Are you paying too much for cloud? | KPMG | UK

Are you paying too much for cloud?

Are you paying too much for cloud?

Disciplined cloud cost management helps enterprises unlock the benefits of cloud – and get greater value from cloud commercial models.

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cloud cost management levers

Cloud has come of age. Eleven years after Amazon’s public release of a beta EC2 platform, more than a third of IT budgets are now expected to be spent on hosting and cloud services.1

Public and private cloud is now in a period of sustained market growth, however Gartner describe a situation where many enterprises are “ill-prepared for managing costs”.2

Maturity will bring consolidation in the next phase. Until then, cloud consumption will continue to be characterised by:

  • Costly and time-consuming initiatives to get workloads to cloud
  • Legacy operating models omitting key roles needed to operate cloud efficiently
  • Easier provisioning creating an OPEX proliferation challenge to be managed
  • High expenditure on cloud-enabling toolsets, ranging from DevOps to orchestration

The complexity of managing spend on cloud is many times that of on premise because there are many times more variables in play.

For twenty years, the primary driver for most businesses in choosing their infrastructure was cost – with notable exceptions for specific, limited capabilities such as high-performance compute. The Harvey Nash/KPMG CIO Survey in 2017 found that most organisations moving to the cloud were doing so for reasons of agility – cost was only the fifth most important reason.3

The digital era demands capability, and enterprises are prepared to pay a premium for this.

But is this premium really necessary?

Using our proprietary database of over 150 cost levers, KPMG undertakes reviews which consistently find double-digit percentage addressable savings. For one client, we found 26 percent in license savings and for another we avoided costs of £1m per annum across reserved instance, utilisation/auto-scaling and technical configuration savings. 

Most organisations are over-paying for their configuration of cloud infrastructure.4 The commercial model of cloud makes this a relatively easy cost to correct. KPMG’s Cloud Cost Management can help drive value in cloud by increasing the use of the lowest cost, adequately capable configuration. Our reviews help clients either set up their own cloud cost management capability or run cost management as an ongoing managed service. We can help save clients significant amounts of money.

Cloud brings a step change in capability to many enterprises. It underpins the most exciting technology developments of our era. It also brings a different economic model – consumption pricing.  Enterprises can exploit this to achieve the holy grail of the CIO and CFO – a zero impact cost saving. 

KPMG is proud to be a leader in the market in bringing this capability to our clients.

Read the full article

 

Contact us:

Adrian Bradley - Director, CIO Advisory

Emma Bisset - Manager, CIO Advisory

 

References:

1. The Voice of the Enterprise: Hosting and cloud managed Services - Organisational Dynamics Study, 451 Research, November 2016

2. Comparing Tools to Track Spend and Control Costs in the Public Cloud, Gartner, July 2017.

3. Navigating Uncertainty, Harvey Nash/KPMG CIO Survey 2017

4. http://uk.businessinsider.com/companies-waste-62-billion-on-the-cloud-by-paying-for-storage-they-dont-need-according-to-a-report-2017-11

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