Businesses are seeking more insight into cloud spend, in part due to increased adoption of cloud resources across their organization. The average U.S. business predicted it would spend $1.8 million on the cloud this year, and organizations with more than 1,000 employees predicted $10 million or more (source). These are significant investments that should be monitored to ensure the best possible return for the business. However, with most studies revealing upwards of 30 percent of cloud spend ultimately wasted, it’s clear that there is work to be done. To avoid overspending, companies must realize that optimizing cloud spend is an ongoing process involving people, process and technology.
Below are three key tips to help your organization manage cloud spend:
1. Know your Cloud Cycle
Governing and managing cloud spend is cyclical. It is a continuous process that requires the orchestration of four steps – planning, tracking, optimizing and reducing.
As part of the planning process, examine business objectives and determine how cloud resources can be used to meet and support them. If you are new to the cloud, or in the early stage of moving workloads from on-premises to the cloud, do an assessment of your current environment. This assessment will help you determine what applications are the best fit for the cloud. During this stage, you are taking a consumption-based approach, prioritizing the applications that will get the most benefit of the cloud’s technical flexibility and cost model. Moreover, through an assessment of this nature you will invariably discover that many resources can be retired or reduced thus saving costs before moving anything to the cloud. It is important to understand that the planning for cloud is also the planning for retirement and cleanup of previously procured and unused resources.
Discovering what not to migrate is as important as discovering what to migrate, and the cleanup before shifting to the cloud will ensure that your resources are optimized prior to the journey to the cloud. This is a terrific opportunity for organizations to evaluate the health of on-premises assets. If unused, retire the software assets instead of moving to the cloud. If resources are underutilized, nurture those resources to health prior to any move. Moving problems to the cloud will not make those problems go away. If the task of evaluating the cloud viability of resources seems daunting, don’t worry; there are a number of options including engaging a reputable organization that can guide your journey to the cloud by evaluating your current on-premises assets and viability of moving to the cloud.
Another step to consider during the planning stage is establishing a culture of accountability from day one. As you procure and provision the optimal configuration, define the stakeholders for those set of cloud resources, establish budgets and make sure the stakeholders get insights on their budget and spend on a regular and proactive basis. This step often brings together the right people, process and technology for budgeting and presenting actionable insights into cloud spend. There are a number of solutions in the market that can provide this visibility – the best of which will provide insights into spend inefficiencies.
It is a multi-cloud world and organizations are using best of breed cloud resources based on requirements. Cloud spend management tools should provide one user experience, an abstraction layer across clouds, to help you evaluate your options, discover and consistently track resources, group resources into business units and establish budgets and proactively manage spend.
2. Track Cloud Usage
Businesses need to implement a tracking mechanism to monitor usage and spend, especially those businesses that have just transferred their on-premises workloads to the cloud. It’s important to recognize that it isn’t simply resource utilization that’s important, it is also spend. The right blend of technical and financial perspectives are critical to long-term success. Since cloud leverages a pay-as-you-go model, it is critical that organizations track cloud usage and spend consistently from the beginning. These consumption levels can change frequently as a cloud environment scales up and down which can ultimately have a dramatic effect on the monthly bill.
Being proactive is the name of the game when tracking cloud usage. During the planning stage, you established a culture of accountability by defining stakeholders and establishing budgets. Tracking spend against budget when all stakeholders know what they should be spending and proactively keeping them informed on what they are spending against the budget is important, including a tool that exposes the expected spend using telemetry based on the spending trajectory and the historical trend.
Native tools provided by the cloud providers will provide insight into the respective cloud provider, but what if you have a multi-cloud environment? The native tools do not have a view into other cloud provider resources, for example AWS does not provide a view into Azure, Google or Alibaba Cloud. A platform that is an abstraction layer above the native cloud providers is important here because it will let you consistently govern and manage budget and spend across different cloud providers. This will enable your organization to answer important business questions such as “how much did marketing spend on infrastructure for campaigns last quarter?” as opposed to simply “how much AWS did we spend last year?”
3. Optimize and Reduce Cloud Spend
Optimization and cost reduction go hand-in-hand. After your organization has the people, processes and technology in place, you can effectively optimize resources. You already planned out the budget and identified stakeholders. You are also tracking spend against budget and proactively informing stakeholders on where they are with their budgets. Once the stakeholders have this level of insight, make sure they are using this information to get ahead of the game and optimize resources.
The stakeholders need to have a process of digging into utilization and configuration information to find out when spend is going to exceed budget. Based on the utilization information, take proactive steps to turn down resources during off hours, turn off orphaned resources (test/dev environment that are not being used) or change to a more optimal configuration based on performance requirements.
Plan, track, reduce and optimize are the key items you need to have in place to better govern and manage budget and spend of your multi-cloud environment. It’s not as challenging as you may think. You’ve been doing this with on-premises resources for many years. You now have an opportunity to save your company upwards of 30% of your cloud spend. And, if done correctly you can merge this governance with on-premises software spend management (again with the right tools and people). Doing this will enable your organization to optimize spend of software. With software making up nearly 20% of your overall IT spend, the savings opportunity cannot be understated. The problem is big, but the solution isn’t overwhelmingly difficult. It simply takes a commitment to continuous monitoring via the right combination of clear processes and the right tools.
