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Cloud Economics: The Solution to Excessive Cloud Expenditures

Author: Kees Birkhoff, expert in cloud strategy, global delivery, portfolio management, Capgemini

Throughout COVID-19, organizations have relied on the cloud more than ever – be it for supporting their remote workforce or for expanding bandwidth for online interactions. In this unprecedented situation, many will have found themselves throwing money at the cloud to compensate for rapid digital expansion. Unless managed, this opens organizations to the risk of paying for these resources even when they become redundant in future.

It is essential, then, to create an elastic infrastructure for cloud usage, one that grows and shrinks in time with enterprise needs, rather than the cloud swelling into a vast, siloed, shadow IT network that is difficult to manage and control.

Cloud Economics: The Solution to Out-of-Control Cloud Expenditures

We call this management process cloud economics, a framework for cloud transformation that prevents unnecessary expenditure and, at the same time, revolutionizes the IT function so it is fit for purpose. The process consists of five steps:

1. Identify: There is a balance to be had between investing and overspending. Our economics assessment looks to understand the value that the cloud is bringing to an organization and provide visibility into what is being spent where. From there, we assess if the business is investing in the right areas, if any applications are dormant and if IT processes are fit to support a cloud-first strategy.

2. Transform: We then assess the relationship between applications, legacy systems, and the cloud: what kind of routes do applications take, are they cost effective, and could legacy systems be moved? Depending on this, applications will either be rebuilt, refaced, or even decommissioned if the functionality is already there.

3. De-invest: Using the flexibility and scalability of the cloud is fundamental to keeping costs reasonable. As part of this, underutilized resources should be shut or scaled down. In this phase, we assist the organization in identifying these resources – most commonly data centers – and decommission them so that they are not an unnecessary drain.

4. Reskill: Moving to the cloud also means retraining the workforce to take advantage of its capabilities and is essential for cloud implementation, development, and maintenance. Designing cloud-native applications, for example, is a growing business need that requires specialist DevOps skills and an understanding of cloud infrastructure.

5. Support: Cloud capabilities are continuously developing; support is far from a sedentary function. Keeping costs low and efficiency high requires continuous monitoring and intervention. We provide our clients with a feedback loop for continuous improvement and offer ongoing support for cloud execution.

Cloud Economics and Cost Implications

In previous years, organizations were hesitant about moving to a cloud-first model because of the cost implications. However, the time for transformation is now. With cloud economics, organizations can measure and finance transformation and take full advantage of what the cloud has to offer.


Author Kees Birkhoff is an expert in cloud strategy, global delivery and portfolio management with Capgemini. Read more from Capgemini here.

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