Cloud computing spend is projected to hit well over $400 billion by 2020. That number’s only going to get bigger, and the bigger it gets, the more companies need to adopt an approach to cloud cost management that is holistically incorporated into their cloud operating model — an emerging practice known as FinOps.
The first step to taking charge of your cloud spending is being fully informed about your cloud costs and usage. With resources being spun up by people across your organization, this can be a complicated process, but one that’s essential for operating your cloud according to best practices.
Curious how other companies are tackling this challenge? In a recent study, 451 Research asked enterprise companies across the US and the UK what methods they use to view cloud costs across their enterprise. The responses broke down into four categories:
1. “We have little visibility into our cloud costs” (11%)
A surprising number of people responded that they have little visibility into their cloud costs. These companies most likely learn about their cloud costs when they get the invoices from their cloud vendors. That means the first time they find out about any overspend is one to two months after the costs were incurred — way too late to take corrective action.
Truth be told, this method doesn’t come close to following best practices, but there may be a good reason for using it. Perhaps cloud use is in the experimental phase for a company, or maybe it’s a very small line item that isn’t at material levels. That being said, cloud use is growing, and even companies with a small cloud spend would benefit from implementing best practices now that will scale with them as they grow.
Best practices for cloud cost visibility include being able to view all of your costs and usage in a timely manner that allows you to take action quickly and decisively.
2. “We rely on cloud providers’ own portals for visibility.” (34%)
AWS, GCP and Azure all offer built-in cloud cost management tools. These tools are integrated with the cloud providers’ existing dashboards, are pretty simple to set up and a convenient default option. Additionally, many of these tools have seen additional functionality in recent years, and that combination makes it understandable why so many companies rely on these tools.
That being said, there are a couple limitations to the built-in tools. The most obvious is the lack of multi-cloud visibility. After all, it’s not likely that AWS is going to invest in a tool that will make it easier to use Azure or GCP — and vice versa. If an enterprise uses multiple clouds, then tracking cloud costs means bouncing between multiple vendor dashboards.
The second limitation is one of customization. These tools are built to integrate with each individual cloud vendor’s offerings, which means cost and usage data is viewed from a foundation built on their service structure. As long as your team structure smoothly fits the cloud provider’s structure, you can get the data you want, but mapping that data directly to your organization becomes a little more complicated.
To follow best practices, you should be able to view your entire cloud infrastructure as it ties to your organization and team structure in a single location.
3. “We manually extract cost information from cloud providers and aggregate into a single view, such as a spreadsheet.” (35%)
APIs and detailed billing data make it easy for companies to get incredibly granular data about their cloud cost and usage. Accessing AWS’ CUR file, for example, can be done with a few clicks and an S3 bucket. So it’s no surprise that the most popular method for viewing cloud costs is extracting cost information into a single view, very often in the form of a massive spreadsheet file.
And therein lies the danger of using this methodology for managing cloud costs. A CUR file can contain well over a hundred lines of data for each resource. For a small number of resources, a manual spreadsheet can be manageable. But as your cloud infrastructure grows, it won’t take long before that spreadsheet gets too massive to tackle manually.
Having a single view like a spreadsheet or a simple in-house tool also limits your options for viewing your cost data, sharing it with others and taking decisive action. Even something as relatively straight-forward as showing a team the specific cloud costs they incur becomes tricky when it’s all in one massive spreadsheet, and trying to view the data from multiple angles to uncover waste or optimization opportunities becomes almost impossible.
Cloud cost management best practices are built around getting people the right cost and usage data they need to see when they need to see it — without having to wade through the entire organization’s data.
4. “We use a third-party tool that aggregates and reports all our costs.” (19%)
Third-party tools, like Cloudability, ingest the data from multiple cloud vendors together into a single pane of glass for all of your cost and usage data. Designed to provide full visibility and to enable optimization, these tools come with a wide variety of features and customization options to help companies better leverage their cloud. While not as common of a methodology as built-in tools or manual single-view tracking, third-party tools are gaining more adoption as cloud infrastructures become more complicated and cloud spend takes up a greater percentage of IT budgets.
The trade-off with third-party tools comes in balancing the expense against your business gains from cost optimization, cost avoidance and full cost allocation. If you choose the right tool and use it correctly, it’ll pay for itself and give you a healthy ROI from those gains. A lot of this comes down to how incentivized your company is to make the most of a tool. After all, you might find optimization and cost waste with Cloudability that helps you get the same amount of cloud for 40% less, but you need a team that’s willing to dive in and make those changes to realize that optimization.
Strangely enough, this can be easier than it sounds. A recent post by the FinOps Foundation discusses what they call The Prius Effect, where people’s driving habits changed just by being made aware of how their driving impacts fuel efficiency. The same thing tends to happen when you increase individual visibility into how their actions affect cloud costs. As a result, many companies find their clouds better optimized and waste reduced just by increasing engineer visibility into cloud costs with a cloud cost management platform.
Best practices for getting cloud cost visibility involve having the customization options to fully realize your optimization potential and to fully allocate your cloud costs.
Third-Party Tools Are the Best Choice for FinOps
All of these best practices are only one part of the FinOps cloud operating model. The model is broken down into the three phases of Inform, Optimize and Operate. Each of the phases builds on each other in an iterative cycle to constantly improve the unit economics of your cloud.
At its heart, FinOps isn’t about saving money — it’s about making money. It’s about being fully informed, being able to make the right optimization actions and taking full advantage of everything the cloud offers to fully realize your organization’s cloud goals.
Ready to get full visibility into your cloud costs? Sign up for your free Cloudability trial.