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
Any organization that’s invested in an Analytics tool like Tableau, Power BI, Looker, etc. knows that they’re only as good as the data you feed them. Challenges such as disparate sources, inconsistent data formats, and slow legacy systems are just some of the roadblocks that stand in the way of getting the insights you need from your BI reporting and analytics tool.
A common solution to this challenge is a data warehouse that enables data management, analytics, and advanced data science. The data warehouse helps organizations to facilitate data-driven decision making, find cost savings, improve profitability, and the list goes on. No matter the industry, size of the organization, technology involved, or data savviness, our clients always ask us the same question: how do the benefits of a data warehouse justify the cost?
What are the costs of building a modern data warehouse?
Before diving into the many reasons why the benefits of a data warehouse are worth the costs to build it, let’s spend a bit of time discussing the two main investments.
The first major investment will be either hiring a consulting firm to develop your modern data warehouse or dedicating internal resources to the task. By hiring data consultants, you introduce additional costs in consulting fees, but yield results much quicker and therefore save time. If you choose to create an internal task force for the job, you reduce upfront costs, but altering day-to-day functions and the inevitable learning curve lead to longer development timelines.
The second investment is almost always necessary as you will need a tech stack to support your modern data warehouse. This may simply involve expanding or repurposing current tools or it could require selecting new technology. It’s important to note that pricing is different for each technology and varies greatly based on your organization’s needs and goals.
It typically involves paying for storage, computing time, or computing power, in addition to a base fee for using the technology. In total, this can typically incur a yearly starting cost of $25,000 and up. To make it easier, each of the major data warehouse technology stacks (Amazon Redshift, Snowflake, and Microsoft AzureSQL Database) offer cost estimating tools. With a clearer understanding of what your costs will look like, let’s jump into why they are worth it.
Why consultants are worth the additional costs.
While your current IT team likely has an intimate knowledge of your data and the current ecosystem, consultants offer benefits as well. Since consultants are dedicated full time to building out your modern data warehouse, they are able to make progress much quicker than an internal team would. Additionally, since they spend their careers developing a wide variety of analytics solutions, they may be more up to date on relevant technology advancements, have experience with various forms of data modeling to evaluate, and most importantly, they understand how to get business users to actually adopt the new solution.
At 2nd Watch, we have seen the most success by bringing in a small team of consultants to work side by side with your IT team, with a shared goal and vision. This ensures that your IT department will be able to support the modern data warehouse when it is completed and that the solution will address all of the details integral to your organization’s data. Considering the wealth of experience consultants bring to the table, their ability to transfer knowledge to internal employees, and the increased speed of development, the high ROI of hiring consultants is unquestionable.
Using a Modern Data Warehouse costs you less than using a traditional data analytics system you may currently have in place.
While this is a considerable amount of money to invest in data analytics, many of your current technology investments will be phased out, or the costs will be reduced using modern technology. These solutions alleviate your IT team from cumbersome maintenance tasks through automatic clustering, self-managed infrastructure, and advanced data security options. This allows your IT team to focus on more important business needs and strategic analytics.
With the volume and variety in data organizations track, it’s easy to find yourself stuck with messy data held in siloed systems. Modern data warehouses automate processes to eliminate duplicate information, reduce unnecessary clutter, and combine various sources of data together which enables you to save money by storing data efficiently. Think of it this way, if your data experts struggle to find key information, so does your technology. The extra compute time and storage costs more than you would expect, implementing a system that stores your data logically and in a streamlined manner greatly reduces these costs.
Advanced analytics unlocks insights, enables you to respond to events quicker, and optimizes key decision-making activities.
While it is more difficult to quantify the ROI here, dashboards and advanced analytics greatly enhance your employee’s ability to perform well in their job and save money. Regardless of your industry, using a modern data warehouse to drive analytics that empowers employees to perform better in several ways:
Dashboards dramatically decrease the time employees spend finding and organizing the data. For many of our clients, reports that once took analyst weeks of effort to are now able to automatically aggregate in seconds.
