E02: Visibility Reduces Cloud Spend During a Recession

Hey, what's up everybody? This is Nick from tenacity cloud.com with my co-host Jason Yeager. And you're listening to the Cloud Cost Optimization podcast. More people than ever are building cool stuff in the cloud and spending a lot of money to do it. So, on this show we're gonna discuss some of the cloud optimization trends.

Specifically today we're gonna talk about a couple of recent articles in Venture Beat and some of the statistics coming out of, you know, the current economic situation globally, and how that's driving, you know, some of the conversations in the, in the C-suite and Inside of organizations.

So, Jason, I guess you know, the first article I'm gonna point to, and we'll link these down in the show notes, but Venture Beat had an article back in early October stating, you know, 81% of IT teams are being directed to reduce their cloud spending or not take on any additional spending by the C-Suite.

And you know, you and I have experience 20 plus years in, in the industry in technology running technology. Certainly being a cost center is out of [00:01:00] a lot of organizations. You know, how is this different? I mean, you know, I would've said that the C-Suite has always focused on reducing costs.

What, what makes this different now? Well, first of all, I would say back in early October was only 10 days ago, . So the time is, time just flies by, doesn't it? You know, the difference is, is I think part of the difference with. And this particular time is that we saw just a massive influx of spend going into the public cloud over the pandemic.

You know, we saw revenues grow by 30, 40% over the course of the pandemic for the cloud providers. You know, the flexibility, the ease to get things spun up, the ease to solve those problems was the reason why I did it. Everybody started working from home. They had to figure out how to support all this stuff, and they did that, but they started spending a ton of.

And now that you know, the, the after effects of the pandemic, us all staying at home and, you know, the war and all this stuff is causing us to, you know, [00:02:00] kind of go into a, a spending freeze and, and companies. In the last couple years have just blown their budgets out from a cloud perspective. I mean, out of necessity.

Yeah. And so the belt is being tightened a lot tighter than it was, say, even 10 years ago. What was it, 10 15 years ago, almost now. The last one that we went through, I mean, you, you and I are old enough to remember the last time we had tighten our belts, right? Which wasn't that long ago.

We're talking about 14, 15 years ago. And so, listen, we've had. 12 plus years of a bull market and things are gonna slow down. And so the amount of spend going in over the last two years has, has been a direct result of why this is different this time. It's not that they're just. We need to save money on cloud.

It's No, no, no. You need to stop spending now and you need to save money because we need to make sure we can pay everyone. You know, it's interesting that you bring up the 2008 crisis. I, I hadn't really even drawn that conclusion yet, but you're right. When we experienced. That downturn, we were coming out [00:03:00] of a very flush era.

And there was a lot of spending on, on hardware and building out new you know, state of the art facilities, et cetera in the organizations I was in. And suddenly, you know, we, I was in a startup at the time and, and we were in growth mode. And there was suddenly this crunch on like, Hey, you know, there are certain economic realities that are happening.

We need to find a better and more efficient way. And that it actually drove. The virtualization trend. So we, we, we went from running you know, hardware, data analytics systems to trying to virtualize out as much as possible on, on VMware at the time. Cuz, cuz that was, that was, you know, what, what was the stable enterprise environment at the, at the time it was really the earliest days of, of aws.

So, you know, I I think that that drove a lot of change in, you know, it, it's interesting because. Right now I think we're seeing a lot of similar changes. We're coming out of a really flush era where we, you know, there's [00:04:00] a lot of growth, a lot of expansion, a lot of digital transformation. Cloud is, is has really strong adoption from a public cloud perspective.

And now we're in, you know, global economic crisis, you know, Organizations that are later to feel that are starting to feel that. And I think that's, that's driven even some adoption of, of technologies that are more efficient, more cost efficient, but may. You know, create and exacerbate some of the problems like containerization and serverless infrastructure can create both opportunity and a little bit of opaqueness in, in understanding cloud costs.

