Question

Discuss the concept of cloud cost management, its application and other related issues.

Answer 1

As enterprises move more and more workloads to the cloud, the first pain our customers feel is the sting of cost overruns. But why is that? The budgets were planned. Some initial sizing was done. But almost immediately, costs are the first to start causing headaches for IT managers. It is apparent that all companies soon will require a structure to integrate cost effective measure. Some of the usual pitfalls and possible lay out of a comprehensive framework to manage costs of cloud workloads are addressed here.

When starting their cloud adoption journey, enterprises often miss putting a cost management framework in place. This usually results in a situation, commonly called the “cloud sprawl”. These lead to (often substantial) cost overruns. Some of the common reasons that occur include:

Cost Ownership

To utilize the full benefits of the speed and agility that cloud provides, modern IT usually provides a common services framework, wherein the business teams are allowed to manage the cloud resources for their applications themselves. While this is the recommended practice, cost ownership often falls through the cracks. We’ve seen customer situations where IT creates accounts and projects for business teams to use, and then hands them over to the business teams, but still owns the costing and billing.

What results from this arrangement is that the business teams get a free reign to create resources, which they do, often well outside of their allocated budgets. They are also neither aware nor often bothered with the mounting spends since they are not the ones footing the bill.

This is usually made worse with the fact that IT does not have strong cost reporting mechanisms to bring visibility into the who and what of the budget overruns.

Budgets and TCO

Doing an initial cloud TCO (Total cost of ownership) is absolutely essential to arrive at a budget for your cloud landscape. When this is not done, stakeholders have no visibility into what their infrastructure is going to cost. Cost saving is often one of the big reasons for cloud adoption, but not doing this exercise results in a bill shock to the enterprise and often slows down the adoption momentum.

Even when enterprises do a TCO exercise, they often do the TCO for the final production landscape. They sometimes miss taking into account the migration plan, DevOps processes and Go-Live dates, and also do not sufficiently size for them. This causes situations where costs skyrocket even before the application is fully migrated. Dev/Test environments tend to severely bloat up and eat into the overall budget.

Cost Visibility

Even when enterprises have done initial sizing and defined cost ownership, having day to day visibility into the cost is important. Because it’s very easy to create resources in the cloud (within minutes), waste becomes a concern. Resources may be created for temporary use but never shut down.

There have been situations where hackers have obtained access to customers’ cloud accounts and created hundreds of servers. The problems with lack of visibility can be due to stakeholders not having granular visibility and actionable insights into their cloud landscape, continuous monitoring not in place, resulting in Month-end Bill shocks and no availability of projections on cloud utilization trends.

Cost Management Approach and Recommendations

Based on our experiences with customer landscapes and cloud best practices, the following key recommendations can help enterprises control and optimize costs effectively.

At a strategic level, this requires that enterprises start by defining and implementing a clear cloud governance model. Once a model is defined, they can implement solutions that provide deeper visibility and actionable insights for cost management.

It is highly recommended to enforce governance via automation, as this provides predictability and reduces overhead. It is important to define and implement access control and ownership of cloud resources, so that responsibilities are clear and unambiguous.

Together, over time, these fundamentals increase awareness and enable behavioral change and discipline needed for successful cloud management.

At a tactical level, enterprises can drive cost visibility by implementing and enforcing mechanisms such as mandatory resource tagging, a lightweight cloud inventory management system, and reporting and recommendations on current cost and projections, utilization and non-conformance.