This blog by Ravi Raghava was co-authored with Bob Ritchie, SAIC Chief Technology Officer.

Key Takeaways:

• Organizations must understand that cloud adoption will not automatically lead to savings and greater efficiency. 
• Organizations that shift to the mindset of IT being an operational expense rather than a capital expenditure have the best chance of achieving cost effectiveness.
• Take advantage of numerous available cloud tools, including auto-scaling, resource utilization monitoring and cost and usage reporting, to reach fiscal and operational efficiency.

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As more organizations rely on the cloud for their operations, effectively managing cloud costs becomes increasingly important.

To optimize cloud cost efficiency, two key factors are transparency and automation. Software-defined infrastructure enables automation, which allows organizations to realize cost benefits from the cloud's elasticity. Meanwhile, cost transparency provides insights to customize resources according to specific business or mission objectives.

The effectiveness transparency and automation

The adoption of cloud technology is not merely a technological shift; it is a strategic imperative. It allows organizations to take advantage of economies of scale and improve operational efficiency. For government institutions, it is important to move away from legacy systems, which can be a large portion of their IT budgets and consume significant amounts of resources for operations and maintenance, thereby leaving little for innovation.

An effective transparency and automation approach aligns with the cloud's focus on operational expenses instead of capital expenditures. Instead of estimating resource requirements upfront, this approach encourages continual adjustments to ensure that cloud usage is flexible and can adapt when business or mission requirements change. This approach also encourages a culture of continuous innovation, allowing organizations to test and evaluate the impact of new cloud services on both cost and effectiveness for their business and mission.

Costly cloud misconceptions

There is a common misconception that cloud adoption will automatically save money and increase efficiency. However, treating the cloud as if it is simply an extension of a company's data center is a harmful mistake. This error can result in underestimating operational costs, which can exceed the costs of running a traditional data center.

It is important to understand that the cloud requires a new way of thinking about IT, from development to delivery to security and operation. To fully benefit from the cloud, it is critical to embrace this shift in mindset and approach it with a transformative perspective.

Importance of cost transparency

To effectively manage costs, it is essential to understand the operational costs associated with the cloud. Cost transparency, commonly referred to as cost and usage reporting (CUR), is the foundation for understanding these costs and forecasting future expenditures. By utilizing cloud cost monitoring tools, visibility into cloud spending is increased, making it easier to detect and avoid unnecessary expenses.

It is important to note that there are no hidden fees in the cloud, but there may be instances of overlooked or misunderstood CUR data. Customers must establish robust monitoring and optimization practices to ensure cost-effective use of cloud resources while providing optimal performance. This includes monitoring resource utilization, implementing cost management tools and regularly reviewing and optimizing cloud infrastructure and configurations. This approach, in combination with techniques such as right-sizing cloud resources, auto-scaling, leveraging reserved instances for predictable workloads and regulating workloads, yields significant cost savings that cloud truly promises.

Looking beyond cost savings

Organizations can benefit from more than just cost savings through cloud adoption. The cloud's operational excellence approach allows research and development communities, as well as test and evaluation teams, to quickly experiment with data without the burden of long-term hardware commitments. Migrating to the cloud also encourages the adoption of data-centric security practices, which strengthen data protection.

These models are implemented throughout the system, providing data-centric security, cost-effectiveness and impactful outcomes. By embracing cloud technology, organizations can innovate rapidly, optimize resource utilization and safeguard their data throughout the migration process. To optimize the use of cloud technology, organizations should explore all pricing models and options, while ensuring their requirements are met.

Maximizing cost efficiency in the cloud is more than just a financial goal; it is a strategic necessity. To meet this necessity, transparency, automation and a change in mindset are essential. By fully understanding the potential of the cloud, avoiding common mistakes and taking advantage of its many benefits, organizations can thrive in a cloud environment. This means not only achieving cost savings but also driving innovation and ensuring security throughout their operations.

Learn more about our cloud solutions and capabilities at SAIC's CloudScend page.