Yeah, I mean, I, I've, I, I'm not so sure that Containerization was designed to cut cloud costs. Actually, I'm just not so sure it was but, but it would be interesting to see, are people gonna now modernize all their application? I mean, that's not true. It, it, it's not a silver [00:05:00] bullet for, for, for. You know, saving money, right?

Kubernetes, I'm, I'm sure there are plenty of use cases. There are plenty of use cases on why it should work, but I think people go into it with this notion that all of a sudden I'm going to be more efficient and I'm going to be saving money and I'm gonna be more, more secure is actually the, the, the one I hear often is that we're gonna use, start using containers.

One of the benefits is we will be more secure when in reality you lose. Most of your visibility into your infrastructure when you implement con containers. So if you don't have a, so a solid strategy in understanding what's, what's being orchestrated, what's being built, what's being used, why it's being used, then you're, you're gonna be in a similar position that you were in before with a bunch of sprawl.

Right? And we see it quite a, quite a bit, especially with organizations that choose it for. Maybe the wrong reasons, . But I would be, I'd be interested to see like the last [00:06:00] recession that we had spawned this virtualization thing. Will this recession spawn at modernization? Cuz that's the best way to.

You know, cut costs and be more efficient is to modernize your applications, whether that's containers for the right use case, or serverless or this or that, whatever the case may be. But that's the best way to do it. I don't know if this will, Well, I mean, if this particular crisis will lead to that though.

Yeah, I think, I think that's, I think that's a good observation, that it may drive the modern nation trend and from a, from a, you know, a cost optimization, cost management perspective, of course, refactoring legacy apps is the most effective way. Of course, it's also, it's also one of those things that's kind of the last step because you want to think through all of the other ways to make an environment efficient so that you're not, you know, building efficiency on a, on a faulty foundation.

Let's be honest, it'll never break down's back 2008. It's just so true, right? Well, the, the jump from a server [00:07:00] to a virtual server is far different, right? Than re because you don't really need to redesign back, you know, you just, Well, it's a Linux server my application runs on and it's gonna run, you know, minus some functionality or maybe that doesn't work.

But, you know, it's a little bit different when you have to rewrite your entire application to, to utilize some function as opposed to some compute. Right? So, you know, there's a whole, so, so, You know, now that I'm thinking about it, it's not going to do that. People are being directed to spend money not, or to stop spending money, not spend more on app modernization, right?

I mean, I can't imagine that people are gonna go from stop spending money, cut all costs, they already don't have enough people, right? I mean, that, like, that's still out there. In fact, it's not just it anymore. The, the mar the, it's a, it's a job seekers market right now, so, We, I don't, I'm not so sure this will spawn the same sort of digital transformation trend that the [00:08:00] last.

Pan the last recession. Did, but we'll see. That's an interesting one. I it definitely took time then. It'll take time now. I mean, you have to build the business case, right? I mean, Yeah. You know, we, we did have to refactor applications that we were leveraging hardware. We had to shift, we had to shift our you know, our, our emphasis on.

on, you know, utilizing all of of memory and making sure we were building apps that were actually built to run on virtualization platforms. But you know, that that was, that was 15 years ago. That was a very different a very different, it's a very different problem set, too. Set of technology. Yeah.

Yeah. So this leads us to our, kind of our second article that this one actually hit back in August. That, you know, 40, 49% again for Venture Beat will link it in the, in the show notes. But 49% of businesses are struggling to control there, their cloud costs. And you know, I, I thought what was interesting is the article does point out a, a, a couple of things that maybe drive in this, but one of those is, you know, some.

Those modernization efforts during transformation, can actually create some [00:09:00] opaqueness inside of the environment. I don't think that's that's all of the issue necessarily, but, but that's certainly part of it. You know, what, what are some of those underlying, you know, factors though, Jason, that you've seen in your experience in, in what you're seeing in the world right now as customers are trying to get a handle on their, you know, their, their cloud.

