The Cloud is designed to make your life easier. If used right, it can push your business development into hyperdrive. But do you actually know how much, and how wisely, you’re investing in Cloud services?

A 2019 report revealed that 35% of Cloud users’ spending is wasted. That’s a significant hit to any company’s finances. Yet it’s far from unusual. So, why the waste? Most likely, the challenge is that your in-house team lacks specific expert knowledge compared to data specialists, making it virtually impossible to craft a cost-efficient, cutting-edge data strategy.

Keen to limit your Cloud costs? Follow this article series to find out how you can, in just a few simple steps. So, on to our first need-to-know tip:

Optimise your Cloud costs to revenue ratio

Do you know how your Cloud costs are billed? Cloud bills are often very complicated, with many line items (sometimes hundreds!). That complexity could mean you’re actually paying more for less. In the past, companies would have a dedicated IT professional managing their server. Things were simpler then: you knew your costs in advance. But that setup hugely disadvantaged small companies requiring multiple servers. Their investments skyrocketed. And technology changes fast, making that new, expensive server obsolete in no time. Now, pay per minute setups for state of the art servers are these small companies’ saving grace. Yet costs can – and will – climb rapidly as your business grows. If your monthly Cloud spend overtakes your revenue growth, you need to understand what’s going on.

Major Cloud providers tend to bill in various formats, leading to gaping variations in cost per machine. Providers often opt for a package deal strategy, lowering pricing by some 25% if you fix your usage until the end of the year. While potentially appealing at face value, this is a dangerous road to go down. If you go too high, you’ll fritter away money on unused capacity. A package deal lock-in will also make your flexibility a luxury of the past.

All in all, to start improving your Cloud service, it’s first vital to closely monitor your monthly Cloud cost to revenue ratio. That way, you can ensure your Cloud spend keeps pace with your revenue, keeping your business development firmly on the straight and narrow. When this ratio has a steady upward trend, it’s time to move onto the step we’ll discuss in our next post: limiting unnecessary licence fees.

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Written by
Rubén Trujillo
CTO Bi4 Group