHAG’),” Sandeen said, “and ensure every IT investment contributes to achieving it.”
According to Sandeen, this strategy transforms budget discussions from mere number crunching into strategic prioritization.
“By categorizing systems into ‘Run-The-Business’ and ‘Change-The-Business,’ organizations can effectively evaluate costs, risks, and impact, ultimately driving innovation while reducing expenses,” Sandeen said.
AI: A Double-Edged Sword for Your Budget
AI presents a unique conundrum, particularly the dazzling realm of generative AI. While brimming with potential, it can also be a costly endeavor.
“Companies need a plan to educate their employees on using AI responsibly,” Sandeen said. “Loading valuable intellectual property into a random tool can erode your competitive edge, and using chatbots without guardrails can lead to legal issues.”
Sandeen emphasizes the importance of understanding AI capabilities and choosing the right tools for the job.
“Microsoft, AWS, Google, and OpenAI have built amazing generative AI platforms,” Sandeen said. “But some customers want to go further, implementing AI in their cloud environment with their own data and security standards.”
Continuous Cloud Optimization: A Marathon, Not a Sprint
Cloud optimization isn’t a one-and-done affair; it’s an ongoing journey.
“Just as business needs evolve, so should your cloud and licensing strategies,” Sandeen said.
He points to the Well-Architected Frameworks from AWS and Microsoft as valuable companions on this journey. According to Sandeen, these frameworks offer a set of evolving best practices applicable to any workload.
“From whiteboarding sessions to API-driven solutions that validate thousands of controls in real-time, these frameworks have matured significantly,” Sandeen said. “Our goal is to ensure clients continuously reap the benefits of cloud cost savings.”
Security: The Unsung Hero of Cloud Optimization
In the cloud, security is non-negotiable.
“It’s everyone’s job, and it should be incorporated from the beginning,” Sandeen said. He observes that cost and security often top the priority list for businesses. “But if cost is initially the primary focus, security often rises to the top as we assess and review potential vulnerabilities.”
Layered security and regular checkups are crucial to identify and prioritize remediation plans.
“Misconfiguration is a major risk in the cloud, but most issues can be easily identified and fixed,” Sandeen said. He also highlights the need for compensating controls to protect the environment in case of a security breach.
The Future of IT Cost Optimization: AI-Powered and Nimble
Gazing into the crystal ball, Sandeen sees AI and machine learning playing an even more prominent role in IT cost optimization.
“We’re already using AI to assess, identify, and suggest remediation strategies for costs and security,” Sandeen said. “Whether it’s chatting with security logs or predicting cost increases, AI is transforming how we work.”
However, Sandeen acknowledges the challenges of keeping pace with technology’s relentless march. He anticipates increased adoption of AI agents in the near future, which has the potential to dramatically amplify productivity.
But with these advancements come new perils.
“New features are released weekly, and what was science fiction 18 months ago is reality today. However, bad actors also have access to AI,” Sandeen said. “It’s cheaper and easier than ever to do bad things. Businesses need to be even more vigilant in their security.”
Preparing for the Future, Embracing Agility
The advice to businesses is concise and direct.
“Stay up to date and remain agile,” Sandeen said. “Regularly review your cloud strategies, automate where possible, and lean on an expert partner where needed. Strategic optimization and efficiency can maximize innovation and cost savings.”
In the final analysis, taming the cloud beast requires a holistic approach, a keen understanding of AI’s potential and pitfalls, a commitment to continuous optimization, and an unwavering focus on security. Both in-house and with external expert guidance and solutions, businesses can confidently embrace the cloud and AI, driving innovation and achieving their business goals without falling prey to excessive IT costs.
