Does this sound familiar? “You will move to the cloud, for right or wrong, because of a business imperative to get out of your data center, not tomorrow, but yesterday.” Or, “You’re sold on the idea that by migrating to the cloud, you’d be able to reduce your total cost of ownership (TCO), increase flexibility, and accelerate innovation projects.” The cloud practically sells itself, and as a result, you plan to ditch your legacy, on-premises technology and begin your cloud migration journey.
However, suppose you hop into the cloud without a defined strategy and approach. In that case, you’ll experience cloud sprawl, and spiraling cloud costs will negate the touted benefits of the cloud. This sort of “blind faith” in all the cloud offers is a common mistake many business leaders make. It has prevented you from considering cloud management and economics as part of your cloud migration strategy.
Enter Innovation Scoring by 2nd Watch. Our data-driven scoring system will help you assess your applications running in the cloud environment and identify where you are overprovisioning and overspending. Innovation Scoring is the first step to establishing cloud economics and maximizing the value of cloud computing to your business in the long run.
The Importance of Cloud Economics
If O2 is how you define your cloud environment, you’ve learned the hard way about the need for cloud economics. While cost savings is a component of cloud economics, the ultimate goal of the practice is tomaximize the value of cloud computing for your organization. Implementing cloud economics will give your business insights into which departments are utilizing the cloud, what applications and workloads are using the cloud, and how these moving parts contribute to more impactful and cost effective business goals.
Without cloud economics, your business will deal with overrun cloud budgets, which are usually due to one or more of the following:
Ungoverned costs: your organization has no idea what it is spending on.
Unforecasted usage: you see more cloud projects than you had anticipated.
Uncommitted mindset: you don’t want to commit to a cloud contract (because you can’t predict its usage), so you miss out on contractual discounts.
Wasted dev/test resources: your dev team is overprovisioning their infrastructure.
Overestimated production headroom: you are not auto-scaling or have not set proper parameters for autoscaling for your applications.
Wrongsized production: your production environment is overprovisioned, and pay for the excess resources monthly.
Poor design and implementation: your architects make suboptimal design choices for cloud solutions because they are unaware of the costs to the business.
For cloud economics to work, there must be a company-wide commitment to the practice beyond simply calculating cloud costs. Just likeimplementing a DevOps practice, impactful cloud economics requires promoting a cross-functional and collaborative culture. Business leaders must encourage transparency and trackability to enable teams to work together harmoniously to manage their cloud infrastructure and prove the true business benefits of the cloud.
2nd Watch’s Innovation Scoring
Cloud economics is critical for your business to reap the maximum benefits of cloud computing. However, cloud economics is a pervasive cultural practice, so it won’t happen at the snap of your fingers. It will require time and effort for your business to establish cloud economics.
The first step in controlling your cloud budget and governing your cloud platform is to identify areas of improvement. 2nd Watch created the Innovation Scoring system, our proprietary scoring methodology, to help you identify opportunities for optimization and modernization in a data-driven way.
Our Innovation Scoring methodology will reveal the underlying problem with your cloud management. We’ll be able to identify the application needing improvement and determine why it is suboptimal. Did you set it up incorrectly and need to move to PaaS with autoscaling capabilities? Or did someone write your application in 2005, and you are in dire need of application modernization? Or is it a combination of both? 2nd Watch designed its Innovation Scoring to pinpoint areas for improvement in your database, infrastructure, and/or application. When we ascertain the source of inefficiency, we can address issues contributing to cloud sprawl and skyrocketing cloud costs.
To calculate your Innovation Score, we analyze several different dynamics related to your cloud applications. The ratings from each category are then cross-tabulated to generate a total view of your entire cloud environment. Your Innovation Score will not only reveal inefficiencies but also allow us to compare your efforts against other similarly sized companies and make sure you are up to industry standards.
2nd Watch understands that cloud economics is a cultural undertaking; therefore, when we assign Innovation Scores to our clients, we do so in a way that encourages company-wide participation. To promote engagement and commitment, we’ve gamified our Innovation Scoring: we split our clients’ technical leadership into teams and calculate each team’s score. When we check in with our clients, we reveal each team’s score to showcase which ones are being innovative and taking advantage of the cloud and which ones have room for improvement.
