SHI Trend Analysis: Global Organizations Challenge Public Cloud Financial ‘Lock -In’

SHI provides analysis of the latest IT trends impacting upon global organizations. As a trusted provider of IT solutions and services, SHI works in close partnership with many of the world’s largest organizations and offers an independent view of the prevailing challenges experienced by IT leaders. In this article, SHI Director of Presales Enterprise Architecture, Charlie Mulrooney, summarizes how multi-national businesses face financial lock-in with public cloud providers.

Several recent discussions with global organizations have highlighted the challenge of making large financial commitments to public cloud providers. These commitments typically require an organization to consume resources from a cloud provider for an extended period. This can create vendor lock-in, which limits an organization’s flexibility and ability to switch to other cloud providers if needed. The financial commitment is often made to achieve an attractive discount, public cloud providers will typically offer discount for large financial commitments – this is not news to anybody. After these agreements are signed, there is a heightened desire to move as many workloads to the cloud as possible to consume the committed spend of the agreement. An area which is often overlooked in this rush to meet the spend commitment is the process of determining what workloads are, and are not, best fits for public cloud.

This results in many workloads simply being moved, as-is, to the cloud. If those workloads were not optimized in the datacenter, they are just as un-optimized in the cloud. Tools report the amount of spend vs. the utilization of these resources, but as the workloads are in production, many teams are reluctant to change anything associated with a stable, running workload due to concerns of impacting availability or performance.

Static workloads that do not change their utilization much over time typically end up costing more to run in the cloud than they did in the datacenter. Workloads that do not use the dynamic capabilities of the cloud are likely to be more expensive to run in public cloud than they would in your own datacenter (or a Co-Lo).

Recently, SHI has seen more conversations and actions being taken to tackle this cost difference. One example that has gotten publicity is 37Signals sharing that they will be saving $1.5 million by moving cloud workloads to on-premises servers. They are factoring in power, cooling, and connectivity. Their statement of “Any mid-sized SaaS business and above with stable workloads that does not benchmark their rental bill for servers in the cloud against buying their own boxes is committing financial malpractice at this point” seems to have caught a lot of attention.

Several large customers have asked SHI for assistance in examining and optimizing their cloud spend, ranging from cost vs. utilization assessments, to cleaning up and standardizing tagging of resources for proper billing and usage analysis, to architecting and delivering infrastructure for repatriated workloads.

Engaging with SHI can help an organization to gain better clarity in this area, fostering data-driven decision making and taking advantage of SHI’s independent view of the global customer market.