- Mar 14, 2019
- Robbie Plourde
Lyft and AWS: A Cloud Cost Management Wake-Up Call
According to the filings for its Initial Public Offering (IPO), the ride-sharing company Lyft will pay at least $300 million for cloud services to Amazon Web Services (AWS) by the end of 2021. This giant figure breaks down to between $8.33 million and $8.57 million every month. Notably, even if Lyft doesn’t consume that much in services by the end of 2021, they will still have to pay the difference.
Lyft likely agreed to the AWS contract for cloud services to ensure access to ample computing resources, so that infrastructure problems wouldn’t cut into their potential growth. It’s a smart move and shows that they understand their business and its resource demands.
But the filings reveal an unacknowledged truth about cloud computing: it’s not as inexpensive as some might think. Even though the cloud can lower your initial investment in computing resources and personnel, it still represents a significant piece of your total budget over time – and those costs can quickly balloon without proper SaaS optimization and cloud cost management.
Learn how to minimize Cloud Shock – the unexpected, unbudgeted cost increase from delivering IT services via public cloud. Read the latest research from The ITAM Review.
Get long-term insights with cloud cost management
Cloud cost management is more than counting software licenses: it’s the oversight to monitor, report and forecast your business needs so that you’re not locked into expensive, long-term contracts and can achieve cloud cost optimization.
Transitioning from one cloud provider to another, or even from the cloud back to an on-premises environment, can be a costly barrier for exiting an expensive or unsatisfactory cloud contract. If your company decides to make a move, you will need the resources to migrate the data effectively, perhaps requiring an intermediary solution both to store the data and to manipulate the data if it’s in a format that’s incompatible with the new environment.
Here’s where cloud software asset management steps in. It is essential to be able to measure your current usage, optimize your current licenses, and forecast future needs. SaaS optimization software is a big driver to achieve these deliverables.
And these are the insights that give current and potential investors security in knowing that your investments are guided by sound and strategic license management insights.
5 non-negotiables for cloud software asset management
So, before your company enters into a massive and potentially costly cloud solutions contract, make sure that you:
- Clarify your goals. Know what your targets are and whether they are attainable. Be sure to avoid pie-in-the-sky thinking that might reflect your dreams but not necessarily the reality of your market.
- Monitor current usage. Know what you’re using and how. Establish a benchmark for measuring usage and changes in your environment.
- Optimize your licenses. Chances are that you’re not getting the most out of your current licenses. If you migrate with a contract based on an ineffective licensing structure, your licensing will continue to be ineffective in the cloud. Optimize before you migrate, so you can get the best possible licenses for your needs.
- Forecast future needs. Use your goals and current usage to get a rough estimate how much computing resources you might need in the future. Without a good idea of what your future might look like, you could end up with an environment that isn’t the right size for your needs.
- Develop an exit strategy. Know what it will take to migrate your data from one cloud vendor to another or back to your own environment. Agree on widely-used data formats to allow for easier migration. This will help protect you from getting stuck in an unsatisfactory cloud contract.
Once you’ve done all the above, you’ll be ready to negotiate a cloud services contract that meets your company’s specialized needs and goals.
Just because the cloud isn’t as affordable as it once seemed doesn’t mean that cost-effective cloud licensing is out of reach. Now more than ever, it’s important for you to take control of your cloud environment before it takes control of you.
Take a deep dive into SaaS spend optimization challenges - and get strategies to control your future SaaS spend. Read the case study, Salesforce and the SaaS Spend Explosion.