Sample Innovation Scoring Output
Our approach to Innovation Scoring promotes friendly competition, which fosters collaboration between teams and a transparent high-level overview of how each team is leveraging the cloud. When our clients are a part of our Innovation Scoring system, it jumpstarts a culture of innovation, transparency, and accountability within their business.
Consider the importance of cloud economics when planning to run your applications in a cloud environment. It is easy to overspend, get overwhelmed, and have no sense of direction. Therefore, cloud economics is beneficial whether you implement it proactively or reactively.
2nd Watch’s Innovation Scoring is a practical first step to getting your cloud budget in order and establishing cloud economics as a standard cultural practice in your organization. Through data and analysis, our Innovation Scoring will help you identify how you can optimize your cloud instance so that you are receiving maximum cloud value for your business. Moreover, Innovation Scoring trains your teams to be communicative and cross-collaborative, which are the traits your company culture needs to succeed in cloud economics.
You made a decision and a plan. You selected a migration partner. And you exited your traditional datacenter successfully by migrating thousands of virtual machines to the public cloud. You breathed a huge sigh of relief because it wasn’t easy, but you and your team pulled through.
While you and your teams were preparing to return to focusing on business value-driven tasks and features, the newly minted cloud estate was ticking away like a taxi meter 24 hours a day, seven days a week. The first invoice came, and it seemed a little higher than your forecast. The second monthly invoice was even higher than the first! Your business units (BUs) are now all-in on the cloud, just like you asked, and deploying resources and new environments at will like kids in a candy store. The invoices keep coming, and eventually, Finance takes notice. “What happened here? I thought moving to the cloud would reduce costs?”If this sounds familiar, you’re not alone.
As with many new technologies and strategies, moving to the public cloud comes with risks and rewards. The cloud value proposition is multi-faceted and, according to AWS, includes:
Total Cost of Ownership (TCO) Reduction
For many enterprises, the last three pillars of productivity, resilience, and agility have gotten overshadowed by the promise of a lower TCO. It’s not hard to understand why. Measuring cloud usage costs is easy. The cloud service provider (CSP) does this for you every month. The idea that migrating to the cloud is a cost-driven exercise excludes three-fourths of the potential business value – especially when migrating with a lift-and-shift approach.
The Lift-and-Shift Approach
When you consider workloads like black boxes, you start your journey without complete visibility into the public cloud’s opportunities. Maybe you had an expiring datacenter contract and had to evacuate under time pressure. That’s understandable. But were you educated and prepared for the tradeoffs of that approach? Or were you shocked by the first invoice and the speed at which the invoices are growing? Did you prepare the CFO in advance and share the next steps? So, what did you miss?
When you took a black-box lift-and-shift (BBLAS) approach, the focus was on moving virtual machines in groups based on dependency mapping. Your teams or your cloud partner, usually with the help of automation, defined the groups and then worked with you to plan the movement of those groups – typically referred to as “wave planning.” What you ended up with is a mirror image of your datacenter in the public cloud.
You have now migrated to someone else’s datacenter.
The old datacenter was predictable where fixed hardware investments dictated capacity, and efforts towards efficiency only occurred when available resources started to dwindle from new and existing services and applications being deployed or scaled. This new datacenter charges by the millisecond, has unlimited capacity, and the investment in additional capacity bypasses procurement and is in the hands of the engineers. Controlling costs in this new datacenter is a whole new world for most enterprises. Enter the FinOps movement.
“FinOps is an evolving cloud financial management discipline and cultural practice that enables organizations to get maximum business value by helping engineering, finance, technology and business teams to collaborate on data-driven spending decisions.” – finops.org
FinOps is to finance and engineering, as DevOps is to development and operations. The FinOps philosophy and approach is how you regain cost control in a BBLAS environment. Before diving into how FinOps can help, let’s look at the Cloud Cost Optimization Cycle (CCOC). The CCOC is a precursor to the FinOps framework and another black-box approach to cost efficiency in the cloud.
