The potential for cost savings is one of the top three reasons for cloud adoption, according to survey by the Cloud Industry Forum but whether expected savings are realised in practice is another question.
While public cloud services are commonly seen as a route to reduced spending, the reality is not always so simple.
The vast array of solutions available to enterprise from a diverse group of vendors has created multi-cloud environments in many cases. Navigating this landscape can be daunting. Businesses need to explore multiple cloud offerings and find the right fit for their workload and applications. After that, proactively managing and optimising infrastructure 24/7 is highly challenging and budgeting decisions can rapidly spiral out of control.
Furthermore, complex billing models can obscure visibility of the spending arrangements of different departments. Implementing governance can be hard and overprovisioning is not uncommon.
This causes significant financial pressures. Cloud computing expenditure can represent up to 30% of the average company’s IT budget, according to research by IDG Enterprise. 2
Gaining control of cloud costs depends on a systematic approach. CDW, supported by CloudHealth, provides clarity and control with a range of dedicated services. CloudPlan is a strategic methodology that helps organisations make choices about how to manage transformation, which platforms to use for different types of application, objective setting and development of a sustainable and transparent budget. Moving forward, CloudCare provides comprehensive support for organisations utilising or planning to utilise the public cloud, with ongoing cost monitoring and advanced reporting that enables rightsizing..
Here are five ways to improve cloud cost management.
1. Gain visibility
In order to allocate budget to departments, cost centres or lines of business, it is essential to talk to each department to understand how money is being spent and who is spending it. This information can be used to divide up the total cloud budget. The process can be a major manual undertaking so you might consider working with a cloud management platform that enables precise and flexible reporting, enabling you to report on the criteria and business groupings that matters most, whether by owner or project name. After that, you can see how spend is trending from month to month and assess whether it is in line with projections. With a strong understanding of your cloud spend, you can make budgets and forecasts as predictable as possible.
2. Monitor key metrics
Once you understand your spend, it’s important to keep an eye on key metrics in order to make accurate financial decisions. Your focus should be on cost and usage, so the key metrics to monitor are cost per hour and usage per hour, as well as performance analysed by categories including CPU, memory, network and disc. The hourly interval is useful for analysing potential spikes during peak periods of the day. Daily, weekly and monthly intervals enable tracking over longer periods. Based on this analysis you can optimise infrastructure with adjustments to virtual machines and rightsizing.
3. Set benchmarks
To keep spending aligned to immediate and longer-term organisational goals, key stakeholders need to be accountable for the spend of their department in terms of infrastructure. Some companies apply charges to lines of business to make them financially accountable for their spend. In other cases, departments are simply shown their spend at the end of each month to make them aware of financial implications. Regularly presenting charges to departments is proven to keep costs under control.
4. Don’t miss discounts
Flexible pricing structures are one of the main attractions of cloud infrastructure. In most cases, this enables companies to make an upfront commitment in exchange for a discount on compute costs. For example, purchasing Reserved Instances from AWS or Azure (or Committed Use Discounts from Google), can reduce your cloud costs by up to 80%. CloudHealth recommends that you cover at least 70% of your compute infrastructure with reservations. Additionally, after purchasing reservations, it is important to monitor and manage them on a daily basis in order to identify the full value of this large investment.
5. Seek simplicity
Spreadsheets are one way to track and manage cloud spend but the process can be hugely time-consuming for teams. The CloudHealth platform helps you allocate cloud spending and track budgets by dynamic business groupings. CloudHealth also helps you manage the full lifecycle of reservations including the modelling of purchases, buying reservations and monitoring for opportunities to modify the arrangement. A key strength of this policy-driven platform is that you are able to create rules to monitor your environment and detect anomalies. The outcome can range from a simple notification to an automated action.
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