CLOUD COST MANAGEMENT: Have you ever thought about optimizing the costs of your Cloud?
Cost management, in addition to being a great challenge for companies that use Public Cloud services, is also a great opportunity to promote efficient IT consumption.
With “Cloud Cost Management” we intend to identify, manage, and monitor the causes of costs incurred on Cloud or MultiCloud platforms with some very specific purposes. In this article we want to explain and deepen the approach that Criticalcase adopts and adapts to its customers.
To begin with, it should be noted that managing the costs of the Cloud is not just a question of Operations. Many companies delegate the management and optimization of Cloud costs to the IT Operations body, but the “problem” must be addressed on several corporate levels (Finance, Procurement, Program Management, IT Strategy, etc.) and during the different phases of the life cycle of projects.
The following image shows a typical segmentation of “Cloud Cost Management”, this model is effective but incomplete, as it is developed solely at the IT Operation level:
What are the main aspects that drive Cloud costs out of control?
These are some of the main causes that lead to a drift in Cloud costs:
Every Cloud Service Provider has a different billing method and the way in which they apply costs. The bill may include thousands of options and combinations that are difficult to understand also because they can vary during the life cycle of the project.
This complexity increases when a customer uses multiple Cloud Providers as he will have to manage different payment and billing methods.
The invoices are made up of hundreds of items thus making it difficult to reconstruct and allocate costs.
Self-provisioning causes out-of-control growth with unexpected costs. An easy access to the point-and-click web console without constraints can lead to uncontrolled increase in resources.
Cloud providers annually announce the addition of new services and components, new features, and new pricing models, making it difficult to control these changes.
The same application can be developed using many types of different architectures and components which can therefore involve different costs. This implies that companies have more difficulty in calculating and identifying the most convenient alternative to satisfy the customer.
The main Cloud platforms such as AWS, Microsoft Azure, Google Cloud Platform (GCP) have different billing, service, API and management systems and therefore there is no standardization, and this creates difficulties when using multiple platforms.
The task of Criticalcase professionals responsible for IT operations and cloud management is to assure:
- • Make customers aware for what they spend.
- • Build the foundation for cost tracking using vendor native tags and hierarchies.
- • Promote cost optimization by monitoring utilization and capacity metrics.
- • Take advantage of programmatic discounts.
- • Modernize applications in order to use provider-managed services when they are most convenient.
- • Deploy native cloud provider tools to manage spending.
Cost Optimization Roadmap
The Criticalcase methodology (which takes its cue from the Gartner framework) provides a framework for managing the costs of the Public Cloud.
This methodology not only provides information on operational aspects such as reducing disk space, turning off machines if not used, etc., but also providing information on architecture, application development, DevOps, and governance.
It is a recursive and structured approach that aims to ensure a balance between costs and the level of service required.
- PLANNING
In this phase, Criticalcase defines the objectives, direction, and business requirements with the customer, taking into consideration the available budget.
A census of the applications used in the company will be made to understand their value, impact, their complexity, and security constraints.
Cost planning is the key to establishing cloud spend expectations. Ignoring this component of the roadmap without budgeting for applications would cause concern as companies would struggle to hold their customers responsible for their expenses.
ASSESSMENT AND ANALYSIS
At this point we analyze the architecture to understand how it was deployed and developed. Once the information is gathered, Criticalcase begins to monitor and measure the workload to understand if there are any oversized or undersized machines and make an analysis of the costs invested.
The technical requirements are also analyzed and will be compared and correlated with the other solutions.
COST ANALYSIS
In the cost analysis phase, Criticalcase will focus on the census of the services used by the customer by implementing a labeling strategy. These labels, or more simply Tags, implement metadata that apply to all the elements of the hierarchy of a native provider and are displayed in the supplier’s invoice next to each item to be used to group the various costs.
The cost monitoring phase is important to gain the visibility on cloud spending which is essential to verify the correctness of expectations and detect any anomalies.
REDUCTION
At this point, the cost reduction activity is started by optimizing and downsizing the machines, starting an on-and-off plans, disposing of unused resources and so on.
This step is the quickest way to immediately reduce costs as these practices do not require architectural changes and are easy to apply. Ignoring this component of the framework will increase costs for cloud services and will not allow you to take advantage of the elasticity of cloud computing.
OPTIMIZATION
Cloud spend optimization goes beyond the cost reduction techniques mentioned in the previous step. On the contrary, strategic optimization techniques often require architectural modifications of applications to reduce the need for resources.
Although these optimizations may take longer to implement than the previous techniques, they have other advantages such as greater resilience and scalability. By ignoring this step of the framework, savings opportunities cannot be fully maximized, leaving behind the economic benefits of adopting cloud native principles.
Total Cost of Ownership, Stakeholder and Governance Model
In this chart we can see the Total Cost of Ownership (TCO)
As can be seen from the image, the curve of TCO Oprimization after a while tends to flatten, this means that after a start in which cost optimization is very pronounced, it will tend to stabilize.
It is recommended that each company evaluates and studies its curve well in order to optimize its cost / benefit ratio regarding its applications, constraints, objectives and its strategy.
The basic rules to follow are the following:
Designing architectures and solutions based on cost optimization principles. Efficient use of the IaaS cloud, PaaS, sizing, and optimization of the service.
Follow the cost reduction policies continuously, inform customers about optimization opportunities, and establish reports and dashboards to create cost awareness throughout the company.
Define the requirements to be provided by the application in terms of performance, availability, frequency of updates or intended use.
Provide governance rules for policymaking regarding budget approval and cost allocation.
What analysis tools should be used to optimize costs?
Our suggestion is to use the native tools of the Cloud platforms. These tools are highly integrated with the cloud platform and provide high functionality.
Native tools are available to all customers, some of these tools are free while others must be paid with a consumption-based model, but most importantly, cloud service providers continue to invest in their management toolset, with frequent updates of new features and services.
What are you waiting for? Optimize the costs of your cloud, all you have to do is contact us 😉 !