A black-box approach is when virtual machines are viewed as a fixed infrastructure without regard to the applications and services running on them. Seasoned professionals have lived through this traditional IT view for years, and it is what separates operations and development concerns. DevOps philosophy is making inroads, of course, but many enterprises have only begun to introduce this philosophy at scale.
The Cloud Cost Optimization Cycle goes like this. Every month your CSP makes cost and usage data available. An in-house resource or a consultant analyzes the massive amount of data and prepares recommendations for potential savings. The consultant presents these recommendations to the operations team, which then reconfigures the deployed infrastructure to achieve cloud savings.
This cycle can produce significant savings at scale and is the traditional starting point for gaining visibility and control over runaway cloud costs. The process follows the FinOps recommended progression of crawl, walk run toward a mature practice. This approach has both benefits and limitations:
Infrastructure-focused cost savings
Cost savings are limited to infrastructure and cloud configuration changes
Brings financial accountability and cloud spend awareness to the enterprise
Application architecture remains unchanged
Sets a trajectory towards FinOps best practices (crawl, walk, run)
Can create friction between Operations and AppDev teams
Accomplished primarily by the Operations team
App refactoring focused on patching instead of business value or modernization
The Black-Box Dilemma
In an ideal state, operations teams can iteratively reconfigure public cloud infrastructure based on cost and usage data until the fleet of virtual machines and associated storage are fully optimized. In this ideal state, interactions with the application teams are minimal and driven by the operation team’s needs. The approach ignores the side effects that right-sizing infrastructure can have on somewhat brittle monolithic legacy applications. What usually happens in a BBLAS environment is that the lift-and-shift migration and the subsequent CCOC reveal unforeseen shortcomings in the application architecture, and runtime defects surface.
CCOC – Mixed Results
A lack of necessary cloud skills and experience on the operations side can exacerbate the issues. For example, if the operations team chooses the incorrect cloud instance type for the workload, applications can become bound by resource constraints. When cloud skill and experience are missing from the application development side, this can cause long delays where defects are difficult for the team to triage and patch. So now, instead of cost optimization efforts gloriously precipitating savings, they are producing a mixture of saving money and addressing issues.
This combination creates an environment where engineering and operations teams begin to collide. The applications were stable in the old datacenter due to factors like:
Extremely low network latency between services
Applications and databases tuned for the hardware they were running on
Debugging and quality processes tuned over the years for efficiency
Now application teams have a new stream of issues entering their backlogs driven by fundamental changes in infrastructure introduced by the noble pursuit of tuning for cost savings. Business value, architectural improvements, and elimination of technical debt are slowed to the point that Application Development leaders start to push back on the CCOC. Operations teams don’t understand why the application is falling apart because the metrics and the cloud cost data they collect support the reduction or reconfiguration of cloud resources. Additional factors are now in play from an application development perspective with a black-box cloud cost optimization strategy:
Users are constantly communicating new feature requests to the business
Enterprise and Application Architects are pushing teams for modernization
Software Team leads are insisting on dedicating capacity to technical debt reduction
Enterprises are struggling to retain developers and are more resource-constrained than ever, causing a general slowdown in time to market for features and architectural improvements when flaws in legacy applications need patching.
Going Beyond the Lift-and-Shift
You need a different strategy to overcome these challenges. You must look inside the black boxes to move forward. The CCOC, at its best, will produce a finely tuned version of a legacy application running in the public cloud. You can address the cost pillar of the cloud value framework from an operations perspective, but additional opportunities abound in the form of Application Modernization.
Enterprises in situations like the one described here need to do two things to move forward on their cloud journeys.
Mature cloud cost optimization towards FinOps
Invest in Application Modernization
These two strategies are complementary and, combined, what 2nd Watch has dubbed “FinOps Driven Modernization.”
