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How To Get the Upper Hand on Cloud Cost Management

These three steps can help your organization contain cloud expenses.

• By Amit Rathi
• February 22, 2023

The original premise of the public cloud was to provide a simple and cost-effective alternative to building, maintaining, and operating an on-premises data center. Then 2020 happened and the reality became more complex. Single cloud became a thing of the past. Driven by the digital transformation over the last few years, companies have now adopted multiple clouds based on individual business needs. As a result, most companies lack detailed insight into their cloud expenses, the correlation with business applications, and potential cost-saving possibilities. It’s extremely difficult to optimize a cloud environment without deep visibility into what, when, how, and why resources are being used.

For Further Reading: Why Your Cloud Expenses Are Rising: Blame Cloud-flation Proven Ways to Use AI to Cut Cloud Costs The Importance of Seeing Cloud Costs in Business Context

The focus needs to shift to maturing everything within your established cloud environment. Ensuring workloads continue to perform as expected at the lowest possible cost requires proactive, specialized attention. You have to consider thousands of configuration choices and then continually adjust to maintain a real-time, best-fit infrastructure as your workloads and cloud provider options change.

As organizations approach cloud adoption maturity coupled with business pressure to reduce spending, the companies that have a proactive approach will have a significant upper hand in dealing with economic uncertainty. This will enable organizations to have meaningful partnership conversations and healthy negotiations with cloud vendors. Let’s dive deeper into each aspect.

Resource Optimization

The key to optimizing how you utilize the cloud is taking a deep dive into the data behind it and putting cloud governance policies in place. Which departments are using which applications via which cloud provider? How much capacity was used and for how long? For example, if one department is using application A on AWS and another department is using application A on Oracle, your organization is suffering.

By merging the applications to a single cloud provider, you can see parallels in use and govern a streamlined path forward for future use across the company. This gives you the ability to group workloads with similar utilization levels and other characteristics and then iteratively model them in your target cloud environment to find the configuration that meets your performance criteria at the lowest cost.

Given the strategic importance of the cloud and the size of cloud expenditures, it’s critical for enterprises to have solid controls in place to manage it all. Cloud governance is a framework of processes used company-wide to control and operate a cloud environment. It should ensure that the business can operate efficiently in the cloud.

The upper hand: Have departments document how they follow these practices so you can measure the data about what worked or didn’t work and adjust accordingly.

Pressure to Reduce Spending

When it comes to selecting a specific cloud configuration, there are multiple options. Like any purchase, you want to evaluate your choices based on value, not just pick the one that offers the lowest cost. That value judgment should reflect your risk tolerance. For example, let’s say option A is cheaper but if demand increases, you could run into performance issues that will affect customer satisfaction. Option B is somewhat more expensive but gives you much more capacity for growth. There’s no one right answer, but you’ll want to understand the implications of both and then pick the one that’s better aligned with your organization’s priorities.

Consider also the tradeoffs. If your ongoing cloud cost data is stuck in native tools, you’ll never have more than a siloed view, making it hard to see the full value and manage your entire cloud estate holistically. If you extract and compile it manually, you create extra work. However, if you wait until you get your end-of-month bill to catch spikes in costs, or for users to complain about finding performance bottlenecks, it’s too late to do anything about it.

The upper hand: Select a hybrid or multicloud cost tool that will easily give you a unified global view of all your cloud costs. Use the tool to establish a financial accountability practice that enables data-driven cloud spending decisions. FinOps isn’t simply about saving money. Making smarter cloud spending decisions across the board does more than just support operational efficiency. It can drive more revenue, grow the customer base, and accelerate the velocity of strategic product and feature releases.

Negotiating Power

Without proper cloud cost management, you will always have blind spots. To remove them, you need visibility. To gain visibility, you need a unified platform that takes a deep dive into data and provides detailed insights. To get useful insights, you need consistent cloud governance. Without all of these tactics implemented, you lose negotiating power with cloud service providers (CSPs) because there’s no data to back up your usage trends and cost predictions when you’re at the negotiating table.

The upper hand: Once you implement all of these tactics together, you gain negotiating power with CSPs. Some CSPs give discounts based on your spending and if you consolidate in certain places. You can go back to the negotiating table with detailed insights on overall cloud costs and say, “If I consolidate with you, what advantages will I get?” or “Can you give me additional resources?”

A Final Word

Even with an uncertain economy looming, you can still have leverage over your cloud costs. Taking a proactive approach to maturing and defining your cloud architecture will give you a significant upper hand in dealing with uncertainty.