Why is Cost Management & Optimization important?
As more and more companies transition to the cloud (70% of companies has already started according to Gartner) many of these companies have cost savings for moving as a major reason for doing so. The challenge is that many of these companies may not realize these savings due to a number of reasons that we want to outline in this blog post.
There can be many reasons for this, but some of the more common we have seen are these:
Lack of knowledge: People that are responsible for the design and migration does not have the needed knowledge of the new cloud world, hence wrong decisions are made which drive higher cost.
Speed to cloud: Many companies rush to the cloud and close the door behind them (Exit of the datacenter) so when they run out of time, they need to move things faster to the cloud and take rushed decisions. This can and will result in higher cost and not dealing with real legacy issues, as “we deal with this later” is often used.
Poor foundation design: When laying out the foundation of the cloud platform making this efficient and scalable is paramount. If a scalable design is not done correctly this can lead to “boxed in” limitations that leads to higher cost and reduced capabilities.
Moving what we have and not optimizing: When customers move their infrastructure to the cloud they typically lift and shift without re-designing the nature of the application. This leads to limited advantages moving the application to the cloud due to the fact that it’s not made for a modern platform. This leads to limited options for scaling and optimizing the application in the cloud which leads to higher cost.
Operating the cloud like the Datacenter: Many customers we talk to operate the cloud in a similar way they operated their Datacenter and focusing on using the same tool on-prem as in the cloud. This drives a culture of lowest common denominator and limits the use of modern cloud capabilities for the sake of unifying the way resources are managed. This has an upside and can be justified to some extent, but our view is that it gets harder to embrace and deliver on the promise of the cloud.
It's not only about the check but also about the culture and business
What we quickly realized is that every organization is different and are at varies maturity levels and culture.
Many cloud organizations have a central center of excellence whom typically get the responsibility to drive cost and cost optimization.
What we learned from working with many customers around cost, is that you can try to do Cost Optimization driven by a central team, but there is a limit for how successful you can be in larger organizations as understanding the app or applications becomes key when optimization cost. Furthermore realizing that Cost Optimization is an ongoing effort was also a surprise to many organizations.
In several organizations we worked with the DevOps teams had no insight into the cost or spend and therefor had limited ability to do much about it. The DevOps teams are typically very good at optimizing the app when we talk about reliability, security, performance but the cost discipline was rarely part of the case.
Looking at cost in a different way
What we encouraged companies to do was to take a different look at cost. We wanted them to change the conversation from how can I save money to how can I get the most for my money mapped to business needs.
This approach takes more time and even in some of the most mature organizations we worked with on this journey, took them 3-5 years.
What can be done?
Getting the right processes in place and getting the right teams to talk together at the right times was not always easy and forced a change in cultural behavior in most of the cases.
Getting the DevOps teams to take accountability and most importantly driven by the right incentive was a key changer for many of our customers.
What worked best
Lastly what was the most successful combination was when the DevOps teams took ownership of cost (Helped by CoE) and were able to communicate with the business to shape a finance / cost model and where customers whom were using their service drove their behavior towards lower cost where both DevOps teams and Customers had the needed incentive to go with the most optimal cost mapped to values needed for what they were getting from the IT-service.
Want to hear more
If you want to have a deeper discussion on Cloud Cost Management & Control we have deep insight on how to use use Tools, People & Processes in combination to drive cost Management.
Feel free to book a meeting here: Book a meeting
