How to Leverage Elastic Services for Cost Optimization

Due to the current pandemic, business continuity for many organizations has suffered a great deal. Organizations, primarily those in manufacturing, agriculture, transport, hospitality, energy and retail sectors, have been affected by the unanticipated change in the business landscape. Some companies in these sectors have been experiencing massive losses in revenue, which is why their primary requirement at this point is cost reduction.

The other side of the crisis is that organizations in sectors such as medical, government and financial services, which are providing essential services, have experienced higher operational demands than usual–again leading to increased operational costs. Irrespective of the industry you belong to, and whether it is experiencing reduced or increased operations, cost optimization is a reality for you to ensure a sustained existence.

One of the most reliable measures for cost optimization at this stage is to leverage elastic services designed to grow or shrink according to demand, such as cloud and managed services. For example, a well-positioned organization with a cloud native architecture can scale up or scale down cloud consumption to mitigate lost operational demand. Organizations that employ managed services providers can repurpose full-time staff members from impacted business units or product lines to more strategic initiatives.

The Need for Cost Optimization: Now and Later

From observations of the economic impact of the crisis, many organizations have not been well positioned or in a state to leverage elastic services during the current crisis. In the absence of a flexible operational model, they are exposed to risks caused by:

• A sudden disruption in business continuity.
• Loss of business or revenues.

To ensure that they are ready, should another disaster strike, companies need to start planning now. Partnering with a seasoned managed services provider to plan and leverage the consumption and subscription services is advisable, so that they can immediately adjust expenditures that are no longer relevant and can prepare for long-term cost reduction to conserve cash.

Optimizing Costs with Elastic Services

One thing that the impact of the pandemic on businesses has made very clear is that investment toward IT strategy and planning services pays in good times, as well as bad times. Therefore, organizations, whether they are experiencing loss or profit at this stage, should consider long-term investment toward IT strategy and planning services, and thoroughly plan the “new normal” expenditures needed to scale demand/revenue.

Elastic cloud and managed services can help these organizations strike a balance between the rapid changes in the demand and need for expenditure.

• With consumption services, organizations can choose to pay only for the services and resources they use.
• With subscription services, organizations can choose flexible payment terms that often afford advantageous pricing the longer one commits. Choose the timeframe that balances the risk and reward.
• Since most enterprises will freeze hiring and try to avoid long-term or substantial capital investments at this stage, they can meet their operational demands by contracting managed services and re-platforming their applications to use cloud services.

The Three-Step Approach to Successfully Implementing Elastic Services

Given the requirements of each business are different, and the way they plan their expenditure varies as well, there is no one-size-fits-all strategy to ensure the successful implementation of elastic services for cost optimization. In order to ensure that elastic services help optimize costs in your organization in an efficient manner, you should follow the three-step approach described below:

1. Discover: First, collect all your operational revenue and expenses over a three-year period. Understand seasonality lows and highs (these are elastic needs). Perform a business-impact-analysis (B-I-A) to understand the critical business processes and then map them to risk scenarios that can cause business disruption. Capture and arrange the risks and then determine how to build a risk mitigation plan with your strategic IT leadership and advisors.
2. Analyze: Adapt your existing architecture to identify your business goals and how it has changed due to the new circumstances, and then perform a gap analysis and capabilities assessment.
3. Plan: Based on your business goals, revisit how and where it makes sense to use elastic services to fit seasonal fluctuation better, and risk scenarios where rapidly declining operational demand may occur.

Given the pace and scale of how the business landscape is changing, a traditional wait-and-watch response is not going to work in the long run. Engaging with a strategic leadership partner that can help you analyze your current infrastructure and implement elastic services is a smart move to meet your business objectives.