The amount of cost and usage data available to enterprises operating in the cloud reveals an opportunity to use that data to drive application modernization strategy at scale across all business units. The biggest challenges in approaching application modernization at scale are:
Cloud skills and experience
Analysis paralysis – where do we start
Calculating Return on Investment
Modernization efforts will be slow and costly without the resource capacity having the necessary cloud architecture and operations skills. They will not produce further buy-in through the socialization of success stories. Getting started seems impossible when an enterprise consists of multiple business units and thousands of virtual machines across hundreds of accounts and development teams. Modernization costs rise dramatically when cloud cost optimization requires changes to the software running on the virtual machines. It can add a significantly higher risk than changing instance families and reconfiguring storage tiers.
How Can FinOps Help Drive Modernization?
Let’s look at how maturing FinOps drives modernization opportunities and capacity. We discussed how an infrastructure-focused CCOC could slow down features, business value, and modernization efforts.
A potentially significant percentage of the savings realized from this approach will be diverted to triaging and patching application issues.
Do the additional development efforts overshadow the infrastructure savings?
Is the time to market for new features slowed to the point that the enterprise’s competitive advantage suffers?
Most enterprises don’t have the processes in place to answer these questions. FinOps Driven Modernization is the answer. With the data from the CSP, the FinOps team can work with the operations and development teams to determine if an optimization recommendation is feasible and valuable to the business.
How does this work at scale among all business units? When you combine cost and usage data with information like:
Process information from inside each virtual machine
Service ticket and bug metrics
Nature of the cloud service
IaaS, PaaS, FaaS
More on this in the next installment of this series
Revenue – unit economics
You begin to see a more holistic view of the cloud estate and can derive insights that include cost and much deeper business intelligence.
Sample FinOps Output from 2nd Watch
Consider being able to visualize where to focus cost optimization and modernization efforts across multiple business units, thousands of virtual machines, and hundreds of applications in a single pane of glass dashboard. The least innovative, noisiest, and most costly areas in your enterprise will begin glowing like hot coals. You can then focus the expenditure of resources, time, and money on high-impact optimization and modernization investments. This reallocation of spending is the power of FinOps Driven Modernization. Finance, operations, engineering, product, and executives are all working together to ensure that the enterprise realizes the actual value of the cloud.
Let’s dig into a hypothetical business unit struggling with cloud costs. The FinOps team has identified that their per-unit costs exceed the recommended range for their cloud cost-to-revenue ratio. The power of FinOps-Driven Modernization has revealed that the BBLAS approach has resulted in a fleet of virtual machines running commonly modernized workloads like web servers, database servers, file, or image servers, etc. In addition to this IaaS-heavy approach, the BU heavily leverages licensed software and operating systems. This revelation triggers a series of interviews with the BU leadership and application owners to investigate the potential and level of effort to introduce application modernization approaches. The teams within the BU know there is room for improvement but lack the skills and available resources to act.
They learn through the interview process that they can move licensed databases from virtual machines to a managed cloud platform. Additionally, they discover they could migrate most of the databases to open-source alternatives. Further, they can decommission the cluster of file servers and migrate the data to cloud-native storage with minimal application refactoring. By leveraging the CSP and operational data, a business case for investing in helping the BU make improvements writes itself.
Without leveraging the FinOps philosophy and extending it with a focus on application modernization, this business unit would have operated for years in a BBLAS state, costing the enterprise orders of magnitude more in cloud spend than the investment in modernization. Extending this approach across the enterprise takes cloud cost management to the next level, resulting in purpose-driven, high-impact progress towards realizing the value of the public cloud.
FinOps is the practice that every enterprise should be adopting to help drive financial awareness throughout the organization. FinOps enables an inclusive and virtuous cycle of continuously improving when leveraged as a driver for application modernization.
Schedule a whiteboard session with our FinOps and Application Modernization experts to discover how 2nd Watch’s approach can help you and your team meet your transformation objectives.
Jesse Samm, Application Modernization Practice Director at 2nd Watch
When making a cloud migration, a common term that gets tossed around is “cloud optimization”. If your organization is new to the cloud, optimizing your environment is essential to ensuring your migration pays off quickly and continues to do so in the long term.