Accurate data empowers better decision-making and yields creative problem-solving. You have the right information quicker.
Real-time analytics enables you to quickly respond to significant business events. This gives you a competitive edge since you can easily retain customers, spot inefficiencies, and respond to external influences.
Predictive analytics save you money by finding opportunities before you would need to act.
Developing a full-scale data warehouse requires time and money that may not be available at the moment. That being said, the benefits of a data warehouse are necessary to remain competitive. To address this discrepancy, Aptitive has found a solution to help you build a modern data warehouse quicker and without the large upfront investment. A modular data warehouse contains key strategic data and ensures that you gain advantages of analytics almost immediately. On top of that, it provides a scalable foundation that you can add data to overtime until you incorporate all the data necessary for your business functions.
Cloud adoption is becoming more popular across all industries, as it has proven to be reliable, efficient, and more secure as a software service. As cloud adoption increases, companies are faced with the issue of managing these new environments and their operations, ultimately impacting day-to-day business operations. Not only are IT professionals faced with the challenge of juggling their everyday work activities with managing their company’s cloud platforms but must do so in an timely, cost-efficient manner. Often, this requires hiring and training additional IT people—resources that are getting more and more difficult to find.
Managing your cloud operations on your own can seem like a daunting, tedious task that distracts from strategic business goals. A cloud managed service provider (MSP) monitors and maintains your cloud environments relieving IT from the day-to-day cloud operations, ensuring your business operates efficiently. This is not to say IT professionals are incapable of performing these responsibilities, but rather, outsourcing allows the IT professionals within your company to concentrate on the strategic operations of the business. In other words, you do what you do best, and the service provider takes care of the rest.
The alternative to an MSP is hiring and developing within your company the expertise necessary to keep up with the rapidly evolving cloud environment and cloud native technologies. Doing it yourself factors in a hiring process, training, and payroll costs.
While possible, maintaining your cloud environments internally might not be the most feasible option in the long run. Additionally, a private cloud environment can be costly and requires your applications are handled internally. Migrating to the public cloud or adopting hybrid cloud model allows companies flexibility, as they allow a service provider either partial or full control of their network infrastructure.
What are Managed Cloud Services?
Managed cloud services are the IT functions you give your service provider to handle, while still allowing you to handle the functions you want. Some examples of the management that service providers offer include:
Managed cloud database: A managed database puts some of your company’s most valuable assets and information into the hands of a complete team of experienced Database Administrators (DBAs). DBAs are available 24/7/365 to perform tasks such as database health monitoring, database user management, capacity planning and management, etc.
Managed cloud security services: The public cloud has many benefits, but with it also comes security risks. Security management is another important MSP service to consider for your business. A cloud managed service provider can prevent and detect security threats before they occur, while fully optimizing the benefits provided by a cloud environment.
Managed cloud optimization: The cloud can be costly, but only as costly as you allow it to be. An MSP can optimize cloud spend through consulting, implementation, tools, reporting services, and remediation.
Managed governance & compliance: Without proper governance, your organization can be exposed to security vulnerabilities. Should a disaster occur within your business, such as a cyberattack on a data center, MSPs offer disaster recovery services to minimize recovery downtime and data loss. A managed governance and compliance service with 2nd Watch helps your Chief Security and Compliance Officers maintain visibility and control over your public cloud environment to help achieve on-going, continuous compliance.
At 2nd Watch, our foundational services include a fully managed cloud environment with 24/7/365 support and industry leading SLAs. Our foundational services address the key needs to better manage spend, utilization, and operations.
What are the Benefits of a Cloud Managed Service Provider?
Using a Cloud Managed Service Provider comes with many benefits if you choose the right one.
Some of these benefits include, but are not limited to:
Cost savings: MSPs have experts that know how to efficiently utilize the cloud, so you get the most out of your resources while reducing cloud computing costs.
