Barry Whittle - December 05, 2018

Why you need a cloud spend and optimization solution

 

Trends on cloud spend are astounding. Virtually all organizations use it one way or another, and the pace of change isn’t slowing down—83% of enterprise workloads are predicted to be in the cloud by 2020.

Despite this “cloud-first” environment, where the prevailing wisdom is to go full bore into cloud adoption, organizations aren’t maximizing their cloud footprint. A “Field of Dreams” approach to cloud (“If we provision it, they will pay”) had some teeth when spend was so small that no one paid much attention to it. But then, cloud spend got big (really big). No one optimizes anything with an ad-hoc approach. What you need is a dedicated cloud cost management and optimization solution.

There are many arguments against investing in yet another tool. But if you care about cloud spend and value (which, if you are intent on future-proofing your career, you probably should be), meet these arguments face on.

Here are the top six arguments against adopting a cloud cost management and optimization solution. And why they are wrong.

 

“I don’t know how to build a business case.”

A business case needs to articulate pain and impact. If you are struggling to build a business case, your cloud adoption discomfort may not have crossed over into pain. But as your footprint gets larger, the impact becomes more pronounced. A business case must articulate the opportunity cost of delaying.

The value prop of cloud boils down to agility, but there’s a cost. And quantifying that cost is nuanced. Your cloud provider bill has plenty of operational detail and an accounts payable-orientated view of your cloud liability. However, there’s a lack of context. Who is driving this spend? What are my fully-burdened cloud costs? Does this spend support any of my initiatives? How does it support or undercut current on-premises IT solutions?

Context can be layered onto a cloud provider’s bill with some spreadsheet-ninja skills, but that isn’t scalable. Provisioners and consumers (the yin and yang of your cloud strategy) must keep pace with a monthly cloud report card (a.k.a. bill).

»Listen: [Webinar] Take Control of Your Cloud Spend and Usage

 

“We are ‘cloud-first.’”

Cloud adoption must acknowledge your existing infrastructure. Legacy systems may be unsuitable for the cloud or prohibitively expensive to migrate. This is a reality that can’t be overcome by simply chanting “cloud first” over and over.

Some migration decisions are easy. Financial (e.g., your environment is cheaper in the cloud) or operational (e.g., the agility and innovation of cloud serves your market needs) imperatives make it a clear-cut call (“Decision made. What’s next?”).

The challenge is when different scenarios are close enough in a cost-benefit analysis that there are no clear paths of action. A cloud cost management solution offers what-if costing scenarios to drive decisions.

“I have other, higher-priority projects than cloud spend.”

IT leadership is being hit with infinite requests from the business. Regardless of the problem they want to solve, the cloud is the platform—your CMO wants business capabilities, not operational headaches. The business is vacuuming up cloud capabilities, and IT needs to maximize the effectiveness of that spend. Saying you have “higher priorities” than cloud puts you out of step with the business—they know the value prop of cloud and are already all-in with squeezing the maximum benefit from it.

“Higher-priorities” may mean that - today - other initiatives take up a higher proportion of IT's budget than cloud. From a pure spend view, cloud may be a second class (cost) citizen in your IT budget. But that balance is shifting. With cloud adoption increasing YoY, spend today will mushroom in the future. All the unknowns around predicting technology trends are underpinned by knowing the delivery vehicle for it will be cloud. Getting your cloud cost management in order now (e.g., building a tagging strategy) sets up future success.

»Read more: The essential guide to building your cloud tagging strategy

“I don’t have the people or resources.”

This may be true, but you need to address it. Organizations can’t maximize economies of scale without monitoring and optimizing cloud spend—you will overpay (and never know about it). People and software resources that will pay for themselves once the governance they oversee starts paying dividends.

Not allocating resources suggests IT isn’t taking the challenge of cloud seriously. You are managing your cloud spend in some form or another and, with pay-as-you-go billing, there are real costs to getting it wrong. With on-premises resources, the OpEx hit is consistent over the depreciation cycle. Cloud spend is wholly dependent on provisioning and usage—you must have someone managing this spend to avoid budget surprises.

“My data isn’t good enough.”

Cloud bills are overwhelming. Thousands of lines of operational data do not easily translate into business value. Organizations look at this data and conclude ”Okay, we need to roll out a cloud cost management and optimization solution, but we better clean up the data first.” Big mistake.

Whatever state your cloud bill is in today, it will be in a more confusing state tomorrow. More provisioning, shadow IT, budget over-runs: the cloud landscape isn’t going to get clearer while you mull over data quality. It’s better to act now.

