I am the co-founder and CEO of Azul, with 30 years experience as an entrepreneur and executive in the technology industry.
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In Homer's Odyssey, Odysseus undergoes a perilous journey home to his wife. At one point, he must navigate his ship through the Strait of Messina — a narrow body of water near Sicily. In doing so, he faces a difficult choice. On one side of the strait lies Scylla, a multiheaded monster who devours sailors six at a time. An arrow's distance across from her lies Charybdis, an enormous whirlpool that threatens to engulf the entire ship. The monsters are too close to navigate safely between, so Odysseus must choose which path to risk (avoiding the Strait entirely is not an option). Ultimately, he sails past Scylla, half a dozen sailors are eaten and he continues on his way.
This story has long been associated with the proverbial advice, "Choose the lesser of two evils."
Like Odysseus, business and IT leaders must also navigate an unavoidable path fraught with risks (the cloud), and all too often, they are forced to choose the lesser of two evils. Today, the whirlpool Charybdis engulfs laggards who fail to transform their business using the cloud, ceding the competitive advantage to nimbler players and creating an existential risk. Scylla is the multiheaded monster of unforeseen cloud costs that devour margins, harm valuations or fail to produce the intended ROI.
In my role at Azul, I speak every day to business and IT leaders at various stages in the cloud journey. From those conversations, two things are clear.
1. Businesses primarily turn to the cloud as a key enabler of agility and digital transformation.
2. They usually do so without a strategy for controlling cloud costs.
This enthusiastic yet ad-hoc cloud adoption often produces a crisis. As Gartner, Inc. states: "Organizations with little or no cloud cost optimization plans rush into cloud technology investments. They end up overspending on cloud services by up to 70% without deriving the expected value from it."
Many customers I engage with have seen their inflated expectations around the cloud descend into Gartner's famous "trough of disillusionment." The challenges faced by our customers mirror those outlined by Andreessen Horowitz's Sarah Wang and Martin Casado, who state that "the excess cost of cloud weighs heavily on market cap by driving lower profit margins" before noting that "scaling companies can justify nearly any level of work that will help keep cloud costs low."
Business and IT executives face the challenge of providing novel cloud-based applications while optimizing infrastructure costs. How you approach this paradox depends on which stage of the adoption cycle you occupy. Most businesses fall into one of the following four stages.
• Laggards. This is the smallest cohort. These are the folks still asking whether the cloud is real and figuring out how to approach it. They continue hesitating due to security concerns and a lack of executive alignment. We encountered laggards frequently a few years ago, but most customers have passed this stage. If you find yourself asking whether the cloud's for you, you're already behind, and Charybdis is about to swallow you whole.
• Eager adopters. By far, the largest group includes companies whose expectations have outpaced their cloud maturity. They are either in the process of rapidly adopting cloud technology or are already seeing great results and want to keep migrating more workloads. This is the most critical stage of the cloud journey. Establishing a strategic vision for managing growth and optimizing costs during this stage can pay massive dividends down the line. Doing so can allow businesses to avoid being gobbled by the Scylla of uncontrolled cloud costs in the next stage.
• Cloud paradox victims. This group is rapidly growing as companies progress from the stage of eager adoption and tumble into the cloud paradox. These companies often achieve great results by deploying a limited number of workloads in the cloud. However, they then rush to scale without a cost optimization plan. As a result, their cloud costs climb rapidly, and the very purpose of pursuing digital transformation is lost as margins shrink. Now, they must frantically right the ship, which can produce a host of other problems such as opportunity and operational costs. For this reason, it is critical to establish a cost optimization plan early in the prior stage.
• Value optimized leaders. Digital transformation fueled by agile, cloud-based development practices. Better margins and higher valuations. Freed developer resources and reduced opex that can help fund innovation initiatives. These are but a few of the fruits that can await businesses that successfully navigate this journey and reach their home shore. This is a small cohort and represents the most advanced cloud practitioners.
They succeed because they are productively using the cloud, have strategic and operational alignment, and have evolved from thinking about cloud costs to instead viewing everything through the lens of cloud value attainment. Unsurprisingly they are often industry leaders due to cloud-based competitive advantage.
In summary, neglect the cloud, and your business will fall behind innovative competitors. Embrace the cloud without a cost-optimization strategy, and watch your market value get whacked. Inaction is not an option.
Fortunately, unlike Odysseus, you do not need to choose the lesser of two evils. Technologies and strategies exist to navigate these waters, but selecting the right approach requires an understanding of your position in the adoption curve. There are many mechanisms for optimizing cloud costs depending on your maturity (hybrid cloud utilization, workload rightsizing, application performance optimization, cloud cost management tools, etc.).
This can be a complex landscape, so don't be afraid to ask for outside assistance to help you wrap your mind around it. Even Odysseus had help.
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