This story first appeared in InformationWeek, a partner publication.
Cloud services are an integral part of IT and business life; so, too, are concerns about spending too much on cloud operations.
It’s easy to overspend on the cloud, says Elizabeth Ebert, CIO advisory partner at IT and management consulting firm Infosys Consulting. “Companies that are overspending on cloud resources tend to be the ones that are managing cloud infrastructure in the same manner they managed on-premises capabilities,” she explains.
Ebert suggests that IT leaders should tailor their governance models to monitor provisioning, and spend so that the monthly consumption bills don’t include unexpected costs.
“The acquisition and release of cloud resources needs to be monitored as the key driver of costs,” she advises. “Savvy IT organizations are leveraging the cost management tools provided by the hyperscalers, as well as third-party capabilities, to continuously monitor these patterns.”
Organizations typically run into issues when they lack financial transparency and don’t have the necessary financial forecasts and controls in place before building or moving anything to the cloud, observes Alicia Johnson, consulting principal, technology transformation, for business advisory company EY.
Some common issues arise when organizations don’t track IT expenses in a way that enables breaking out costs to support analysis or forecasts at an application or portfolio level. It’s also important for organizations to have a clear understanding of current state capabilities and performance.
“Without it, engineering workload performance can be a challenge,” Johnson says. “Optimization is essential to ensure the efficient consumption of all cloud resources,” she notes.
Assess, Modernize, Optimize
Rishi Kulkarni, senior director and cloud native lead at business and IT consulting firm Capgemini Americas, suggests adopting a three-stage approach to cloud service procurement.
“Assessment involves building a business case that incorporates overall total cost of ownership, and maps business goals with savings from cloud adoption,” he explains.
Modernization involves developing an enterprise architecture that's tuned for cloud-native services, incorporating the “hard” and “soft” savings into each layer of architecture.
“By building an operating model that provides easy access to cloud and hybrid resources through an as-a-service model, organizations will have the ability to enable continuous improvement.” Kulkarni says.
Optimization requires establishing the right blend of intelligent service-level indicators and service-level objectives to prevent failures and help detect, predict, and auto-resolve failures via mechanisms like DevSecOps automation and self-healing.
Start Small
To optimize a cloud budget, start with the smallest possible allowable instance that's capable of running an application or service, recommends Michael Norring, CEO of engineering consulting firm GCSIT.
“As demand increases, horizontally scale the application by deploying new instances either manually or with auto-scaling, if possible,” Norring says.
Since cloud service costs increase exponentially the larger the size of the service, it's generally cheaper and more affordable to use small instances.
“This is why when deploying services, it's better to start with a fresh install, versus lifting-and-shifting the application or service with all its years of cruft,” he says.
Create a Cloud FinOps structure
Will Thomas, managing director at business consulting firm Protiviti, believes that establishing a Cloud FinOps structure, working as part of a greater cloud governance team, is the best way to gain impartial insights into current cloud spend. It also provides the chance for alignment to financial models and maximized business benefits.
Thomas feels that the single most important goal of a Cloud FinOps professional should be to enable the business to make money.
“That’s done by following standard cloud governance disciplines, such as resource consistency, where well-established naming conventions and tagging strategies are implemented and enforced,” he says.
Go Multi-Cloud
Many enterprises already use multiple clouds from various providers, observes Bernie Hoecker, partner and enterprise cloud transformation lead with technology research and advisory firm ISG. He notes that adopting a multi-cloud estate is an effective strategy that allows an organization to select providers on the basis of optimizing specific applications. Enterprises also turn to multiple clouds as a mechanism to deal with resiliency and disaster recovery, or as a hedge to prevent vendor lock-in.
“A multi-cloud estate makes IT management and governance complex,” Hoecker observes. “Budgets for these estates must be integrated into a single cloud budget that leverages FinOps practices to drive efficiency and accountability.”
Commit to Cloud-Native
The cloud’s potential is expanding exponentially, as is evident by the investments cloud providers are now making.
“Transforming with an eye toward cloud-native will help reduce costs with inherent operations automations and will [help adopters] achieve empirical evidence of greater business and mission impact,” says Chris Bjornson, cloud practice lead at management consulting firm Accenture Federal Services.
By focusing on the organization and the people, you’ll enable the entire enterprise to operate at the speed of cloud, Bjornson says.
“These changes are certain to challenge existing organizational culture and norms, and managers need to be prepared to lead those transformations and begin with the end in mind,” he says.
John Edwards is a veteran business technology journalist. His work has appeared in The New York Times, The Washington Post, and numerous business and technology publications, including Computerworld, CFO Magazine, IBM Data Management Magazine, RFID Journal, and Electronic Design. He has also written columns for The Economist's Business Intelligence Unit and PricewaterhouseCoopers' Communications Direct. John has authored several books on business technology topics. His work began appearing online as early as 1983. Throughout the 1980s and 90s, he wrote daily news and feature articles for both the CompuServe and Prodigy online services. His "Behind the Screens" commentaries made him the world's first known professional blogger.