In my last blog, Navigate Our New Cloud Reality With The CloudHealth Optimization Desk, I passed along some data points from IDC and some feedback from CloudHealth customers showing how cloud strategy and spending is changing in response to the COVID-19 pandemic.
Depending on a company’s unique circumstances, they’re reducing, shifting, or even increasing their cloud spend. On top of that, 54% of organizations surveyed view public cloud management as more difficult than on-premises, and at least as difficult as other cloud tasks, according to the 2019 Enterprise Strategy Group Hybrid Cloud Trends report. Every decision weighs heavily. And, for that reason, every organization needs a Cloud Center of Excellence now more than ever.
A Cloud Center of Excellence (CCoE), sometimes known as a Cloud Business Office, Cloud Strategy Office, or Cloud Program Office, is a cross-functional working group that is tasked with supporting and governing the execution of an organization's cloud strategy. A CCoE facilitates collaboration and adoption of best practices across a range of disciplines—primarily operations, finance, security, engineering, and enterprise architecture. It’s a pragmatic way to bring centralized management to a decentralized IT delivery model.
So, why is it more important now than ever? This is the first major economic downturn of the cloud era. Old ways of responding to financial and market crises just don’t apply.
This is the first economic downtown of the cloud era
A recent Twitter thread started by @cloud_opinion captured the unique financial management challenge of the first major recession of the cloud era:
Unlike past recessions, there’s less of an opportunity to cut CAPEX. Companies have shifted much more IT spending to the cloud. And it’s not so easy to save money by simply spinning down EC2 instances—most companies have bought Reservations and/or Savings Plans and have already committed to that spending.
But not every company is in the same situation; some customers have told us that they may be wasting more money by not buying enough Reservations and/or Savings Plans, rather than buying too many. It’s different for everyone but there is one truth: cloud doesn’t optimize itself. A CCoE brings all hands on deck to find the best ways to reduce costs, optimize committed use discounts, and establish new best practices for all future deployments.
The cloud economist is the new rock star
Absolutely, the cloud economist’s profile has been raised and their skills are needed more than ever. And they can be incredibly influential in getting back to the basics of cloud spend management and maxing out optimization opportunities.
But their job is not to hack and slash budgets. The companies that get through this current crisis will be the ones who embrace a CCoE with a clear charter that not only optimizes costs, but focuses cloud investments on digital transformation that gets the company through the current downturn and prepares for life after COVID-19. The cloud accountant/economist won’t be successful operating in isolation. They’ll need to work closely with every cloud constituent to make the most informed decisions about current spend and future investments.
Communications is a greater challenge
The CCoE is now an indispensable communication medium. The communication between finance teams and cloud engineering and development is usually quite spotty in the best of circumstances. Even when in a central office, cloud engineers and developers aren’t known for being overly communicative. Now, organizations are extremely distributed with 100s and 1000s of remote employees. Developers and engineers can be scattered across time zones. A CCoE acts as means of communication and collaboration for what are now distributed teams. Every organization needs to virtually bring the key constituents together with a regular cadence to constantly and proactively manage their cloud strategy.
Engineering and development teams need guidance and a seat at the table
The Cloud economist can’t unilaterally impose the cloud rules of the road and cut spending. Well, they can, but it would most likely end badly. To optimize without causing harm to the customer experience, engineering and development teams must be involved in establishing policies for best practices for sanctioned and unsanctioned cloud resources. Telling a developer, “you don’t need an instance that large for that workload,” won’t go over well, especially late in the software delivery process. Bringing engineering and developer teams into the CCoE makes them part of the policy creation process. It has them contributing to best practices. As a result, they’re more bought in and committed to following the best practices they helped create.
So, yes, a CCoE is more important now more than ever for all these reasons and more. And CloudHealth is here to help. If you’ve never used CloudHealth, start a trial or ask us for a demo. For CloudHealth customers looking for even more ways to optimize their cloud investments, read more about the CloudHealth Optimization Desk and how it can work with your CCoE to make the most informed decisions.