Finding hidden cloud costs is fast becoming part and parcel of operating in the public cloud. For many organizations, the five greatest expenses are staff, facilities, capital equipment, development costs, and inventory. There’s another expense, though, hiding in plain sight and making a push into that top five — the cost of running your applications in the public cloud, whether that’s via Amazon Web Services, Google Cloud, Microsoft® Azure or a combination of providers.
Technology leaders need a cloud architecture that will meet performance requirements, achieve faster time to market, and quickly scale up or down as the business demands. It’s common for cloud bills to run over budget in the process. Fortunately, it’s also easily preventable with the following guidelines for avoiding surprise cloud bills and keeping track of cloud costs.
The price you really pay
When a company receives its first bills from a public cloud provider, they typically experience sticker shock. To start, the bills are often well above budget. On top of that, Cloud services bills are cloud-friendly, but not necessarily business-friendly. Usually, these bills are categorized according to public cloud vendor services and not to the service they provide for the business. They contain multiple sections, thousands of lines and many types of charges.
This makes it a challenge to associate each charge with its purpose, allocate costs to end users or properly calculate the return on investment. This has led many companies to put a “just-in-case” cushion in their budget to pay for unexpected cloud bill expenses. Further complicating matters, there are four major unpredictable variables that usually impact planning for cloud project costs:
- Compute – virtual server instances
- Storage – amount that is provisioned in gigabytes
- Networking – inbound and outbound data transfer traffic
- Databases – building, deploying, and managing
These are the kinds of challenges that have led many CIOs to wonder what they can do to better understand and optimize cloud costs.
Making it work
From a business standpoint, enterprise technology leaders should go for the reserved capacity (instance) or committed use options whenever they can. These options are both cheaper and more predictable. They can also work on policies and procedures to ensure there are no untagged resources in the system. This will enable these leaders to see exactly what each application or workload is costing. Organizations can also establish a FinOps discipline where everyone takes ownership of their respective cloud usage. Moreover, they can adopt third-party cloud cost optimization tools to support these policies, procedures and disciplines and help solve the most complex problems associated with the cloud.
Also known as cloud financial management or cloud optimization tools, the best-of-breed software in this category features:
- Visibility and reporting to track costs across business units, applications, teams and other custom views
- Easy-to-implement savings recommendations which allow organizations to easily reduce cloud spend by up to 20-40%
- Forecasting and budgeting insights to improve planning and reduce wastage
- Anomaly detection in real-time using AI/ML-powered algorithms to react to unplanned spikes
- Ability to allocate costs and track chargeback/showback cloud costs based on end user or team consumption for improved accountability
- Container cost insights that allow you to obtain big picture details of cost by pod, namespace, etc., to guide your future optimization decisions
Proactively monitoring, managing and optimizing costs with such cloud cost optimization software allows organizations to better plan and forecast for growth in the cloud.
Maximizing cloud investments
The right cloud cost optimization software makes cloud bills clearer and more predictable. These tools provide insight and intelligence to substantially reduce cloud costs which will allow enterprises to fully take advantage of public cloud services. Many organizations have easily realized savings of 20% or more on their cloud spending just by using cloud optimization software and following best practices.
Cloud cost optimization isn’t a one-time action. It’s part of a journey in which you constantly focus and re-focus on optimizing the value of your enterprise’s cloud investment. Take the first step in your own journey toward maximizing your cloud investments and