6 simple steps to cloud cost optimisation
Cloud continues to be one of the fastest-growing segments of IT spend – and this has only been accelerated by recent market events. Since cloud is becoming a greater focus of the IT budget, the need for a change in strategy to accommodate the extra spend, responsibilities and risk has become the topic of conversation at the board level.
In the words of Gregor Petri, Vice President Analyst, Gartner, “it will be essential for CIOs to develop a formal strategy that helps to put individual cloud decisions in the context of the enterprise’s strategic goals.” For many, goals that emanate over the entirety of an enterprise tend to focus on effectiveness, profitability and future-proofing activities that protect key business interests.
Whilst a migration to the cloud ticks many of these boxes, managing cloud spend remains the second biggest challenge in the space. In fact, Gartner predicts that many companies without reliable cost optimization processes already spent an average of 40% more on the cloud in 2020 than they should. It’s no wonder that cost optimisation is said to be one of the main drives for cloud adoption – especially when it comes to multi-cloud environments.
The benefits of adopting a cost optimisation strategy in line with your enterprise’s goals is that you can gain full transparency over your spend so you can make more informed business decisions about what is working best for your enterprise, and what isn’t.
Cost optimisation as an exercise is about more than simply switching things off. It can prevent overspend, flag potential repercussions, give greater negotiation powers for contractual renewals and identify better alternatives for your business needs.
By building cost optimisation into your strategy, you can begin to create the dashboard you need to gain management consistency over your variable streams of costs – everything from contract procurement to integrating greater streams of communication to better monitor license usage. Doing so will enable you to realise savings without compromising performance, which can then be reinvested back into the business.
In a recent webinar with Apptio, ECS’ Cost Optimisation Lead Andrew Logan spoke in great detail about how enterprises can overcome the current crisis and accelerate Cloud Adoption in order to optimise cost across the business. And luckily for you, Logan also took listeners through 6-step process that will enable you to understand the profile of your cloud usage and review resources, cloud governance model and billing reports to identify areas for improvement.
We are going to walk you through that 6-step process now:
- Understand your Cloud Account Structure – gather together all the accounts used by the organisation. Review your company credit card billing and expenses to bring together all cloud spend.
- Identify a toolset to help you with the task in hand. Cloud providers can provide native tooling such as Cost Explorer in AWS, Azure advisor from Microsoft and Google cloud console, or you can invest in a multi cloud toolset such as Cloudability.
- Build a dashboard view of all your cloud costs to allow you to compare and contrast usage and understand consumption vs budget. This is a useful way to educate your teams in the use of cloud and impact on costs. Build some automated alerting to pick up on any anomalies in spend that can be addressed immediately rather when the bill comes in.
- Map the costs to consumers through use of cost transparency exercises and cloud provider functionality like tagging or labelling. Understand breakdown of spend across business applications and production vs non-production environments.
- Review current cloud consumption and make sure that idle resources are turned off or consolidated. Undertaking a right sizing exercise to ensure optimal use of all the resources. This will give you a baseline consumption model.
- Review your cloud purchasing model to maximise use of cloud discounts and savings plans. This will significantly reduce your cloud spend and introduce an element of capex spend into your finances.
The beauty of this process is that it can be completed in any order. Whilst we advocate completing them all as an initial exercise, each will go a long way to building the foundation you need to develop a formal strategy that helps put individual cloud decisions in the context of your enterprise’s strategic goals.
If you missed the webinar with Apptio, you can catch up by watching the recording here. Alternatively, our team are always on hand should you require any assistance whilst implementing the six steps above. Just drop them a note here and they will be in touch as soon as they can.