IT leaders on their way to the promised land come to a fork in the road. There are two arrow signs ahead. The arrow pointing to the left path displays: THis path is in oral surgery. Right-pointing arrow: This method calculates the cost of an IT asset and its business value..
IT leaders beg for training. If I were to tell this joke to a CIO, that's what they'd say.
Regardless of which method you prefer, quantifying the impact that assets have on your business is becoming increasingly difficult. Instead of managing application workloads and other resources solely on your own, you'll be operating them across multiple clouds and potentially everywhere in between.
This broad continuum impacts IT's ability to drive revenue. Frankly, it's the difference between being seen as a cost center and being seen as a value creator.
Most IT leaders analyze the cost structure of hardware, software, labor, and other resources to help inform budget and resource allocation decisions.
Technology business management (TBM) expanded its scope to help align resources with business goals, followed by FinOps, which organizations use to track and optimize cloud software spending.
Multi-cloud assets add complexity to costs
However, modern IT environments are far more distributed. According to Enterprise Strategy Group, 86% of organizations currently use multiple cloud providers, and 65% rely on more than one cloud provider.1
According to IDC, even with top-notch FinOps in place, organizations find that up to 30% of their total cloud spend is wasted.2 Add to this the on-premises systems, private clouds, colocation, and edge devices that run across your IT estate.
Additionally, there is more crossover than ever before between the financial levers that IT leaders wield for public cloud and on-premises practices.
For example, while public cloud providers have popularized pay-as-you-go consumption models, leading to a massive shift from CapEx to OpEx, more organizations are residing their IT infrastructure in their own datacenters rather than in other companies' datacenters. Now available for rent as a service within the company.
IDC's initial analysis of as-a-Service deployments shows 39% lower operational costs, 60% faster deployment of IT resources, and faster IT resource deployment over three years compared to other provisioning models. It shows a 38% increase in efficiency.
Today's financial governance frameworks are not tailored for multi-cloud environments. This makes it difficult for IT leaders to have meaningful conversations with executives about aligning cost and business value.
Track IT assets and value
Tracking the cost and value of IT services requires a thorough and focused approach. The framework must include:
Install cost accounting reader
One of the more interesting positions that IT organizations have filled in recent years is that of a cloud cost management specialist. Staff with similar roles for all her IT assets. The right choices will create her KPIs and benchmarks to track how IT assets are translated into business value.
Prioritizing cost allocation
Work with costing gurus on a standardized approach to defining cost structures for platforms and services. Collecting such data is critical as more organizations bring generative AI services into production, causing exponential growth in data volumes (and soaring costs).
Laboratory standard report
Aggregate data from various sources to gain visibility into your IT spending. Details show improvements (or hard truths) in predictability and granularity of costing, creating a single source of truth. After all, if you can't measure it, you can't improve it.
Governance and policy creation
Establish governance policies that consider the characteristics of each public cloud and on-premises system to ensure compliance and cost control. Determine how to track variable costs for IaaS and as-a-Service solutions, as well as service level agreements and risk mitigation across all assets.
Incorporate optimization strategies
Learn techniques for right-sizing instances and optimizing and predicting usage patterns for public cloud and on-premises systems. You should also track instances of technical debt to catch potential death spirals and curb wasteful spending.
Ultimately, these steps will help you make more informed choices about workload placement, vendor selection, cost-benefit analysis related to running internal or external resources, and Ensure your investments create value that supports business growth.
This path may help you navigate the fork in the road as you head toward the promised land of becoming a value-creating partner for your business.
Click here for details Dell APEX as-a-Service Solutions.
1 Addressing the Top Three Drivers of Multicloud Complexity, ESG, June 2023 2 IDC, IDC Blog, The Era of FinOps: Focus is Shifting from Cloud Features to Cloud Value, February 2023 3 IDC, Business Value White Paper sponsored by Dell Technologies, August 2023, IDC #US50921623