The cloud is often pitched as a way to assist organisations in taking control of their IT costs. By shifting CapEx expenditure to OpEx, and by introducing effortless scalability into the IT environment, the organisation can consume IT on an as needed basis and, in doing so, run with maximum cost efficiency.
Or at least, that’s how it should work. Unfortunately for many organisations “bill shock” and cost blowouts are an expensive lesson with the cloud. In many cases, however, these issues are preventable, and come down to misconfiguration and a lack of proper maintenance of the environment.
One example that we’ve seen at NovaWorks: a company might download a cloud-hosted application from GitHub and not realise that they need to configure the script from the default, which used premium SSD disks that cost 10x as much as the standard SSD Disk to run. It works well, of course, so they’re very happy with it… right up until the point where they get the bill at the end of the month and realise they should had paid more attention to what that application was consuming.
Another challenge that we find is that organisations rely on pricing calculators from cloud platforms like AWS and Azure when looking to deploy a VM to the environment. Those calculators are easy to use and accurate, but there are costs that are inherent to the cloud that can be overlooked if you don’t know how to use the calculator properly. For example, deploying a VM might also involve transferring 1TB or more of data, and the cost of the data transfer can be easy to overlook when using the calculator.
And then there are times where the problem is simple efficiency. We had a client that was running an older style of VM, and they were happy with it. It would have continued to function for them as they needed to for a few years, but by taking a day to migrate it to a newer VM type, it was possible to save the client $2,000/month. It’s for this reason that we encourage our clients to take a close look at their IT environments on a regular basis to see if there are opportunities for optimisation and finding new efficiencies.
What is involved with cloud cost optimisation?
There are three principal steps in running a cloud cost optimisation programme. They are:
- Review. The review takes a couple of different forms: the CIO should know what the budget is, what the current architecture of the environment is, and what they propose to do with it, and all of this needs to be done before the migration or optimisation project.
- Secondly, the CIO and their team should look at the services that are available now, and then consider what new services are being brought to market. Within that, is there the opportunity to move the services to the newer platform, and what costs would be involved in doing that (including downtime and the impact that has on overall business productivity).
- Finally, once optimised, it’s important to continue to review the environment, we suggest on a monthly basis and ensure that you understand where the costs are coming from and, if they’re increasing, the root cause for that.
These are the steps that NovaWorks will go through with each of our clients. The first task is to put the structures and processes in place and formalise them. In many cases – particularly when the client has been predominantly on-premises previously – there can be a bit of a “shock to the system,” as there are some overheads involved.
Usually with an on-premises environment there’s a three-year cost involved, which is paid up-front and then simply maintained until the end-of-life cycle requires management. Within that period, if you want to change the configuration, you can simply do that. It’s a significant and typically inefficient cost up-front but once paid for it’s then available.
Meanwhile, with cloud environments, changing configurations will generally involve some costs, so it’s important to get things right upfront, and have the right governance in place to continually review and adjust where possible.
So, does this mean that cloud is not the cheaper option?
Cloud is not inherently the cheapest option for IT consumption, but it can be. It all comes down to the management of the IT environment.
One of the great advantages of cloud is that it is always going to be totally fair and transparent about the costs involved. What’s more, it will be predictable. Whatever cloud provider you use will charge the same amount with every bill, and the cost will only change when they’ve given you plenty of notice. Furthermore, every single expense is listed, somewhere. It’s possible to design and calculate the total cost of any cloud project ahead of time, which is not necessarily the case with on-premises projects.
What slips organisations up is a lack of understanding around the full scope of their project or the cloud services that they need. Microsoft and AWS have thousands of products within their cloud environments. Finding the right ones requires an ongoing review into the cloud environment and how it is being used.