If your organization is already established in the cloud, you may observe higher costs than expected due to cloud sprawl, under-utilized resources, and improper allocation of resources. Cloud optimization helps your organization reduce these costs and improve overall efficiency in the cloud
What is cloud optimization?
The definition of cloud optimization may vary from one cloud service provider to another, but generally, cloud optimization is the process of analyzing, configuring, provisioning, and right-sizing cloud resources to maximize performance and minimize waste for cost efficiency. The reality is that many organizations’ cloud environments are configured in an inefficient manner that creates unnecessary cloud spend. With proper cloud optimization tools and practices, these unnecessary costs can be eliminated.
While cloud optimization is mostly discussed in terms of cloud spend, cost optimization is simply a faucet of cloud optimization and can extend to overall performance and organizational efficiency. Some examples of cloud optimization practices that your organization can adopt right now include:
Right-sizing: Matching your cloud computing instance types (i.e. containers and VMs) and sizes with enough resources to sufficiently meet your workload performance and capacity needs to ensure the lowest cost possible.
Family Refresh: Replace outdated systems with updated ones to maximize performance.
Autoscaling: Scale your resources according to your application demand so you are only paying for what you use.
Applying Discounts: Reserved instances (RIs) allow companies to commit to cloud resources for a long period of time. The longer the discount and the more a company is prepared to pre-pay at the beginning of a period, the greater the discount will be. Discounted pricing models like RIs and spot instances will drive down your cloud costs when used according to your workload.
Identity use of RIs: Identifying the use of RIs can be an effective way to save money in the cloud if used for suitable loads.
Eliminate Waste: Regulating unused resources is a core component of cloud optimization. If you haven’t already considered cloud optimization practices, you are most likely using more resources than necessary or not certain resources to their full capacity.
Why is cloud optimization important?
Overspending in the cloud is a common issue many organizations face by allocating more resources to a workload than necessary. Integrating cloud optimization practices can reap many benefits for your cloud infrastructure and your organization, including the following:
Cloud Efficiency: When workload performance, compliance, and cost are continually balanced against the best-fit infrastructure in real-time, efficiency is achieved. Implementing cloud optimization practices will eliminate as much cloud resource waste as possible, increasing the performance of your cloud environment.
Cost Savings: Although cloud optimization comes in a variety of forms, cost optimization is the most important component for many organizations. By reducing waste in the cloud, costs are reduced as a byproduct.
Greater Visibility: Cloud optimization practices utilize analytics to provide visibility into your cloud environment to make data-driven decisions. Implementing optimization tools also provides cost visibility, so your organization has a better perspective on cloud spend.
Increased Productivity: Once a cloud optimization strategy is implemented, IT teams will spend less time trying to solve problems because an optimized environment prevents problems before they occur.
Organizational Innovation & Efficiency: Implementing cloud optimization often is accompanied by a cultural shift within organizations such as improved decision-making and collaboration across teams.
What are cloud optimization services?
Public cloud services providers like Amazon Web Services (AWS), Microsoft Azure, and Google Cloud have over 500,000 distinct prices and technical combinations that can overwhelm the most experienced IT organizations and business units. Luckily, there are already services that can help your organization achieve the cloud optimization it needs to drive business outcomes. Cloud optimization services help your organization identify areas of improvement in your cloud for cost savings and efficiency, create an optimization strategy for your organization, and can manage your cloud infrastructure for continuous optimization.
At 2nd Watch, we take a holistic approach to cloud optimization. We have developed various optimization pillars based on real-time data to ensure your cloud environments are running as efficiently as possible. Behind our solutions for cloud optimization is a team of experienced data scientists and architects that help you maximize the performance and returns of your cloud assets. Our services offerings for cloud optimization at 2nd Watch include:
Strategy & Planning: Define your optimization strategy with our proven methodology, tailored to meet your desired business outcomes and maximize your results.
Cost Optimization Assessment: Gain the visibility necessary to make data-driven decisions. Identify opportunities across our Pillars of Optimization to maximize cost savings and cloud environment efficiency.
Spot Instance & Container Optimization: Save up to 90% compared to traditional cloud infrastructure by running both Instances/VMs and Containers on spot resources for relevant workloads.
