3 Tips for Cloud Cost Optimization in Healthcare

Cost Reduction Starts with Anticipating Cost Increases

The first step in reducing costs requires doing the opposite: You must ascertain where costs will increase when you move to the cloud. This might sound counterintuitive, but I’ve seen cost reduction efforts fall flat in organizations when this isn’t done up front. Here’s how it happens.

An organization wants to move IT to the cloud to save money. Then, it finds out that it can’t begin to think about a cloud move without increasing network and internet bandwidth and without procuring additional security services for the cloud, such as secure access service edge.

The best practice for addressing this is for the CIO to present these transitional costs up front to budget decision-makers and bake these new costs into the total cloud budget. This new cloud budget number then becomes the baseline against which cost reductions are measured.

Once you have a total cloud cost picture, you can pursue opportunities for cost reductions. There are a few key areas where you will be able to find them.

READ MORE: Ask yourself these three questions before modernizing your infrastructure.

Look into user subscriptions. As more clinicians and support staff use cloud-based resources, they will independently budget for these without IT’s knowledge. This is especially true for Software as a Service offerings that were previously delivered to end users via download but are now delivered from the cloud. Often, there are more cloud services in use than IT planned for. In some cases, these resources are underused or redundant. This is an area that IT should audit so service duplications or dormancy can be eliminated.

Similar auditing and tracking should be done for cloud storage and processing that goes unused. This usually happens when resources are provisioned and then left in an active state because someone forgets to deprovision them after use. As a result, the healthcare organization keeps paying for them, even though they sit idle.

Finally, you might have cloud providers that provide the same service, or there might be excess, obsolete data stored and paid for in the cloud when it should be purged.

These are all areas where IT can tighten up use, with a goal of paying only for cloud services that are actively being used.

Find Opportunities for Cost Optimization

The beauty of cloud is that, if you manage it well, you pay only for what you use. You eliminate dormant assets such as in-house processing and storage that you’ve amortized as capital investments.

“Eliminating redundant infrastructure is key to reducing costs,” says Paige Johnson, vice president of education marketing at Microsoft. “You can also use existing license agreements and long-term vendor relationships that can result in cost savings.”

Equally important is training IT staff on the resource management tools that each cloud provider furnishes.

“Investing in cloud training for IT personnel ensures that organizations can better manage and optimize cloud environments without hiring new staff,” Johnson says. “This helps in retaining institutional knowledge while expanding cloud expertise.”

The cloud tools available to IT staff include tools for monitoring cloud usage, security, uptime and throughput. The same tools help IT to fine-tune applications for optimal performance at the lowest cost.

Regain Cost Control

Some years ago, when I was a CIO, we had difficulty understanding our telecommunications bills, but we knew they were too high. The problem was the complexity of the bills. There were billing category acronyms we couldn’t decipher and peculiar ways of adding up costs, making it impossible for us to fully understand and discuss these bills with vendors. We brought in a telecommunications bill auditor to go through the charges, explain how we were being billed and identify surplus costs. We got to the bottom of the bills and saved ourselves a bundle.

Cloud bills can be equally as complicated, which is why many cloud providers provide cost analysis tools. Mastering and using these tools is a task for both IT leaders and a cost analyst from your finance department. You should also contact your vendors when questions arise.

By gaining a comprehensive understanding of your cloud cost picture, you can identify and eliminate surplus cloud costs and ensure that the cloud services you are spending on align with your organization’s business goals.

Optimizing and controlling cloud costs and seeking reductions when cloud resources go unused should be central areas of focus for CIOs and CFOs because as healthcare IT moves to the cloud, so will IT costs.