Increased data security: MSPs ensure proper safeguards are utilized while proactively monitoring and preventing potential threats to your security.
Increased employee production: With less time spent managing the cloud, your IT managers can focus on the strategic business operations.
24/7/365 management: Not only do MSPs take care of cloud management for you but do so 100% of the time.
Overall business improvement: When your cloud infrastructure is managed by a trusted cloud advisor, they can optimize your environments while simultaneously allowing time for you to focus on core business operations. They can also recommend cloud native solutions to further support the business agility required to compete.
Why Our Cloud Management Platform?
With cloud adoption increasing in popularity, choosing a managed cloud service provider to help with this process can be overwhelming. While there are many options, choosing one you can trust is important to the success of your business. 2nd Watch provides multi-cloud management across AWS, Azure, and GCP, and has a special emphasis of putting our customers before the cloud. Additionally, we use industry standard, cloud native tooling to prevent platform lock in.
The solutions we create at 2nd Watch are tailored to your business needs, creating a large and lasting impact on our clients. For example:
On average, 2nd Watch saves customers 41% more than if they managed the cloud themselves (based on customer data)
Customers experience increased efficiency in launching applications, adding an average 240 hours of productivity per year for your business
On average, we save customers 21% more than our competitors
2nd Watch helps customers at every step in their cloud journey, whether that’s cloud adoption or optimizing your current cloud environment to reduce costs. We can effectively manage your cloud, so you don’t have to. Contact us to get the most out of your cloud environment with a managed cloud service provider you can trust.
Multi-cloud strategies suggest that enterprises run their applications and workloads in whatever cloud environment makes the most sense from a cost, performance and functionality perspective. That’s the theory anyway. In practice however, a multi-cloud environment requires a fair amount of tooling. Many enterprises grapple with integrating technologies created by competing suppliers in the hopes of achieving the elusive, single pane of glass.
Regardless of the challenges, a multi-cloud strategy has inherent benefits. Understanding problems upfront, and mitigating the consequences, is step one to realizing those benefits.
Problem: Cloud cost sprawl
Typically, the first migration in a company is initiated as a cost saving measure. Maybe you’re moving from CAPEX to OPEX, or joining a monthly subscription plan, so there’s a clear strategy and goal. As you move deeper into the cloud, developers see the potential of new applications, and opportunities for innovation. The shiny new tools and enhanced flexibility of the cloud can lead to unexpected and expensive surprises.
All too often, an organization moves to a monthly subscription model and slowly but surely, everybody increases and expands their use of services. Next thing you know, you’re getting huge bills from your cloud provider that nearly equal or exceed the cost of buying equipment. Cloud cost sprawl is the expensive result of unrestricted and unregulated use of cloud resources. It’s so rampant that an estimated 35% of enterprise cloud spend is wasted via cloud cost sprawl.
Solution: Cloud cost optimization
There’s more than one way to wrangle cloud use, achieve your goals, and maintain your budget while cutting out waste. Cloud cost optimization is a complex organizational process that runs parallel to cloud migration and cloud-based service use.
With simplified cloud billing, an understanding of how cloud cost sprawl happens, why cost optimization is important, and an ongoing optimization effort – large enterprises can save up to 70%. Through a combination of software, services and strategy, cost optimization helps businesses immediately achieve significant cost savings.
With various types of environments coming together in multi-cloud, it can be hard to integrate, interoperate, and move data across the infrastructure for performance and use. Each environment has its own managing and monitoring systems that require certain expertise.
Infrastructure as a service (IaaS), including cloud providers like AWS, GCP and Azure, are one layer of the environment – and higher level services, or platform as a service (PaaS), is another layer. Platforms like Salesforce and NetSuite offer additional tools to build within specific domains, but the challenge is bringing everything together.
