The Role of Supply and Demand Dynamics in Cloud Optimization
Author: Kalibr8 Marketing
Date: May 30, 2023

Cloud computing, which is by no means a new concept, has risen to new heights amidst the beginning of digital transformation, thanks to the advantages the technology holds over the older generations of computing. Cloud computing has quickly become one of the most important technologies used in recent times, providing both individuals and organizations the ability to access computing resources, such as software, hardware, and platform, as services remotely through the Internet.

Growing quite rapidly, cloud computing’s global market value came in at USD 569.31 in 2022, and is expected to reach USD 677.95 by the end of 2023, with experts predicting a CAGR of 20 percent, bringing the estimated market value to USD 2,432.87 billion by 2030. The proposed longevity of the cloud’s success lies in its extreme flexibility, as the technology is not only able to harmonize with other devices and applications, but also offers capabilities that are beneficial regardless of the industry, size or vertical of a company.

However, the cloud is certainly not perfect, with many companies attempting to optimize their cloud processes in efforts to drive down inefficient use of cloud resources. Worldwide expenditures on public cloud services ballooned to USD 362.2 billion in 2022 from USD 257.5 billion in 2021, a 41 percent increase, according to estimates by Gartner. Unfortunately, according to some estimates, up to 35 percent of cloud spending can be labeled as wasteful, putting 126.77 billion of worldwide cloud expenditures under the category of wasted spend.

This is an extremely worrying statistic, especially for IT companies, who are gearing up for the continuance of the current economic slowdown. According to a new report, 30 percent of IT organizations are reevaluating sources of risk capital to fund losses, while 46 percent are reducing their workforce, or at least slowly down hiring new candidates. However, the report found a staggering 69 percent are starting direct cost reduction initiatives, being the most common current practice among IT enterprises moving forward.

Things like developer/test waste, wrong-sizing production, and suboptimal design and implementation are some of the most notable driving factors relating to cloud over-spending. With future economic uncertainty on the horizon, it’s understandable for enterprises today to desire ways to drive down the costs of their cloud. Among the different techniques for reducing cloud waste, one quickly becoming popular among IT organizations is the use of demand management applications and practices.

Cloud demand management is a crucial component of IT service management, particularly within the framework of ITIL® (Information Technology Infrastructure Library). By definition, demand management is concerned with forecasting, understanding, and fulfilling the IT needs of an organization. By aligning IT resources with business goals and priorities, demand management helps ensure that IT services are delivered efficiently while enabling organizations to make informed decisions about allocating their IT resources.

Simply put, demand management works on a supply and demand basis, as forecasting, analyzing, and planning can help IT organizations figure out when the use of cloud resources is necessary, and when the technology can be halted, for the most efficient use of the cloud. Doing this provides better resource allocation and utilization, which helps organizations reduce the need for reactive and unplanned work, allowing them to be fiscally responsible yet functionally efficient.

However, as with many things in life, proper demand management also comes with its own set of challenges when it comes to proper implementation. For example, a lack of proper expertise is often a hurdle an organization may run into when attempting to adopt demand management practices, as it involves many different components and requires people with certain skill sets.

This has led many enterprises to seek out a managed service provider (MSP) partner to correctly implement and execute demand management practices. As MSPs continue to grow into technological jack-of-all-trades, capable of handling a plethora of digital issues, their use within nearly all sectors continues to rise as well. The global managed services market size was valued at USD 239.71 billion in 2021 and is expected to expand at a compound annual growth rate (CAGR) of 13.4 percent from 2022 to 2030.

This growth is unsurprising, as according to the 2022 Cloud Infrastructure Report, today 71 percent of respondents said that they rely on an MSP for some portion of their cloud operations. This has been quite a boon for the MSP industry, but now, MSPs are looked upon as being solely responsible for helping organizations make cloud demand management not only a reality, but a success. This has MSPs increasingly looking for technology to adopt to make clientele demand management processes as smooth as possible, with cloud optimization platforms being among the most notable technologies.

Cloud optimization platforms like ours are suites of software tools that MSPs leverage to manage and optimize their cloud resources, providing users with tools that allow them exercise administrative control over private, public, and hybrid clouds. When offered as part of an MSP portfolio, these platforms can offer a variety of advantages for organizations looking to enhance their demand management prowess.

For instance, cloud optimization platforms can provide MSPs with a centralized portal to leverage more advanced management capabilities over time. These include horizontal scaling, power consumption savings, cloud insights, trends, and usage data. This helps MSPs enhance their cloud portfolios, allowing their offerings to stand out from the competition.

Furthermore, the use of artificial intelligence (AI) and other automation capabilities provided by a cloud optimization platform simplifies the process of cutting cloud costs, letting MSPs show their clients where they can restore, resize, and terminate resources to better match their capacity and needs, ensuring proper usage. Automating resource allocation can let MSPs offer their clients the ability to deliver up to 65 percent in monthly cloud savings.

Finally, cloud optimization platforms provide a single view of all customers cloud environments or individually, across multiple clouds with data on cost, power consumption, and overall optimization. This provides MSPs with enhanced scheduling capabilities, enabling them to automate and schedule expensive resources to turn off at weekend and schedule the same resources to scale up and down for peak and off peak during the working week, for maximum optimization.

The global cloud optimization platform market grew from USD 14.24 billion in 2022 to USD 17.15 billion in 2023 at a CAGR of 20.5 percent, with experts predicting continued growth at a CAGR of 19.7 percent, bringing the estimated market value to USD 35.2 billion by 2030. However, as more MSPs begin to adopt their own platform into the repertoire to help clientele achieve their desired levels of cloud optimization, these numbers may surely rise beyond expert predictions.

At Kalibr8, we understand how quintessential cloud management and optimization capabilities have become to the modern-day MSP, as cloud offerings have nearly become the backbone of the managed services industry. This is why Kalibr8 provides an automated cloud optimization & cost management platform with an intuitive and efficient “single pane of glass” view into all aspects that impact getting the most value for the least cost.

Our platform can help MSPs understand a VM’s usage pattern and make more accurate decisions as to when each scaling or schedule group is needed to be available to users, as well as easily see savings from scheduling & scaling VM’s and cost usage in dollars and cents over defined billing period.

On top of this, MSPs can build, view, and understand overtime of VM costs vs. specifications and requirements against each VM’s intended use, with the Kalibr8 platform. The platform allows MSPs to control their client’s cloud costs, through automated capabilities that help them identify unmanaged resources, accurately allocate costs, and even implement effective governance.

Designed for Managed Service Providers, today, our platform securely manages Microsoft Azure assets with a goal to improve the economics and ROI. By the end of 2023, Kalibr8 will introduce the same capabilities for AWS and Google Cloud.

Overall, by working with Kalibr8 and leveraging our Kalibr8 cloud optimization platform, our MSP partners can work with their customers to maximize budgets and confidence in their cloud spend, and can  gain a deep analytical view of costs and savings by resources, group, subscription, or tenant, benefitting both MSPs and their clientele in the short, and long-term.

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