Top 5 Cloud Cost Management Challenges

Jeff DeVerter, CTO, Rackspace Technology

Amid the accelerated shift to cloud services, businesses are struggling with the associated IT budget management process, according to new Rackspace Technology survey results featured in a report titled, “Technology Budgets: Managing Shifting Priorities.

“Many businesses have found out the hard way in 2020 that their IT systems, resources and spend tracking weren’t ready for COVID,” said Jeff DeVerter, chief technology officer – solutions at Rackspace Technology. “With a 59% increase spend on IT tools, businesses have been forced to adapt quickly to a changing environment,” he said.

The survey polled 1,516 technology decision makers in 10 countries in June 2020. Those decision makers included CSOs, CIOs, CTOs and other IT leaders from a range of industries, including the public sector/government, healthcare, media, financial services, manufacturing and retail.

Top 5 IT and Cloud Cost Management Challenges

The survey posed questions related to IT spend, various approaches to cost management and the recent challenges and changes to the way business is conducted amid the COVID-19 pandemic.

Here are five major challenges identified in the survey:

1. IT budget sprawl

The survey examines the proliferation of IT budget management across organizations, and the results indicate that IT budgets are spread across many groups within organizations, making it increasingly difficult for IT decision makers to maintain visibility into where and how their IT budgets are being spent.

2. Cloud cost governance/optimization

The findings indicate that many organizations are not properly governing and optimizing cloud costs. In fact, the survey results show 50% of IT decision-makers lack a basic understanding of what cloud cost governance and cloud cost optimization are, and how they are different. Businesses in this category are at risk of cloud sprawl.

3. Lack of skilled resources to manage IT budgets

Across the board, leaders recognize the value in investing, tracking, and managing IT spend but finding someone with the expertise to do this effectively is a challenge. According to the survey results, 99% of IT decision makers surveyed reported having a documented IT budget and dedicated resources to manage IT spend, and yet, almost half of those surveyed do not feel these resources are skilled enough to be effective.

4. The COVID-19 Impact

Additionally, COVID-19 has taken an already difficult task and made it even harder, with respondents reporting the need to address a wide array of new technology challenges. And the research showed 78% of decision-makers report new concerns around budget or cost in the last three months, with 43% reporting concern over being unable to fund planned projects.

5. Shifting budgets to remote work

Also, businesses report a 59% increase in spend on technologies to support remote working, including virtual desktop infrastructure (VDI), productivity, video conferencing/collaboration, and more, which required shifting budget away from planned initiatives and toward obtaining the technology necessary to keep the business running. As different business units seek to quickly adopt tools to maintain business continuity, the investment in other IT priorities can get lost in the shuffle and go untraced, the research showed.

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    Monika Goel:

    It would be an understatement to say that businesses are still finding it challenging to cope with the remote working environment. One of them is to manage the finances that have rapidly increased due to the pandemic. But if we look at the long-term results of adopting cloud technology, it is safe to say that the cloud will drastically reduce the spending on IT tools.

    With the cloud, businesses will not have to spend hefty amounts managing and repairing the extensive IT infrastructure. Moreover, there are endless options to choose customized cloud solutions as per your business requirements and budget.

    Joe Panettieri:

    Hi Monika: Thanks for your readership. Generally speaking, I’ve never thought of cloud services as a money-saving activity. Instead, I’ve mostly considered it a (1) speed to market and (2) access to innovation opportunity. The cloud allows businesses of any size to move fast, scale up, scale down, and pivot at a moment’s notice. And yes, there are cost-savings opportunities for those who really understand how to manage the math of it all.

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