Multi-Cloud Optimization: Cloud optimization on a single public cloud is one challenge but optimizing a hybrid cloud is a whole other challenge. Apply learning from your assessment to optimize your cloud environment for AWS, Microsoft Azure, Google Cloud, and VMware on AWS.
Forecasting, Modeling, & Analytics: Understand your past usage, and model and forecast your future needs with the analytical data needed for visibility across your organization.
Our cloud optimization process starts with data, and you have a lot of it. But data alone can lead you astray yielding wasted resources and overspend. There are many other factors to evaluate, such as EDP/EA agreements and Savings Plans/RI Purchases, to ensure you choose the most cost-effective option for your business. Strategically, our data scientists and architects map connections between data and workloads. We then make correlations between how workloads interact with each resource and the optimal financial mechanism to reach your cloud optimization goals.
Cloud Optimization with 2nd Watch
Working with a managed cloud service provider like 2nd Watch will give your organization the expertise needed for cloud optimization. If you want to learn more about cost savings or are interested in fully optimizing your cloud infrastructure, contact us to take your next steps.
In my last blog post, I covered the basics of cloud cost optimization using the Six Pillars model, and focused on the ‘hows’ of optimization and the ‘whys’ of its importance. In this blog, I’d like to talk about what comes next: preparing your organization for your optimization project. The main reason most clients delay and/or avoid confronting issues regarding cloud optimization is because it’s incredibly complex. Challenges from cloud sprawl to misaligned corporate priorities can cause a project to come to a screeching halt. Understanding the challenges before you begin is essential to getting off on the right foot.
5 Main Cloud Cost Optimization Challenges
Here are the 5 main challenges we’ve seen when implementing a cloud cost optimization project:
Cloud sprawl refers to the unrestricted, unregulated creation and use of cloud resources; cloud cost sprawl, therefore, refers to the costs incurred related to the use of each and every cloud resource (i.e., storage, instances, data transfer, etc.). This typically presents as decentralized account or subscription management.
Billing complexity, in this case, specifically refers to the ever-changing and variable billing practices of cloud providers and the invoices they provide you. Considering all possible variable configurations when creating many solutions across an organization, Amazon Web Services (AWS) alone has 500,000 plus SKUs you could see on any single invoice. If you cannot make sense of your bill up front, your cost optimization efforts will languish.
Lack of Access to Data and Application Metrics is one of the biggest barriers to entry. Cost optimization is a data driven exercise. Without billing data and application metrics over time, many incorrect assumptions end up being made resulting in higher cost.
Misaligned policies and methods can be the obstacle that will make or break your optimization project. When every team, organization or department has their own method for managing cloud resources and spend, the solution becomes more organizational change and less technology implementation. This can be difficult to get a handle on, especially if the teams aren’t on the same page with needing to optimize.
A lack of incentives may seem surprising to many, after all who doesn’t want to save money, however it is the number one blocker in large enterprises that we have experienced toward achieving optimization end goals. Central IT is laser focused on cost management and application/business units are focused more on speed and innovation.Both goals are important, but without the right incentives, process, and communication this fails every time. Building executive support to directly reapply realized optimization savings back to the business units to increase their application and innovation budgets is the only way to bridge misaligned priorities and build the foundation for lasting optimization motivation.
According to many cloud software vendors, waste accounts for 30% to 40% of all cloud usage. In the RightScale State of the Cloud Report 2019, a survey revealed that 35% of cloud spend is wasted. 2nd Watch has found that within large enterprise companies, there can be up to 70% savings through a combination of software and services. It often starts by just implementing a solid cost optimization methodology.
When working on a project for cloud cost optimization, it’s essential to first get the key stakeholders of an organization to agree to the benefits of optimizing your cloud spend. Once the executive team is onboard and an owner is assigned, the path to optimization is clear covering each of the 6 Pillars of Optimization.
Path to Cloud Optimization
Step One: Scope and Objectives
As with any project, you first want to identify the goals and scope and then uncover the current state environment. Here are a few questions to ask to scope out your work:
Overall Project Goal – Are you focused on cost savings, workload optimization, uptime, performance or a combination of these factors?
