As a result of the global pandemic, flexibility has become critically important to enterprises – and far more common in business operations than ever before. The vast majority of companies have instituted flexible working policies to retain and attract employees; behind the scenes, they have also increasingly adopted cloud services to enable agility during uncertain times.

According to Flexera’s 2021 State of the Cloud report, 80% of surveyed enterprises now have a hybrid cloud strategy, and 92% have a multi-cloud strategy. While cloud adoption continues to accelerate, enterprises are trying to become “cloud-smart,” adjusting their cloud strategies to optimize performance against cost.

At the same time as hybrid and multi-cloud solutions have grown sharply in popularity and importance, they have also changed the traditional cost structures of data storage and processing, leaving many companies with unpredictable and unsustainable expenses. Therefore, it’s prudent to take a step back and consider what the resurgence of hybrid and multi-cloud solutions means for the cloud landscape and, most importantly, for enterprises that are looking to the cloud for flexibility.

Over Time, Cloud-Only Solutions Can Create Sky-High, Hard-to-Escape Costs

Cloud infrastructure spending skyrocketed in 2020, as enterprises facing pandemic-era disruptions sought immediately available infrastructure to address their changing business needs. However, as companies scaled their use of cloud services and profitability slowed, the cloud’s longer-term implications began to become obvious. Costs that were initially controlled and well-understood can creep up or spike based on changing workloads, some of which might not become obvious until well after the expenses have been incurred. 

So, while enterprises may have their immediate needs met by cloud services – solutions that made sense during a period of limited access to on-premise resources – the pressure clouds put on margins will likely start to outweigh their benefits as their usage grows. Absent that key piece of understanding, enterprises may keep relying on the false assumption that clouds guarantee increased agility at lower costs for extended periods of time.

That assumption is compounded by a practical challenge: Once companies realize how much their cloud use has increased recurring expenses, they may be surprised at the up-front cost of bringing workloads back in-house. They might feel unable to move workloads off the cloud given the heavy IT lifting and steep hardware investments required for such efforts – then they’ll find themselves stuck with ballooning cloud expenses.

Hybrid and Multi-Cloud Platforms Are Safer Alternatives

Enterprises need to do what’s best for both their budgets and their data – though today’s “smart” choices may be different from the ones that made sense last year. One clear lesson has emerged: As digital transformations continue to accelerate, only hybrid multi-cloud platforms will give enterprises the ability to manage whatever is yet to come.

A recent study by VC firm Andreessen Horowitz found that hybrid and multi-cloud approaches can result in significant cost savings for enterprises. The firm notes that Dropbox, a company known publicly as a cloud storage provider for consumers and enterprises, decided to repatriate the majority of its own workloads from the cloud, embracing a hybrid but cloud-lean strategy for its own needs. In so doing, Dropbox wound up saving a staggering $75 million over two years – a savings achieved by overhauling and optimizing infrastructure.

A Four-Step Approach to Smarter Cloud Practices 

To avoid becoming trapped by ballooning cloud costs, enterprises should follow a four-step approach to set themselves up for success in a hybrid, multi-cloud world.

1. Track cloud spend: Enterprise leaders need to highlight cloud spend as a key performance indicator, ensuring it is being continuously monitored by the business. 
2. Recognize the impact of cloud costs on profitability: Leaders should consider the economic optimization of cloud costs by asking a simple question: “For every dollar the business makes, how many cents or dollars does it cost to deliver?”
3. Move quickly to identify growing workloads for repatriation: Enterprise leaders should actively plan to bring large, costly cloud workloads back on-premises, particularly when it’s clear that the cloud will offer only cost and/or performance improvements for a limited period of time. Data quantities are expected to grow exponentially this decade; by the time cloud costs start to catch up to or even outpace revenue growth, it will be hard to make an abrupt pivot away from the cloud.
4. Repatriate wisely and incrementally: Though it’s important for enterprises to repatriate workloads, it doesn’t need to be done aggressively or overnight; instead, businesses should move incrementally towards a hybrid model. IT leaders must think through the strategy, asking questions such as whether repatriation makes sense only for a subset of the most resource-intensive workloads, rather than bringing everything back on-premises at once.

Combining Flexibility with Financial Controls Is a Win for Both Enterprises and Data

Ultimately, enterprises will achieve superior long-term results by initiating more detailed and practical financial controls over their cloud services. While that process will initially require collaboration between an enterprise’s IT and financial leaders, the end result will be greater transparency in data costs – a necessary step in making data the company’s greatest asset.

Rather than relying on cloud-only or cloud-first strategies, enterprise leaders who become “cloud-smart” will facilitate the necessary business-wide flexibility to tackle whatever is ahead. There’s certainly plenty of value in the cloud, but ultimately, the massive opportunity to accelerate change and improve business outcomes will depend on hybrid and multi-cloud approaches for long-term sustainability.