The document discusses cloud transformation trends, highlighting both the challenges and strategies related to cloud adoption among organizations. Key drivers for cloud adoption include cost savings, but organizations frequently face budget overruns due to uncontrolled usage and a complex multi-cloud environment. To optimize cloud costs and improve governance, organizations must implement ongoing optimization practices and address skill shortages within their teams.

1. Copyright (C) 2018 451 Research LLC
Money Pitfalls and Failed Expectations:
Optimizing Essentials for the Cloud
March 20, 2018
451 Research and 2nd Watch
William Fellows & Owen Rogers
451 Research
Willy Sennott
2nd Watch

2. William Fellows
Founder & Research Vice President
Willy Sennott
Director, Data Science & Optimization
2
Owen Rogers
Research Director, Digital Economics
Unit

3. Housekeeping Items:
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4. Money pitfalls and failed expectations:
optimizing essentials for the cloud
Owen Rogers and William Fellows

5. 451 Research is a leading IT research & advisory company
5
Founded in 2000
250+ employees, including over 120 analysts
1,000+ clients: Technology & Service providers, corporate
advisory, finance, professional services, and IT decision makers
85,000+ IT professionals, business users and consumers in our research
community
Over 52 million data points published each quarter and 4,500+ reports
published each year
2,000+ technology & service providers under coverage
451 Research and its sister company, Uptime Institute, are the two divisions
of The 451 Group
Headquartered in New York City, with offices in London, Boston, San
Francisco, Washington DC, Austin, Mexico, Costa Rica, Brazil, Spain, UAE,
Russia, Taiwan, Singapore and Malaysia
Research & Data
Advisory
Events
Go 2 Market

6. Covering the technology and services, economics and
business models driving enterprise cloud transformation,
and the re-invention of the IT industry.
Cloud Transformation
6

7. 7

8. Sea change in attitude towards use of public cloud
8
It takes a
village
New normal
More buying,
less building
Market value
accelerating
90%
of companies in
cloud by 2019
cloud first->
cloud only
60%
of IT deployment
will be
off-premise
by 2019
90%
of Fortune 100
use a partner to
access AWS
17%
CAGR
Hosting, Cloud &
Managed Services
$125bn 2018(E)
“

9. The Cloud Transformation Journey
Great Expectations lead to a Brave New World
• Great Expectations drive cloud adoption
• Cloud costs reach Wuthering Heights
• A mix of War and Peace breaks out as CIOs control
consumption
• Optimizing consumption drives a Brave New World
9

10. CLOUD TRANSFORMATION
WORKLOADS AND KEY PROJECTS 2017
Source: 451 Research, Voice of the Enterprise:
Cloud Transformation, Organizational Dynamics
2017
Q42. What are the key factors
in building the business case
for cloud-computing
investments at your
organization?
10
38.8%
32.2%
32.0%
26.9%
23.5%
Cost savings
Resource scalability based on
application/workload
demands
Time to market/agility
Improved availability/uptime
Less to manage internally
n = 490
Great Expectations
Cost is biggest driver of
moving to the cloud

13. CLOUD TRANSFORMATION
WORKLOADS AND KEY PROJECTS 2017
Q53. What are the top IT pain
points in your organization?
Please select up to 3.
13
53.2%
46.6%
43.3%
29.2%
27.2%
26.0%
24.0%
9.7%
2.6%
Cost/budget
Security issues/concerns
Responding effectively to changing
business requirements
Managing legacy infrastructure
Insufficient staff
Dealing with new applications/projects
Skills shortage
Vendor management
Other
n = 534
Source: 451 Research, Voice of the Enterprise:
Cloud Transformation, Vendor Evaluations 2017
Percent of Sample
Wuthering Heights
Costs out of Control

15. CLOUD TRANSFORMATION
WORKLOADS AND KEY PROJECTS 2017
Source: 451 Research, Voice of the Enterprise:
Cloud Transformation, Organizational Dynamics
2017
Q35. How would you describe
your organization’s approach
to cloud governance with line
of business owners?
15
34.2%
26.9%
18.6%
13.1%
7.3%
We have formal policies and cloud
offerings that the line of business can
use.
We put some governance rules in place
with the line of business spending on
cloud.
We track cloud spending with the line of
business, but don’t control it.
We know there is cloud spending in the
line of business, but we don’t track it.
We have no idea what the line of
business are spending on cloud, if
anything.
n = 521
War and Peace
IT Departments Fight Back
with Governance Controls

