Is your cloud spend out of control? How to rein in your purchasing

Is your cloud spend out of control? How to rein in your purchasing Andrew Logan joined ECS as cost optimisation lead in early 2018. Previously, he spent 12 years at RBS in various cost optimisation roles. He also spent five years at Prudential as head of enterprise capacity planning and lead infrastructure architect.

If the weather isn't quite up to scratch it is hard to resist the lure of an all-inclusive family holiday. The azure blue sea, pristine white sand, and masses of food and drink – interspersed with a spot of swimming to burn off some of the excesses. 

But fast-forward to check out and you get a nasty surprise: a larger than expected bill. Those extras excluded from your “all-inclusive” deal were too tempting for your teenagers: how did they consume so many snacks between the all-you-can-eat buffets? 

The post-holiday blues kick in as you realise you should have given your kids clearer guidelines on the first day.

A nasty surprise on the invoicing front can also occur if you do not prepare carefully enough when you move to the cloud.

I highlighted the importance of tackling ghost spending and costly, complex contracts before moving to the cloud in this article. A natural next step is cloud cost optimisation, whether you are starting to deploy cloud or already have projects underway.

A cloud feeding frenzy

While there’s no doubt that cloud adoption has a positive impact on business agility, it can also lead to a cloud feeding frenzy and over spending. 

But with cloud projects popping up and no corporate-wide policy, those planned-for operational cost savings can vanish in a heartbeat. Plus the initial calculations around cloud provider pricing often ignore the full extent of on-premise support required, exacerbating the issue. 

According to Gartner, it is not unusual for public cloud bills to be 2x to 3x higher than expected. And it is a growing phenomenon, with Gartner anticipating that, “Through 2020, 80% of organisations will overshoot their cloud IaaS budgets due to lack of cost optimisation approaches.” 

The need for restraint

We are already seeing this first hand. A growing stream of large enterprises is looking for help with their cloud cost optimisation as the realisation dawns that the free-spending cloud holiday must stop. 

No organisation would consider running a data centre without adequate cost controls, and the same should apply in the cloud to avoid expenditure surprises, waste, and general inefficiency. 

Understanding your cloud consumption habits

Understanding the costs and drivers of technology at a service level is essential for an efficient, sustainable cloud journey. 

Cloud business management tools such as those from Apptio can help you to manage and optimise your IaaS and PaaS investments. If you don’t have the resources and expertise internally to handle the entire cloud cost optimisation lifecycle process then engaging an enterprise cloud consultancy is an alternative approach. 

If you are at the start of your official company-wide cloud journey, not counting any rogue, ad hoc cloud environments already in use, then a high-level migration and business case analysis is the first step towards justifying your cloud spend. This assesses the total cost of ownership (TCO) of your on-premise, hybrid and cloud choices – and the potential savings.  

The result is a detailed technical assessment and target recommendations, including governance and operating models. Workloads are mapped to the most appropriate cloud provider and service to optimise costs, and decisions made on how fast an organisation can migrate specific workloads and applications.

Once the cloud migration is underway, detailed tracking and management of your hybrid IT environment is vital to help you plan and forecast spend, utilisation and capacity, and justify future migration decisions.

Managing the costs associated with working with multiple cloud providers is fraught with challenges. This is where cloud management tools really come into their own, giving you full transparency of your current cloud spend and usage across multiple providers via a single pane of glass. 

Stop playing whack-a-mole

If your organisation has struggled to suppress the voracious cloud appetite of business teams, then a policy of shared accountability is long overdue.  Allocating cloud costs to the applications and business units that consume them is a key element in cloud cost optimisation. By providing internal consumers with direct visibility of their cloud costs, they are more likely to stay within budgets.

In fact, in our experience, taking a granular look at costs and usage on a daily basis is the only way to avoid cloud budget overruns. For an accurate picture, don’t forget to include associated employee, networking and security costs. 

While some cloud budgets may be stretched to the maximum, studies show that cloud utilisation can sometimes be as low as 10-20% of the provisioned capacity. The machine learning algorithms built into most cloud management tools make it easy to radically reduce waste from these under-utilised and idle instances. 

Effective governance is also important. For example, to avoid the chaos that results from finding cloud resources that do not seem to have an identifiable owner, it’s worth standardising on a tagging strategy to understand the applications and business units that drive usage. 

Once your cloud cost optimisation process is looking shipshape, you can turn your attention to breaking down the public cloud and on-premise silos and managing all of your IT costs in one place.  Aligning to a standard cost model that works with both cloud and legacy on-premise IT is a good first step, and using apples to apples comparisons will accelerate future migration and optimisation decisions. 

In conclusion, applying cost optimisation best practice to your public cloud consumption will help you to avoid that bloated post-holiday feeling that comes from overindulging on those unnecessary extras. By keeping close tabs on public cloud usage, avoiding cost overruns and analysing the data to make more informed decisions, organisations can take full advantage of the agility the cloud has to offer and ultimately deliver a greater return on investment. in hearing industry leaders discuss subjects like this and sharing their experiences and use-cases? Attend the Cyber Security & Cloud Expo World Series with upcoming events in Silicon Valley, London and Amsterdam to learn more.

View Comments
Leave a comment

Leave a Reply

Your email address will not be published. Required fields are marked *