CFOs suffering from public cloud ‘bill shock’ are falling for the private cloud’s clearer cost savings
Private cloud is enjoying a resurgence across the C-suite, but each leader has their own reason to find it so alluring. The CIO is head over heels for its ability to deliver AI without risking data safety, while the CISO wants to sleep well at night, safe in the knowledge security and compliance are built in. Both are feeling bruised by promises made by the public cloud which have not been kept. For the Chief Financial Officer (CFO), though, what’s really making them fall in love with private cloud is a rather more down to earth benefit – cost.
That is not to suggest they are focussed solely on balance sheets. Latest market research indicates financial leaders are fully aware of their responsibilities beyond finance in steering technology strategies. This is being underlined by funding investments in AI. These are not only making businesses more productive and agile, they’re also improving collaboration with the CIO, according to nine in ten CFOs. So, they’re keen to invest, they just don’t want to be hoodwinked by the costly promises made by public cloud vendors.
Cloud Cost Pressures Are Driving a Shift Back to Private Infrastructure
of organisations say cost is a key driver behind bringing workflows back from public to private cloud environments, signalling a major shift in cloud strategy.
of organisations believe some portion of their public cloud budget is wasted, revealing widespread dissatisfaction with cost efficiency.
View our infographic for more stats on VMware and Private Cloud
This chimes well with Broadcom’s recent Private Cloud Outlook research which revealed the high importance of cost as a driving factor behind more than two in three organisations (69%) bringing back workflows from public to private clouds. As one might imagine, security is the top concern, while better performance and reliability come in at second. Just behind these two, though, is cost. That is because nine in ten organisations say they trust the private cloud for cost transparency and predictability.
This contrasts with what the research reveals about attitudes to public cloud, which has clearly not lived up to its hype of being both scalable and affordable. Broadcom’s study reveals a staggering 94% believe some of their budget is wasted. In fact, to drill down a little deeper, nearly one in two believe they are wasting a quarter of their public cloud budget and nearly one in three think they are wasting as much as half.
As Steve Wood, CTO at Xtravirt is finding, many organisations who once thought public cloud was the way forward are now questioning previous decisions.
“At Xtravirt we’re seeing a move from cloud optimism to cloud realism,” he says.
CFOs, and the rest of the C-suite, are now shifting their priorities. They're centring decisions around controlled cost predictability and better platform discipline. They know they just can’t go on with the cost unpredictability of public cloud.
CTO at Xtravirt
Why are CFOs approaching Xtravirt?
At Xtravirt, we’re finding this desire to control cost is one of the main reasons organisations start conversations with us. They want to know the real cost, not a promised figure which expands with usage. They want to plan ahead with the assurance of predictable, transparent costs.
That’s why organisations are asking us to explore how a unified cloud platform built on VMware Cloud Foundation (VCF) will empower them to gain a more visible picture on cost so they can take back financial control. As Robin Gardner, CCO of Xtravirt explains, VCF has many attributes but predictability of cost is the one feature that appeals most to the CFO.
“CFOs are obviously very worried about signing a blank cheque with public cloud infrastructure, where they just have no idea what the final bill each month is going to be,” he says.
They’re very interested in working with us on a private cloud built on VMware Cloud Foundation because it offers predictability. They can use that visibility on cost to show their capabilities will improve but their total cost of ownership will go down. That’s a very appealing combination for a CFO.
CCO of Xtravirt
Protection about future unexpected costs
When CFOs are making the decision to work with Xtravirt to set up and operate a private cloud platform based on VMware Cloud Foundation, they are not solely looking at initial cost savings. They’re also factoring in protection from future unforeseen costs and the ability to clearly understand, forecast, and govern infrastructure spend over its full lifecycle. The biggest concern here is security. One might imagine it’s the area of IT that would be mostly the CISO’s concern, but it’s the CFO that needs to factor in financial liability risks and balance-sheet exposure when making IT decisions.
Falling prey to cybercriminals is not only measured in brand damage but also the very real cost of lost sales, reduced loyalty and, of course, ransomware demands. This is why security, as well as cost, is such as important selling point for CFOs, according to Joe Baguley, CTO EMEA at Broadcom.
“A really strong sales point CFOs love is that they can invest in VCF to mitigate against future risk because it has security built-in, rather than added as a bolt-on,” he says.
“They can see that VCF offers a good level of protection against cybercriminals and ransomware demands. There are many other attractive features, where they don’t always need to know the technology in detail, but they love the fact we can carry out their workflows at a third of the cost they’re paying now. They also love that they can move workflows and other services to our platform when their agreements run out elsewhere. There’s a roadmap there for future cost savings.”
Just as security is a built-in component of VCF, so too is compliance. From a CFO perspective, compliance is not just a regulatory issue but a measurable financial risk. VCF 9.0 provides deep insight into where data, workloads and resources reside, giving both control and accountability. It allows tech teams to gain oversight that their data and data management tools are exactly where they want them to be and that resources are being used efficiently and for their intended purpose. This gives the CFO reassurance on compliance that can be demonstrated. Considering the massive fines that can now be levied against organisations, under provisions such as GDPR and (in the financial services sector) DORA, that offers the CFO reassurance and better protection against potentially crippling liabilities.
Xtravirt – The perfect partner for cost predictability in the private cloud
VCF is not only the natural choice for the CFO looking for financial control today, it comes with the extra reassurance of Broadcom’s unwavering commitment to continual research and development improvements. That investment directly supports greater cost predictability, with visibility into infrastructure usage, higher utilisation, and the ability to model future hardware and licensing requirements with confidence, allowing CFOs to move from reactive cost management to proactive financial planning.
Broadcom has so far spent more than a billion dollars on the platform’s evolution, culminating in the latest version, VCF 9.0. For CFOs, this level of sustained investment reinforces a platform designed to deliver optimal performance, ensuring capital investments are fully utilised rather than diluted across underused capacity. Any CFO will know that this level of investment is more than any organisation would ever be expected to spend on product development, and it underlines a key commitment to a road map that will grow with its customers’ requirements.
One of the key reasons that organisations choose to partner with Xtravirt is the many years we have worked in partnership with Broadcom and previously VMware. We understand the need to work with the C-suite on the ‘why’ before we get to the ‘how’, particularly when decisions affect long-term cost structures and risk exposure. That means any solution is built entirely around what each specific organisation requires, so CFOs can plan with confidence, as well as open the ability to add new capabilities further down the line, when the business sees fit.
It takes years of experience to deliver optimised, unified cloud platforms, particularly when organisations are bringing back workflows from the public to private cloud. It also takes a deep level of expertise to smoothly migrate services and deliver a platform the CFO can be proud of. One with clear visibility on predictable costs that helps them mitigate the risk of expensive security or compliance mishaps. It is this combination of cost savings today and reassurance of cost predictability in the future that is helping the CFO fall back in love with the private cloud.