A data strategy informs the business case for a cloud cost management and optimization solution. Determining accountability and translating that into tagging requirements is a forcing function for data clean up. Even minimal tagging governance (e.g., aligned to a standard tagging taxonomy) has an impact. Single-source linked accounts blown out into business unit consumption start accountability conversations. Any data, shown through a new lens, will have gaps and inconsistencies but at least you start a dialogue between the business and IT.

“I already have insight from my cloud provider.”

Your cloud provider delivers analytics on cloud spend—without a comparative view of other cloud providers or on-premises solutions. Optimizing your hybrid IT spend means not just looking at one provider who isn’t able (or willing) to show comparative costs for cloud migration.

To avoid vendor lock-in, you need to see the full range of cloud options. An apples-to-apples comparison of hybrid IT options (leveraging a standard taxonomy) gives you the data to make informed decisions between private and multi-cloud options. Fully burdened public cloud costs include cloud provider costs and your internal support costs—a cloud provider bill doesn’t tell the whole story.

Cloud is now the dominant delivery vehicle of IT solutions. Innovation and agility are so tightly tied to the value proposition of cloud that your business partners have an expectation of “cloud first”—and if they don’t today, they will tomorrow. IT must get ahead of this demand by putting the right scaffolding around cloud for transparency and optimization. That’s why you need a cloud cost management and optimization solution.

 

Challenges with cloud cost management

Public cloud costs are buried in monthly billing detail across multiple accounts and providers, business units, and teams. As a result, IT leaders do not have visibility into the total cost of supporting technology services and cannot make informed decisions about the most effective use of the public cloud.

Indirect costs of public cloud (physical labor, software, security, and other non-provider costs required to deploy and maintain services) aren’t in a cloud provider’s bill—and neither is data about consumption by business stakeholders. Without fully burdening public cloud costs (direct and indirect) and tracking consumption by business units, you’ll struggle to get the “most bang for your cloud service buck.”

Overwhelming billing detail hinders spend analysis

Infrastructure and Operations (I&O) leaders optimize public cloud spend by monitoring consumption, but cloud bills run to thousands of lines of data and are overwhelming. I&O need to distill bill detail into action, such as when to recommend Reserved Instance (RI) purchases vs. leveraging spot instance pricing.

Business units consume cloud like it’s free

Although cloud providers offer instance tagging to identify business purpose, tags are often poorly structured and sporadically populated. Without mapping of public cloud services to business units and applications, business units are unaccountable for their public cloud spend. They have no incentive to curb or curtail cloud spend—leading to waste, sprawl, and consumption of public cloud like it’s free.

When consumption is scattered due to fragmented purchasing across the organization, cloud OpEx spend accelerates without warning—leading to budget and resource constraints.

Under- or over-utilized instances in multi-cloud lead to waste

When every cloud provider has different service offerings and billing structures, it’s impossible to compare costs in a multi-cloud world. A singular provider view of public cloud (AWS Cost Explorer or Azure Cost Management) doesn’t serve the needs of multi-cloud organizations. Without a common view that spans cloud providers, organizations rely on estimates for optimal numbers of instances, sizes, and service level of public cloud services—leading to waste.

Hidden cloud costs lead to disappointing migration value

I&O leaders struggle to build defensible migration plans because they cannot compare between cloud providers and existing on-premises options. Instead, decisions are made based only on cloud provider pricing without a view of related support costs such as labor. Consequently, companies migrate their apps to the cloud (lift-and-shift, re-architect) but have no way to gauge whether they’ve achieved their migration targets.

 

Required capabilities for a cloud cost management and optimization solution

Eliminate confusion from overwhelming cloud bills

  • Automate ingestion and aggregation of public cloud bills
  • Auto-map multi-cloud billing to standard classification of IT services
  • Track public cloud spend by app across dev/test/prod environments

Quit using cloud provider pricing to make migration decisions

  • Incorporate cost of labor and security
  • Allocate fully burdened costs to consuming applications and services

Avoid surprises that lead to cloud budget overruns

  • Monitor cloud cost and usage with real-time spend analysis and forecasting
  • View AWS reserved instance inventory, spend, and expirations

Prevent the business from consuming public cloud like it’s free

  • Standardize best-practice tagging strategy to track business purpose
  • Automatically parse tags in billing detail to map to consuming apps and business units

Slash waste from underutilized or idle instances

  • Analyze potential cost savings from underutilized or inefficiently deployed resources
  • Recommend AWS Reserved Instance (RI) purchases based on actual usage and consumption


Apptio® Cloudability provides IT leaders with real-time clarity into total public cloud spending to drive accountability for cloud consumption, optimize purchase decisions, and more efficiently utilize public cloud resources.

With Apptio Cloudability, you:

  • Understand costs and usage to avoid surprises and drive accountability
  • Manage consumption by infra, app, and business units to make better decisions
  • Optimize resources by taking action on underutilized and idle instances

 


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