Solution: Expertise and tools
If you don’t have the in-house knowledge for a multi-cloud environment, outsourcing cloud management to an expert who also provides guidance and direction for cloud growth is a cost-effective solution. Regardless of who is in charge of integration, cloud providers offer tools and services to help monitor and manage the infrastructure as a whole. Recently, services have been introduced to directly address integration with other environments in a multi-cloud infrastructure.
For example, Google’s latest service, BigQuery Omni, lets you connect, combine, and query data from outside GCP without having to learn a new language. AWS is taking a more multi-cloud approach with ECS and EKS Anywhere. There’s also Anthos on GCP, and Arc on Azure – all services that allow organizations to run containers in the environments of their choosing.
See how cloud providers are embracing the movement toward multi-cloud to make multi-cloud integration easier.
Accelerate the delivery of innovative solutions and gain competitive advantage, without impacting current operations, using 2nd Watch Managed Cloud Services. Your dedicated cloud experts provide a simple, flexible set of Day 2 operational services to support cost optimization, management, monitoring, and integration within a multi-cloud infrastructure. Contact Us to make multi-cloud a success at your organization.
Cloud optimization is an ongoing task for any organization driven by data. If you don’t believe you need to optimize, or you’re already optimized, you may not have the data necessary to see where you’re over-provisioned and losing spend. Revisit the optimization pillars frequently to best evolve with and take advantage of everything the cloud has to offer.
Begin with the end in mind
The big question is, where are you trying to go? This question should constantly be revisited with internal stakeholders and business leaders. Define the process that will get you there and follow the order of operations identified to reach your optimization goal. Losing sight of the purpose, getting caught up in shiny new tools, or failing to incorporate the right teams could lead you off path.
Empower someone to drive the process
This is pivotal because without this appointed person, cloud optimization will not happen. Give someone the power to drive optimization policies throughout the organization. Companies most successful in achieving optimization have a good internal mandate to make it a priority. When messages come from the top, and are enforced through a project champion, people tend to pay attention and management is much more effective.
Fill the data gaps
Cloud optimization is a data driven exercise, so you need all the data you can get to make it valuable. Your tools will be much more compelling when they have the data necessary to make smart recommendations. Understand where to get the data in your organization, and figure out how to get any data you don’t have. Verify your data regularly to confirm accuracy for intelligent decision making geared toward optimization.
Implement tagging practices
The practice of not only implementing, but also actively enforcing your tagging policies, drives optimization. Be it an environment tag, owner tag, or application tag, tags help you understand your data and what or who is driving spend.
While lack of tagging and data gaps prevent visibility, overprovisioning is also an accountability issue. Just look at the hundred plus AWS services alone that show up on a bill for an organization that’s a long-time user. It’s not uncommon for 20-30% of the total to be attributed to services they never even knew existed at the time they migrated to the cloud.
Hold your app teams accountable with an internal mechanism that lets the data speak for itself. It can be as simple as a dashboard with tagging grading, because everybody understands those results.
Rearchitect and refactor
Migrating to the cloud via a lift and shift can be a valuable strategy for certain organizations. However, after a few months in the cloud, you need to intentionally move forward with the next steps. Reevaluating, refactoring and rearchitecting will occur multiple times along the way. Without them, you end up spending more money than necessary.
Continuous optimization is a must
Optimization is not a one and done project because the possibilities are constantly evolving. Almost every day, a new technology is introduced. Maybe it’s a new instance family or tool. A couple years ago it was containers, and before that it was serverless. Being aware of these new and improved technologies is key to maintaining continuous optimization.
Engage with an experienced partner
There are a lot of factors to consider, evaluate, and complete as part of your cloud optimization practice. To maximize your optimization efforts, you want someone experienced to guide your strategy.
One benefit to partnering with an optimization expert, like 2nd Watch, is that an external partner can diffuse the internal conflicts typically associated with optimization. So much of the process is navigating internal politics and red tape. A partner helps meld the multiple layers of your business with a holistic approach that ensures your cloud is running as efficiently as possible.