For the past five years, Sykes Enterprises has been on a push to migrate workloads onto the cloud. The objective was scale, especially for internally developed systems.
One of the first solutions it migrated was the oneTEAM platform, a proprietary workforce management system which supported a work-from-home business unit of about 5,000 customer service agents. Then the pandemic hit, and the platform stretched to 40,000 agents as everyone went home.
"We just could not have done that had we not picked that system as one of the ones we migrated early on," said Dave Pearson, CIO at Sykes Enterprises.
The expansion also meant cloud spend surpassed the forecast envisioned for 2020. But financial modeling gave the business an idea of what to expect.
"Ironically, we ended up spending less than what our model predicted, because you don't really know scale until you hit scale," said Pearson.
In 2020, organizations relied on their cloud platforms to adjust to change. As cloud usage went up, 42.6% of organizations ended the year overrunning their cloud budgets, according to a report from Pepperdata. One-third say they blew past their cloud budget estimates by between 20% and 40%.
Though the unforeseen changes in the pandemic might have accelerated cloud budget overrun, organizations didn't start grappling with cloud spend just last year. Companies find themselves over budget for cloud spend by an average of 23%, according to a 2019 report from Flexera.
To combat the uncertainty of the cloud bill, IT leaders are turning to cloud governance models that let them control usage more closely, spin up cost management solutions and use financial modeling to bring cloud usage under control.
Tracking, controlling usage
It's very easy to overrun a cloud budget without a proper governance structure in place, said David Edwards, CIO at affordable housing nonprofit Enterprise Community Partners.
"I think the key for us was going into it with governance from the start," said Edwards, who became the company's CIO in January. While there are plenty of tools available to track cloud costs, the "real key is governance on the front-end" with clear visibility into who is able to have access, manage and start up cloud services.
"If you haven't controlled [usage] on the way in with governance and policies, you're doomed," Edwards said. "It's going to get away from you if you don't know who can spin up new resources, how long the resources are going to live, or how much consumption or demand, you're going to have."
Among factors causing overrun in an organization's cloud budget is the absence of cloud cost management tools, said Tracy Woo, senior analyst at Forrester.
"Sometimes there will be instances that are set up just for demos, and then they can keep on running for months and months and months until they revisit that for another demo," Woo said. "That can quickly run up costs as well."
A tool dedicated to tracking where instances are running idle, running up a tab, can help companies bring spend under control. Vendors such as AWS and Google Cloud offer their own solutions for cloud cost management. Though most are currently limited — they cannot offer optimization in a multi-cloud environment — Microsoft Azure is making some in-roads in that regard, Woo said.
"We've seen just a wider expanse of integration within that area, more monitoring tools have gotten in the game," said Woo.
The tools of financial modeling can take an out-of-control cloud budget in line, offering IT leadership visibility as to what to expect when the cloud bill, inevitably, comes due.
"The reason you do modeling is so you can be a little predictive about your operating plan for the year," said Pearson. The company turned to an in-house solution to do modeling and estimate what kind of costs it would face as a result of expanding its platform to support remote work.