Use of the public cloud is rising each year, with a corresponding increase in business spend. The Covid-19 pandemic helped drive these increases further: a VMware report found total cloud spend increased at the start of the pandemic and continued to rise throughout 2020.
This shouldn’t come as a huge surprise: when the first lockdown occurred, businesses focussed their efforts on allowing remote work where possible while ensuring security and flexibility – in many cases, aided by the cloud.
However, few people consider the cost management challenges associated with the adoption of public cloud technologies. Organisations tend to lack the skills, experience, controls, processes, and tools to effectively manage their cloud spend, which often leads to ‘bill shock’ when their cloud provider bill significantly exceeds budget due to unexpected consumption.
The Flexera State of the Cloud 2021 report found that at least 35% of the money spent by organisations on cloud technology is wasted. For larger companies, this can be an enormous amount of money: the same report found that 31% of companies worldwide are spending at least $1 million per month on the cloud. That’s a potential $4.2 million that could be saved each year.
The simplest explanation for this wastage is that, while organisations have adopted the cloud, they aren’t optimising its use. There are a range of very effective cloud resource and cost optimisation levers that organisations can exploit to avoid wastage and ultimately significantly reduce costs.
Organisations must ensure they can account for every cloud resource in use. Cloud providers offer a capability which allows organisations to associate meta data (e.g., resource owner, cost centre, etc.) with each cloud resource through the use of tagging to help identify ownership amongst other things. If you cannot account for the cloud resource then it is an obvious target for terminating, which will save cost.
Avoid paying for idle or over-provisioned cloud resources by tuning your cloud resources to only provide the capacity you need right now. Cloud providers offer a range of choice when it comes to compute resources in terms of type and size.
Each time you can reduce the size of a cloud resource (e.g., from an extra-large to a large) the associated cost reduces by 50%! Only provision the cloud resource and capacity you need to meet your organisation’s needs in the short term and avoid the temptation to over provision.
Another simple way to cut costs is by enforcing a company policy of shutting down workloads outside of business hours if you know they’re not needed. Whilst development and test resources are an obvious candidate, most organisations also have some production workloads that are only required to run during normal business hours.
Assuming a 40-hour work week, you might be paying for resources to run for an additional 128 hours each week – more than three times what you actually need.
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Once you can account for your organisation’s cloud resources, and they are tuned to provide the capacity you need in the short term, you can start to consider taking advantage of the commercial levers offered by the cloud providers.
At the most basic level, most cloud providers are willing to offer discounts in the region of 30-50% based on a commitment to use a certain amount of cloud resources for a defined period of time (e.g., one year up to three years). Beyond this, there are a range of other levers that if used in the right way can significantly reduce wastage and cost, however, beware as getting it wrong can also end up costing you a lot more.
Investing in cost optimisation from the outset of a cloud journey will help your organisation to avoid bill shock and will reduce cloud costs in the long run. Organisations need to recognise that effective cost optimisation requires a unique blend of specialist skills and the right tools.
Whilst organisations can choose to build their own internal capability, help can also be sourced directly from your public cloud provider account team or through a specialist partner as a one-off exercise or ideally an ongoing managed service.
The cloud has myriad benefits but, just as with any other technology, it can be easy to lose track of costs while enjoying them. Given that organisations are spending so much on the public cloud – and that number will likely continue to grow – it’s critical for businesses to take a step back now and understand how to manage costs.
Join the Debate: Cloud First Summit
Optimising the use of cloud resources will be a key theme at the upcoming Cloud First Virtual Summit on June 23rd.
The conference will bring together senior technologists, cloud architects and business transformation specialists to explore new advancements and best practice.
Register your free place now at: https://www.cloudfirstsummit.com/