Cloud computing is nothing new, with end-user spending on public cloud services expected to reach nearly $500 billion this year. Yet in the rush to migrate to the cloud and embrace digital transformation, many companies see a spike in IT spending. Some even find cloud usage costs them more than it saves. According to Gartner, enterprises with little or no cloud cost optimisation end up overspending on cloud services by up to 70%.
In a time of high inflation and depressed growth, most companies want to innovate, accelerate return on investment and simplify operations. Yet they have become so reliant on cloud infrastructure, especially after the pandemic, that they are wary about making deep cuts or dramatic changes. There are, however, some smarter steps every organisation can take to trim the fat without compromising on performance, resilience, or scalability.
Here are some reasons cloud costs get out of control and the ways enterprises can address the challenges:
Not looking at the different dimensions of cloud cost in a holistic way
The costs of cloud services can be split into three main elements: the specific service a company uses (for example, compute or storage); utilisation (how and how much of the service the company uses); and unit costing (the price paid to use the service). Any optimisation strategy needs to monitor all three elements with a view to making sure the company is:
- Matching the right cloud provider and workload to different cloud services and in-house platforms;
- Optimising usage volumes, data ingress and egress, and workloads to keep costs under control as well as avoiding under- and overprovisioning; and
- Benefitting from committed use discounts from its key public cloud providers.
Failing to monitor cloud usage and costs using FinOps disciplines
Organisations sometimes fail to appreciate how dramatically the shift from owning infrastructure to purchasing it as a service will change the economics of technology. They thus do not implement cloud financial operations (FinOps) early in the journey. FinOps is all about putting smarter processes in place to report on who in the business is spending on cloud services, how much, why, and if they are doing so in the most efficient way possible...
FinOps lets the finance and IT team gain visibility into cloud spending for allocating and benchmarking costs, budgeting, and forecasting. It enables a business to gain more transparency into cost-based performance indicators. This in turn enables the company to optimise cloud spending using tactics such as taking advantage of discounted pricing for increased commitment or using automation to turn off unused resources.
Not using all the available tools to optimise costs
The three major hyper-scale cloud providers—Amazon, Google, and Microsoft have embedded cost management and optimisation into their well-architected frameworks. They offer basic tools that businesses can use to get visibility into their spending and resource usage. However, these tools are not enough, especially in complex multi-cloud and hybrid cloud environments.
Cutting-edge cloud expense management (CEM) solutions from independent vendors complement and extend these offerings to guide tighter FinOps discipline. Smarter CEM tools give enterprises visibility into costs across multiple cloud service providers and are designed to simplify the management of multiple billing models. These solutions are essential if a company is to get the full benefit of cloud “pay for what you use” billing models.
A premier CEM solution gives business visibility into the entire technology infrastructure so that it can ensure that it only pays for what it needs. It will also automate the processes needed to monitor, verify and allocate costs from different providers to the various cost centers and resource groups within the business.
Navigate your FinOps journey
Nebula is an independent and knowledgeable guide that helps organisations navigate the challenges and opportunities of digital transformation. Contact us to learn more about how we can partner with you in building innovative technology solutions that unlock human potential and support your DevOps and FinOps journey.