How rising energy costs have impacted businesses’ journeys to the cloud

Rising energy costs have become a critical issue throughout the business world.

How rising energy costs have impacted businesses' journeys to the cloud

Rising energy costs have become a critical issue throughout the business world. According to the ONS, UK electricity prices rose by 66.7% and gas prices by as much as 129.4% in the 12 months to February 2023, and with prices at such unprecedented levels, mounting expenses are starting to have a significant impact on bottom lines everywhere. 

Of course, energy costs aren’t the only challenge faced at the moment. Companies are also struggling with staff and customer retention, as well as staying competitive in such a volatile economic climate. However, energy concerns have the potential to extend far beyond the immediate financial burden they are creating, affecting long-term sustainability and growth if not addressed.

In the face of such a challenge, businesses must adopt new strategies and technologies to cut their energy consumption, improve their efficiency, and maintain profitability. In this context, the role of cloud and the data centre has come sharply into focus, with a growing number of companies looking for ways to reduce the cost of their cloud usage in order to offset spiralling costs elsewhere in the business.  However, many are concerned about making the wrong decision and doing more harm than good. Below are some of the key considerations that all companies should factor into their decision-making process:

Identify the best cloud solution for your needs 

In this current climate, looking for better, more cost-effective data hosting solutions is not only advisable, but essential. One option is to move to private or collocated data centres, where bigger economies of scale can often translate to lower costs. This kind of solution also tends to be one of the easiest migrations to carry out because it is essentially a ‘lift and shift’ approach.

Alternatively, businesses can explore public cloud solutions. These tend to be a little more convoluted to migrate to in the first instance, but public clouds give businesses the ability to scale up and down on the fly, which can make them very economical over time. For example, the travel industry tends to be very seasonal, so having the ability to scale up in the summer and scale down in the winter is much more efficient. The same applies to the retail industry, which typically only needs to scale up around traditional peaks like the festive period and Black Friday. However, for businesses that need their data to be constantly available, the public cloud can often prove to be a more expensive option. 

Don’t disregard the security implications of rising costs

Unfortunately, cybercriminals love a financial crisis. This is because they know businesses will try to stretch out their assets during tough times, often putting expensive upgrades or patches on hold and opting to use legacy equipment for longer. 

However, this approach can leave businesses much more vulnerable, or even create a dangerous hostage scenario where they can’t afford to upgrade their environment, but at the same time, the risk involved with putting it off means they can’t afford not to. 

In situations like this, migrating to a collocated or public cloud environment is almost always the best option because it means they can take advantage of the enhanced security measures Managed Service Providers (MSPs) offer to ensure their environment is always fully patched and secure.

Choose the most cost-effective MSP (not just the cheapest)

When choosing a suitable MSP, companies should always assess their ability to demonstrate ROI from the outset, and how easily they can flex their model based on functionality/needs at a given point in time. Instead of just looking for an MSP that can host an environment cheaply, they should also look at whether the MSP can also optimise it at the same time. Other factors to consider include the level of protection on offer, the availability of applications (and how easy they are to scale), and the ability to re-architect if/when needed.

Understand the growing importance of sustainability

Another increasingly important consideration is sustainability in the cloud. While most business leaders today re-architect because of business functionality and/or cost, rather than for sustainability reasons, this is starting to change. 

According to Deloitte, as of mid-2020 there were 541 hyperscale data centres worldwide, with 170+ more on their way, all of which need significant amounts of uninterrupted energy for round-the-clock processing and cooling. This severely impacts the cloud’s sustainability credentials. 

Aware of this, many cloud leaders have invested heavily in ambitious plans that put them well ahead of other industries when it comes to reaching net zero targets, and they aren’t stopping there. For example, Google has offset all historical emissions since its founding in 1998 and pledges to operate on completely carbon-free energy, 24 hours a day, by 2030. 

In short, as sustainability rapidly rises up the list of corporate priorities, cloud providers can actually prove to be a big asset when it comes to achieving sustainability targets. With this in mind, companies across the business landscape should look for suppliers that offer responsible hosting, with a key focus on sustainability and reducing their carbon footprint, before signing on the dotted line. 

Rising energy costs have had a significant impact on businesses’ journey to the cloud. As energy prices continue to soar, a growing number of companies have started looking for more cost-effective ways to manage their IT infrastructures. `Cloud computing offers a great solution. However, the increased energy demands of cloud computing data centres have also led to concerns about the environmental impact and sustainability of cloud services. As a result, many cloud providers are investing in renewable energy sources and implementing energy-efficient technologies to reduce their own carbon footprints.

Despite these challenges, the adoption of cloud computing continues to grow, driven by the need for businesses to stay competitive and agile in an ever-changing digital landscape. With ongoing innovation and investment in energy efficiency, cloud computing is likely to remain a key part of businesses’ IT strategies in the years to come.

Phil Wood
Phil Wood

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