Businesses in the Asia Pacific region are facing unnecessary cloud spending, according to a study commissioned by Forrester Consulting. Additionally, cloud cost management initiatives and tools are introduced too late or without a complete view of their environment to be very effective.
In the new study, commissioned by IPaaS provider Boomi in December 2023, it was found that 87% of companies in the Asia Pacific region have exceeded their set cloud budgets over the past two years, and 69% expect their budgets to cloud will be exceeded during the current financial year. .
These results come as regional cloud workloads are expected to increase rapidly over the next two years. Workloads for applications in IT operations (51%), hybrid work (55%), software creation platforms and tools (42%), and digital experiences (40%) are expected to grow the fastest.
Challenges with cloud cost management and optimization tools
Forrester Consulting’s survey of 420 cloud and real-time data decision makers worldwide found that most APAC companies surveyed are exceeding their cloud budgets despite widespread use of cloud cost management and optimization tools.
Globally, the survey found:
- Only 10% of companies say CCMO tools fully maximize cloud cost savings.
- On average, a quarter of cloud spending will still be wasted among respondents worldwide.
The Forrester Consulting study attributes this to the growth of cloud workload and tools that often only show part of the cost after the fact. “They do not enable proactive cost optimization at the cloud architecture level, where choices around service adoption and integration can have a significant impact on cloud costs,” the report said.
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Timing Issues for CCMO Initiatives and Tool Deployments
Part of the problem appears to be timing (Figure A). Companies in the APAC region have realized that introducing cost control and optimization measures too late in the cloud development process leads to later difficulties in managing and containing costs. The study found:
- Only 5% of decision makers in APAC say their cloud cost remediation strategies are as proactive as possible, and only four in 10 contain costs at the solution architecture stage.
- Asia Pacific respondents are now prioritizing CCMO tactics earlier in cloud development (62%), but most companies lack proactive strategies at the earlier architecture level.
Visibility issues offered by existing CCMO tools
Organizations report having difficulty tracking different areas of cloud spending with CCMO tools. Among all global survey responses rating areas as “moderately difficult” or “extremely difficult,” data management was the most difficult to track with CCMO tools (Figure B).
In APAC, this result was reflected. Companies in the Asia Pacific region have also found that egress fees (charged each time data moves in and out of the cloud) as well as the time and resources required to build and maintain application integrations are respectively the second and third most difficult areas to follow.
According to Boomi, companies in the Asia-Pacific region are implementing “blind” cost management strategies due to a lack of architectural visibility. About six in 10 (63%) APAC respondents believe CCMO recommendations are only as good as the data their company can provide.
Other issues with CCMO tools
Nearly half (44%) said third-party CCMO tools were not compliant with reporting requirements, while 35% said remedial recommendations given by the tools came too late in the development process.
Additionally, 27% of global respondents said CCMO tool recommendations do not address the root cause of cloud spending in the organization’s architecture design, while 19% said Do not trust native CCMO solutions offered by major cloud providers.
Global results show that only 14% of organizations experience no issues with CCMO tools.
FinOps practices paralyzed by lack of visibility
FinOps practices have emerged as a key way for organizations to control cloud costs in a cost-constrained environment. The Forrester report highlights that the FinOps Foundation in the United States has grown rapidly, now with 48 of the Fortune 50 companies participating.
However, FinOps practices are not as effective as they could be in controlling costs.
The investigation revealed:
- In APAC, 59% of respondents still struggle to gain the cost and data visibility needed to be effective in FinOps practices and roles. APAC respondents face more challenges than North American (43%) and European (40%) respondents.
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- APAC respondents also noted that the lack of cloud architecture that supports cost containment at the integration level prevents 37% of executives from advancing their FinOps practices, limiting their ability to control costs .
Controlling cloud spend is a key strategic priority
Reducing cloud spending has become one of the highest priorities for strategic cloud programs globally; the only higher priorities cited in the report by respondents were executing modernization initiatives and consolidating data for analysis.
However, even though organizations in APAC are aware that they can optimize cloud costs at the solution architecture level, less than half actually have a strategy in place to solve the common problems they face. faced and which increase costs. Common issues cited include excessive storage (52%), lack of integration strategy (44%), and overconsumption of bandwidth (42%).
Recommended modernization and integration
Forrester Consulting said modernization and integration were the solutions. “Seventy-two percent of decision-makers indicate that cloud architecture integration and modernization initiatives have the potential to transform their organization’s ability to reduce cloud spending,” the report states.
“Successfully executing these initiatives at the solution architecture level helps avoid unnecessary spending in the cloud and also allows businesses to better align with FinOps best practices, redirect resources towards innovation and improve the return on cloud investment,” he concludes.
