SAN FRANCISCO and PORTLAND, Oregon, Feb. 26, 2019
451 Research Finds More Than Half of Large Enterprises Worry About Cloud Costs on a Daily Basis; 80% of Respondents Acknowledge Poor Cloud Financial Management Has Had a Negative Impact on Their Business, Including a Drop in Innovation
SAN FRANCISCO and PORTLAND, Oregon, Feb. 26, 2019 /PRNewswire/ -- Today, at the Cloud Economic Summit, in San Francisco, Cloudability announced the results of a 451 Research survey that assesses how enterprises with at least $100k/month in cloud spend fare when it comes to cloud procurement maturity. The report, titled "Cost management in the cloud age: Enterprise readiness threatens innovation," concluded that cloud budgets have quickly become a material part of IT spend, and outside of the largest cloud spenders who budget $1M+/month on cloud most enterprises are unprepared to manage this variable spend resource. The survey captures responses from 300 Finance and IT leaders in the US and UK. A full copy of the report can be downloaded here.
"Our findings tell us that cloud cost management is about more than saving money, it's about making a cultural shift internally and enabling the business to move faster with fiscal discipline," said Owen Rogers, Cloud Economist at 451 Research. "As we inevitably go through the next stage in the current economic cycle and experience a downturn, IT and Finance leaders will begin looking for smarter ways of operating in the cloud since they have no plans to stop investing. The challenge, as always, will be to prevent overspend before it occurs without getting in the way of innovation."
Poor Cloud Financial Management Has a Negative Impact on the Business
Despite the benefits of cloud, more than half (57 percent) worry about costs daily, and have experienced a negative impact to the business due to poor cloud financial management:
Still, many do nothing because they believe they will hinder innovation (45 percent) or think the amount of overspend is too small and not worth resolving (50 percent). Additionally, the reluctance to admit to wasted spend factors into the millions in lost savings and deepening levels of inefficiency.
Disconnect Between IT and Finance
The cultural transformation required to manage cloud was one of the biggest challenges facing IT and Finance, with 72 percent of respondents acknowledging they have no formal reporting capacity between departments. Additional data suggests the IT department is completely unaware of the burden cloud budgeting has on finance.
Other highlights include:
"The 451 data validates a movement already afoot in our customer base over the last eight years that focuses on education, and helping both IT with Finance understand how to manage costs in a cloud economy," said J.R. Storment, Cofounder of Cloudability. "The research shows it's time for a new operating model to emerge that puts best practices into place now, and creates the discipline organizations need to remain competitive as cloud continues increasingly to represent more of IT spending. Those who have deployed FinOps have been able to balance cost efficiency while also maintaining velocity, reinvesting cost savings into further innovation."
About 451 Research
451 Research is a leading information technology research and advisory company focusing on technology innovation and market disruption. More than 100 analysts and consultants provide essential insight to more than 1,000 client organizations globally through a combination of syndicated research and data, advisory and go-to-market services, and live events. Founded in 2000 and headquartered in New York, 451 Research is a division of the 451 Group. Learn more and connect with 451 Research on Twitter and LinkedIn.
Cloudability is the pioneer and leader of the emerging FinOps market, a new practice area that brings financial accountability to the variable spend model of cloud. With more than $9 billion in cloud spend under management, Cloudability helps hundreds of customers make timely decisions about cloud usage and master the unit economics of cloud. Venture-backed Cloudability is based in Portland, Oregon and is a member of the FinOps Foundation. For more information, visit cloudability.com.