By: Tom Christensen, Head of Thought Leadership - Nordics, LTIMindtree

As businesses turn to cloud services to meet their growing technology needs, the promise of scalability, flexibility, and enhanced performance makes cloud computing an attractive proposition. However, the journey to the cloud is not without its challenges, particularly when it comes to managing costs. Second-generation cloud solutions stand out as valuable allies in this regard, offering a suite of tools and strategies for controlling expenses. They help organizations maximize their investments through significant cost reductions while maintaining optimal performance and reliability. This blog explores the transformation of cloud cost management through recent cloud migration projects from the Nordics.

Harnessing second-generation cloud for cost efficiency

To illustrate what is possible, let’s examine Oracle Cloud Infrastructure (OCI), which stands out as a second-generation cloud platform engineered for high performance, scalability, security, and cost efficiency. The service offerings include a full cloud service hyperscaler with over 120 cloud services, ranging from IaaS (compute, storage, networking, etc.) to PaaS with data, integration, and AI services, as well as SaaS and third-party applications.

What about third-party application?

Before we jump into it, let’s address one of the concerns we often encounter: Does a second-generation cloud platform such as OCI support services other than database services? Yes, OCI is designed to support a wide range of third-party applications, making it an applicable choice for businesses with existing software ecosystems. This compatibility ensures that organizations can leverage their current investments while benefiting from the features and cost efficiencies.

Multi-cloud support

Another important consideration is the support for multi-cloud environments, a factor we often encounter in the Nordics. This concern is justified, as many organizations adopt a multi-cloud strategy to prevent vendor lock-in and ensure flexibility. OCI addresses this need by facilitating seamless integration with other cloud providers such as Azure, AWS and GCP. This flexibility enables businesses to optimize their workloads across various platforms, ensuring they only pay for what they use while removing egress costs and maintaining performance and reliability.

Long-term cloud commitments are a concern

In the Nordics, we meet customers who recognize the benefits of committing to a long-term cloud strategy, such as potential cost savings and enhanced service levels. However, others express concerns about being “forced” into a commitment for three to five years with annual payment. This sentiment arises from the fear of being locked into a contract that may not align with their evolving business needs or technological advancements over time. In this context, second-generation cloud offerings allow companies more flexibility, without a long-term commitment. Additionally, the ability to move third-party applications between cloud vendors is a significant advantage.

OCI allows companies to optimize their cloud environment by selecting the best services and pricing models without being locked into a single cloud vendor. This flexibility ensures that businesses can choose cloud services that align with their immediate needs for scalability, performance, and cost-effectiveness, supporting their operational goals without compromise.

Insights into a cloud migration project from the Nordics

A recent cloud migration project shows significant cost savings from taking a structured approach to cloud adoption. This approach starts with an assessment to identify ideal application candidates, followed by strategy and architecture development, migration, production cut-over, and ongoing management. It highlights the following key points:

1. Stakeholder engagement: The project involved working closely with various stakeholders, including the Chief Information Officer (CIO), head of procurement, and operational personnel. Each group had specific concerns and priorities, such as cost savings, stability, and managing large commitments to other cloud providers.
2. Cost and margin focus: The main drivers for the business case were cost and margin, with key performance indicators (KPIs) centered around saving money, ensuring stability, and executing prestige projects.
3. Cost comparison: It provides a detailed comparison of costs between public cloud provider and OCI, demonstrating significant potential savings with OCI. This includes a step-by-step approach to presenting proof of savings using a simple dataset.
4. Risk management: This addresses risk management concerns by conducting a risk analysis and pilot migration, supported by Oracle’s Lift program.
5. Strategic approach: With a strategic approach to cloud adoption, including a meaningful migration of workloads will yield the highest return without introducing unnecessary risk.

In a recent cloud initiative, the successful migration to OCI from another hyperscaler demonstrated potential cost savings of up to 50% through strategic planning and effective stakeholder engagement. The prerequisite for achieving such high savings lies in finding the ideal application candidates. This was mainly third-party applications running on virtual machines that was migrated via a lift-and-shift approach.

Achieving these savings, which are based on the cost of the infrastructure, is a matter of identifying the workloads already deployed and evaluating which are the prime candidates for migration to achieve these savings.

Learn more about how you get can on the fast-track to achieving such savings. You can also discover how a food company revitalized their operations with OCI migration.

Tools for cost management

In the Nordic region, the message is clear: effectively managing costs is vital for organizations seeking to control costs. Oracle OCI provides a suite of tools to help monitor cloud spending. These tools offer insightful data on spending patterns, empowering organizations to make informed decisions that boost efficiency and promote strategic cost-saving measures.

Total cost of ownership (TCO) calculator: This tool helps organizations in estimating the total cost of ownership for their cloud infrastructure. By comparing the costs of running workloads on OCI versus other cloud providers or on-premises solutions, businesses can make informed decisions about their cloud strategy. The TCO calculator considers various factors such as compute, storage, networking, and labor costs to provide a full overview of potential savings.

Cost analysis: Cost analysis is an essential tool that allows organizations to monitor their cloud spending in real-time and analyze usage patterns. With detailed reports and visualizations, businesses can identify areas where costs can be optimized and take proactive measures to reduce unnecessary expenditures.

Budgets and alerts: To enhance cost control, Oracle OCI offers budgeting and alerting features. Organizations can set budget thresholds for different departments or projects and receive notifications when spending approaches or exceeds these limits. This proactive approach helps businesses stay within their budgetary constraints and avoid unexpected expenses.

These tools enable significant cost savings. Discover how an organization saved more than $1 million per year with OCI.

Best practices for cloud cost management

Implementing effective cost management strategies is crucial for optimizing cloud expenditures. Here are some best practices for controlling cloud costs with Oracle OCI:

Paving the way for long-term success

As businesses continue to embrace cloud technology, effectively managing costs will remain a key determinant of success. By following best practices and utilizing available tools, businesses can achieve significant savings and maximize the value of their cloud investments. Learn more about how to leverage Oracle IaaS and PaaS  services here.

In conclusion, controlling cloud costs is not just about reducing expenses; it’s about strategically positioning your organization to thrive in the digital era. Effective cloud cost management enables businesses to allocate resources more efficiently, fostering innovation and growth. By offering the framework and tools necessary for businesses to develop their digital services, you empower organizations to enhance the competitive edge and maximize the value of their cloud investments.