Well, yeah, I think the first thing is to, to just, you know, make peace with the fact that that cloud providers are there to provide you with the flexibility and the tools necessary for you to operate your IT infrastructure in a very secure and optimized manner. They don. Tell you how to do all that stuff.

They give, they give you the tools to be able to do it, but they don't actually help you do it. And so we gotta get, we gotta get away from thinking that the cloud providers are just gonna, you know, they're gonna make sure that I'm spending the right amount of money. So what they do is, it's, it's a really difficult and complex tool.

It's complex billing, right? We, you can be billed by the minute or [00:10:00] by the hour. If you're billed by the minute, multiply that over. That's how many entries you're gonna have in the billing system. And so cloud billing is complex. It's not meant to be some cloud billing and cloud resources, you know, everything usage that goes into it.

It's not meant to be readable by a human alone. I mean, you know, if you're spending a hundred thousand dollars a month on the cloud, your monthly billing file is probably. north of 50 million rows of data and north of 10 to 15 gig in size. So just getting visibility into where you have and what you have and a, and a and, and a system to help you make sense of the cloud complex of, of the complexity of how cloud infrastructure is build.

Is, it's the only way that you can reign in or stop your cloud spending, because if not, you're just gonna be shooting fish in a barrel, trying to figure out what stuff you're using, what stuff you're not using, what commitments should I, should I be using is, are these the right commitments based on my [00:11:00] utilization pattern where my utilization, I mean there, there's so many different questions.

It, it's really. That need to be answered. It's almost impossible without the tools necessary to give you a simple look into your environment. Could maybe, for our listeners, maybe, maybe a way to, to categorize this or characterize this is, you know, there's fantastic capability and just almost, you know, limitless options in cloud and that sort of capability necessitates complex.

In it, just in the environments in and of themselves. So it, it does, it's not, it's not a deliberate obfuscation, It's nothing malicious. It's that the nature of optionality is that it's gonna be complex to get. You know, get your hand, get your arms around everything. And so this is why, you know, I often repeat that even modest scale environments can get away from us really, really quickly as someone who's run operations in, in cloud and tech [00:12:00] environments for, for a really long time.

When you introduced. When you introduce complexity into the environment. So I take advantage of the various tools that are available to me. The more of those I start to use and in greater volume, the harder it is to get my arms around it. You know, if everything just ran on one specific type of unit, I only ran anything ever on that.

Well, I could manage thousands and thousand. Thousands of those. But as soon as I start to option out into the, the tools that really help my business and, and really drive, you know, results help me become more revenue connected as opposed to being a cost center, well, that, that's what generates that complexity in the environment.

All right. So, was that, I think we're gonna leave it at that. You know, I, I, I think, you know, the, the message I would leave our listeners with is, you know, if your organization's not yet talking about cloud cost management or cloud spending where you need to go optimize the environment I think you're gonna start hearing it very soon with 81% of, of, like I said, 81% of IT teams being directed by the C-suite to, to stop spending or reduce spending.

You know, it's, it's, it's definitely gonna be coming. To your organization in the, and [00:13:00] certainly, you know, having a handle on where cloud spending is, having transparency into the environment, really understanding the sorts of strategies that you can use ahead of that conversation makes us, you know, makes all of us, having been in that role makes all of us look a whole lot better in front of the, the C-suite in front of the, the leadership team.

So, you know, be thinking about, you know, what are the sorts of things you need to do in order to get your arms around that and really understand it. So when the question comes, you can start providing answers immediately. Not say, Hey, I. I need several weeks to go figure this out and then come back with a spending request et cetera.

You know, try and get, try and get your arms around it now. Any parting thoughts there, Jason? You captured it, man. Awesome. All right, well that's it for today. Tune in next time. We'll dive into some of the, the topics around, you know, how to, how to better optimize your environment and go deep.

Thanks everyone.