Budget – Do you want to sync to a fiscal budget? What is the cycle? What budget do you have for upfront payments? Do you budget at an account level or organization level?
Current State – What number of instances and accounts do you have? What types of agreements do you have with your cloud provider(s)?
Growth – Do you grow seasonally, or do you have planned growth based on projects? Do you anticipate existing workloads to grow or shrink overtime?
Measurement – How do you currently view your cloud bill? Do you have detailed billing enabled? Do you have performance metrics over time for your applications?
Support – Do you have owners for each application? Are people available to assess each app? Are you able to shutdown apps during off hours? Do you have resources to modernize applications?
Step Two: Data Access
One of the big barriers to a true optimization is gaining access to data. In order to gather the data (step 3) you first need to get the team onboard to grant you or the optimization project team access to the information.
During this step, get your cross-functional team excited about the project, share the goals and current state info you gathered in the previous step and present your strategy to all your stakeholders.
Stakeholders may include application owners, cloud account owners, IT Ops, IT security and/or developers who will have to make changes to applications.
Remember, data is key here, so find the people who own the data. Those who are monitoring applications or own the accounts are the typical stakeholders to involve. Then share with them the goals and bring them along this journey.
Step Three: Data Management
Data is grouped into a few buckets:
Billing Data – Get a clear view of your cloud bill over time.
Metrics Data – CPU, I/O, Bandwidth and Memory for each application over time is essential.
Application Data – Conduct interviews of application owners to understand the nuances. Graph out risk tolerance, growth potential, budget constraints and identify the current tagging strategy.
A month’s worth of data is good, though three months of data is much better to understand the capacity variances for applications and how to project into the future.
Step Four: – Visualize and Assess Data Usage
This step takes a bit of skill. There are tools like CloudHealth that can help you understand your cost and usage in cloud. Then there are other tools that can help you understand your application performance over time. Using the data from each of these sources and collaborating them across the pillars of optimization is essential to understanding where you can find the optimal cost savings.
I often recommend bringing in an optimization expert for this step. Someone with a data science, cloud and accounting background can help you visualize data and find the best options for optimization.
Step Five: Remediation Plan
Now that you know where you can save, take that information and build out a remediation plan. This should include addressing workloads in one or more of the pillars.
For example, you may shut down resources at night for an application and move it to another family of instances/VMs based on current pricing.
Your remediation should include changes by application as well as:
RI Purchase Strategy across the business on a 1 or 3-year plan.
Auto-Parking Implementation to part your resources when they’re not in use.
Right-Sizing based on CPU, memory, I/O.
Family Refresh or movement to the newer, more cost-effective instance families or VM-series.
Elimination of Waste like unutilized instances, unattached volumes, idle load balancers, etc.
Storage reassessment based on size, data transfer, retrieval time and number of retrieval requests.
Tagging Strategy to track each instance/VM and track it back to the right resources.
IT Chargeback process and systems to manage the process.
Remediation can take anywhere from one month to a year’s time based on organization size and the support of application teams to make necessary changes.
With as much as 70% savings possible after implementing one of these projects, you can see the compelling reason to start. A big part of the benefits is organizational and long lasting including:
Visibility to make the right cloud spending decisions
Break-down of your cloud costs by business area for chargeback or showback
Control of cloud costs while maintaining or increasing application performance
Improved organizational standards to keep optimizing costs over time
Identification of short and long-term cost savings across the various optimization pillars:
Many companies reallocate the savings to innovative projects to help their company grow. The outcome of a well-managed cloud cost optimization project can propel your organization into a focus on cloud-native architecture and application refactoring.
Though complex, cloud cost optimization is an achievable goal. By cross-referencing the 6 pillars of optimization with your organizations policies, applications and teams, you can quickly find savings from 30 – 40% and grow from there.
By addressing project risks like lack of awareness, decentralized account management, lack of access to data and metrics, and lack of clear goals, your team can quickly achieve savings.