Cloud Costs spinning out of control?
The debate over cloud costs has intensified as cloud platforms have become the primary focus for most IT deployments. Despite the significant growth in cloud adoption over the last decade, a considerable amount of technology remains non-cloud or on-premises.
Initially, it was believed that public cloud services would reduce the cost per bit of compute and storage resources and provide more account-friendly operating costs. However, while cloud costs can be classified as operating costs, they are still a significant expense. As a result, many companies are discovering that cloud resources are less cost-effective than their on-premises counterparts.
Nonetheless, cloud adoption has successfully accelerated the pace businesses operate and enable the rapid deployment of new services and digital products.
The COVID-19 pandemic highlighted the cloud’s potential as a remote work and retail delivery solution. Additionally, cloud technology provides increased flexibility in purchasing compute and storage resources, allowing companies to procure more IT resources to support R&D, ongoing product development, and internal digital transformation initiatives.
“There is a newfound emphasis on the visibility of cloud costs”
Recent surveys and discussions with professionals have revealed that cost has become a new priority for cloud adoption. Organisations are interested in comparing the costs of cloud hosting with on-premises resources.
To quote Peter Drucker, “you can’t manage what you can’t measure.” The first step to understanding costs is to track and analyse them. Easier said than done. Many cloud services are still purchased in ad-hoc ways or by business lines operating in the “shadow IT” model. CEOs and CFOs are looking to put an end to this.
Cloud Cost Management (CCM) and Financial Operations (FinOps) tools have emerged to address this need for cost visibility. These tools offer sophisticated methods for measuring and managing cloud costs, including evaluating the impact on networking and security adjacencies. Additionally, managers would like to assign costs to specific business units for accountability purposes.
Cloud management companies like Flexera, Apptio, and Virtana are developing CCM and FinOps tools. CCM provides intelligent bill analysis across AWS, Azure, and GCP and alerts on unexpected changes that drive cloud spending, offering actionable saving recommendations. Flexera’s FinOps module integrates into the Flexera One platform, part of a comprehensive IT asset management strategy. Apptio focuses on understanding the operating costs in Amazon Web Services (AWS) and commitments to Software-as-a-Service (SaaS) implementations. Virtana’s CCM offers ongoing cloud cost optimisation, uniquely emphasising balancing performance, risk, and cost.
While platform tools such as IBM’s Turbonomics and VMware’s CloudHealth provide some visibility into usage as it happens, they fall short of providing cost remediation information useful for finance and engineering teams to have cost-reduction conversations.
Emerging solutions focus on arbitrage between cloud offerings, and Kubernetes compute capabilities to reduce compute costs. CAST AI is a promising startup that helps organisations understand Kubernetes costs across various areas, including cost monitoring, security management, autoscaling, rightsizing, and spot instance automation. CAST AI has a unique business model in which it charges customers based on a percentage of the amount of money saved on compute costs.
“It’s not just cloud services, networking too”
The networking industry has recognised the potential to enhance the comprehension of cloud costs. Cloud networking companies like Aviatrix and Prosimo understand that networking is a critical enabler of the cloud. It can be leveraged to provide better visibility and management of cloud service access since cloud services are connected through networks.
Aviatrix’s CostIQ uses distributed telemetry to measure shared cloud network usage and assigns the results to the appropriate cost centres. Prosimo’s Full Stack Cloud Transit platform provides insights into application requirements and performance, which can be used to optimise cloud networking experiences and costs. Both companies are also working on other areas to maximise cloud expenses. We can expect new products from them soon.
Today, with many companies relying on a more intricate cloud operating structure that involves more cloud data, more cloud providers, improved cloud data management, and better cloud security, the financial consequences of daily decisions can significantly impact a company’s cloud bill and overall operating budget.