17. Increasingly complex landscape
17
2ft
Approximate
number of
AWS SKUs
today

18. CLOUD TRANSFORMATION
WORKLOADS AND KEY PROJECTS 2017
Source: 451 Research, Voice of the Enterprise:
Cloud Transformation, Workloads and Key
Projects 2017
Q21. Which of the following
statements best describes
how your organization will
use different on-premises and
off-premises cloud
environments over the next 2
years?
18
38.4%
28.6%
20.4%
12.6%
We will focus primarily on a single cloud
environment, not multiple clouds.
We will have multiple different cloud
environments, but there will be little to no
interoperability between the cloud
environments.
We will have multiple cloud environments
to migrate workloads or data between
different cloud environments.
We will have multiple cloud environments
where the delivery of a single business
function across the different cloud
environments is seamless.
Percent of Sample
n = 437
Rise of multi-cloud
raising complexity

19. ++
Shortage of skills exacerbates cloud management
19
Q. What categories of skills are most acutely lacking when it comes to cloud computing environment management?
Select all that apply. (Base: currently facing cloud skills shortages)
Source: Voice of the Enterprise, Cloud Transformation, Organizational Dynamics, 2017
57%
of Organizations Face Skills
Shortages in Cloud Expertise,
Adversely Impacting Digital
Transformation
30%
of Organizations Find it “Very
Difficult” to Recruit for the
Required Cloud Expertise

20. CLOUD TRANSFORMATION
WORKLOADS AND KEY PROJECTS 2017
Source: 451 Research, Voice of the Enterprise:
Hosting and Cloud Managed Services, Vendor
Evaluations 2017
Q17. How does your
organization purchase
managed services or security
services in connection with
infrastructure services from
your vendor, if at all? Please
select all that apply.
20
29.3%
28.2%
19.7%
13.3%
12.8%
10.1%
3.2%
We do not purchase any management or security
services in connection with the infrastructure services
We purchase third-party management or security
tools, and apply using our own IT resources and staff
The infrastructure vendor bundles management and
security services with the infrastructure service
We buy services from a third-party managed service
provider, separate from the infrastructure
engagement
A managed service partner of the infrastructure
vendor supplies management and security as part of
the infrastructure engagement
We buy services from a managed service provider
who sources the infrastructure from a third party (i.e.,
a public cloud vendor)
Other
Percent of Sample
n = 188
Outsourced management and
tooling is now the norm in
cloud

21. Conclusions
• Cost-savings are a key driver of cloud adoption
• But post-migration, costs rapidly get out of control due to easier and cheaper
access to resources
• Governance controls and pricing models go some way to stemming costs
• For cloud to be value-adding to business, optimization must be done on an
ongoing basis to enable easy access once again, but at a lower cost
• Problem is likely to get worse as a result of increasing complexity, multi-cloud,
and skills gap
• Manual optimization is not viable in such a complex world
• The use of service providers and tooling is commonplace today
21

22. Willy Sennott
Director, Data Science and Optimization
2nd Watch
22

23. Journey to Optimized
Willy Sennott

24. KEY CONSIDERATIONS PRIOR TO OPTIMIZATION
 Cash Flow Position
 What is your annual
budget for cloud?
 Overall budget, budget
by business unit or
project, etc.
BUDGET
 Seasonal Cycles
 Do you expect to migrate
additional workloads to
the cloud?
 How do you expect your
existing workloads to
grow or shrink?
 What new workloads are
going to be built in the
cloud?
GROWTH
 Maturity of Applications
 Can your non-production
workloads be turned off
overnight and/or on
weekends?
 Do you have resources to
support application
changes required to
support autoscale and
spot usage?
SUPPORT

25. Eliminate Waste/Best
Practices
•Unused Resources
•Elastic Load
Balancers
•Elastic IP addresses
•Unused volumes
•Unnecessary
Snapshots
•Business rules by
environment (Prod vs
Dev and Test)
Reserved Instance
Portfolio Strategy
•Review overall
environment to
determine RI
Purchasing strategy
•Utilize multiple pricing
and term vehicles
(such as convertible
and standard) to layer
in RI’s throughout the
optimization process
Auto Park
•Identify workloads
that do not have a
24x7 requirement
•Schedule shutdowns
during non essential
times
Right Size
•Use most efficient
instance sizes
•Analyze historical
data and trends
•Identify all future
known events
•Apply
recommendations to
both EC2 and RDS
and over-provisioned
PIOPS volumes
•New Instance types
and Instance Family
updates
Spot Usage
•Identify workloads
where spot usage is
appropriate
New Services
•Review opportunities
for re-architecture
based on new or
enhanced
technologies.
(Lambda and other
serverless options)
Onboarding
Monitoring
Right Sizing
Initiative
RI Purchases
Quarterly
Optimization
Review
Yearly
Optimization
Review
OPTIMIZATION METHODOLOGY

26. Optimization – Pillar Overlap
Reserved Instances
OperationsAnalysis
ROI
RI’s
Right Sizing
Family
Refresh
Auto Park
Spot
Waste: 1) Idle Load-
balances, 2) Unattached
Volumes and 3) Other
Re-Architecture and
Best practice
changes

27. Questions?