Cloud costs and spend is going up for SMB and Enterprise customers across the board as companies initiate experiments in the Cloud to moving from experimentation to setting up and migrating production workloads. Along with this increase in Cloud investment, proportionately the Cloud spend waste is also going up. In this post we are going to outline some common Cloud utilization scenarios which may lead to cloud spend waste. Along with that we will also offer guidance and recommend some tools to optimize Cloud costs.
According to the recent 2018 State of the Cloud report from RighScale, Cloud costs and spend is going up for SMB and enterprise customers across the board with 31% companies having increased their spend anywhere from 20% to 50%.
Cloud Spend growth for SMB & Enterprises
In order to get an understanding of the scale of the spend waste problem, it is estimated that almost 35% of the Cloud spend is getting wasted.
Cloud Spend Waste
For this reason Cloud cost management should be a key pillar of any cloud strategy. This post describes the key elements of an Enterprise cloud strategy including costs. Let’s review some common Cloud spend scenarios to watch out for when you are setting up and using the Cloud services so that you don’t end up wasting money instead of saving money in the Cloud.
Common Cloud Spend Waste scenarios and how to avoid them
- Getting all the bells and whistles. If you are experimenting in the cloud you may end up buying the advanced version of a service without really needing it. An example of that is getting the standard version instead of basic version for a Web App offering. In order to avoid this scenario assess your needs carefully in detail outlining exactly what you need before you go sign up for those specific cloud services. Confirming that you have the option to scale out these services as you expand or change the scope of your experiment is important too. Another common example of Cloud spend waste is when you may sign up for a database service option which allows for a maximum database size of 10 GB and you know that your database will not grow to even 1 GB in one year. This again is an example where you are signing up for resources which you may never use. Instead you should look into scale up options for the database service, as your database size goes up. If your Cloud provider offers insights and analytics for your workload, make sure you turn them on to gauge the utilization of your owned Cloud resources. This will help you make data-driven decisions on when and what to scale up or out depending on your workload’s needs.
- Forgetting to completely de-provision your resources. One of the most common workload in the Cloud is a Virtual machines (VM). A common mistake most of the IT administrators and developers make when using these virtual machines is that they forget to completely de-provision or delete the VM once they are done using it. They may shut it down thinking that they will not be charged for it but since the VM is using the Cloud resources and can be re-started again at any time the Cloud provider continues to charge you for it. The provider has reserved the VM resources for you to be reused at any time the machine is started back up again.
- Biting on more than what you can chew. Provisioning cloud resources larger than what you needed is a common mistake that newbies to the cloud make. A common example of this is when you setup a VM for your customized app and decide to use the version or type of VM with the maximum number of processors or the maximum memory that the Cloud provider offers for their VM. This is a prime example of Cloud spend waste. Instead of provisioning the most powerful VM for your app start with a VM type that fulfills all your minimal requirements and then use the scale up option as your app’s scope expands. Of course you will have to make sure that your cloud provider offers the scale up options for your VM. You may want to turn on analytics on your workload to see which scale up option to choose for your needs.
General guidelines to reduce Cloud spend waste
There are several ways by which you can reduce your cloud spend and avoid scenarios which lead to cloud spend waste. These include:
- Have governance and controls in place for different teams and organizations within your company around signing up for and using Cloud services. You don’t want to be in a scenario where various teams are going out to the Cloud provider and consuming resources independently and racking up huge bills with out processes and oversight
- Create clear Request, Approval and Usage processes to make sure that there is consistency and predictability in how the cloud services are going be utilized and how much budget needs to be allocated for it
- Form an advisory board with experienced and cloud trained/savvy developers and IT administrators to help different teams and organizations with questions around cloud services, usage and specific options to configure for services they want to provision from the Cloud provider. This again will help with reduction in cloud spend waste.
- Create best practices and training for the most common cloud services utilized by your company and make the training mandatory or a prerequisite for anyone looking to utilize Cloud services
Tools to manage costs
There are several tools out there in the market that you can also use to optimize your Cloud costs. Most of the Cloud providers offer tools and systems to help you manage your costs effectively. For Azure there is a calculator available, while AWS offers a TCO calculator along with Google having their own pricing calculator. Google also recently introduced their billing API to help organizations manage their Cloud costs programmatically if they are using Google Cloud Platform services. Along with these basic cost calculators, both Microsoft and Amazon offer extended cost management systems for customers and partners to help them manage their Cloud spend for both Azure and AWS. Microsoft acquired Cloudyn in 2017, which is a good tool to consider if you have a multi-Cloud environment. There are other third-party tools like RightScale’s Optima and Cloudability’s which you may also want to consider for cost optimization and management.
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