In 2021, even the most conservative businesses are actively looking towards cloud solutions. Migration to the cloud is an opportunity to remove infrastructure maintenance issues from internal specialists, avoid problems with outdated servers and capital investments in hardware.
But you also need to move to the cloud competently: assess what resource you are actually using and whether you are paying in vain for what you really do not need. Together with experts from a DevOps services company Boosty Labs (https://boostylabs.com/devops), we’ll figure out how businesses can effectively manage their costs in the cloud.
How much companies spend on cloud services
Businesses are moving to the cloud for several reasons:
- want to save money;
- want to cover expenses with an operating budget, not capital (as in the case of buying their own servers, which need to be purchased periodically). Moreover, according to SoftwareONE, due to production cuts in connection with the pandemic, there is now a large queue for the purchase of server equipment, and the waiting time for delivery is 180 days;
- want to shift the responsibility for the maintenance of equipment and the availability of services to outside specialists, relieving their own technical department;
- want to quickly get and scale their IT infrastructure for new business tasks (you can deploy a new cloud service in one hour).
For other reasons, everything is clear, but whether a business can save money depends on a competent approach to migration and many other factors. Of course, when making a decision to move to the cloud, a business weighs what investments it invests in the existing infrastructure and its maintenance, as well as how much it will cost if the services are deployed in the cloud. And already by the numbers it determines the expediency of such a transition. Depending on the size of the business, the amounts can vary hundreds of times.
The trend is that companies’ spending on cloud services is growing steadily around the world. According to Gartner, the volume of this market in 2022 will reach almost $ 400 billion. Growth occurs at about 23% annually.
Of course, the main reason is the massive business migration to the cloud. But these costs are not always appropriate and economical.
One of the main problems of the overwhelming number of enterprises (and not only those who decided to migrate to the cloud) is the lack of a full-fledged corporate system for collecting operational analytics. That is, performance monitoring and capacity planning systems. Somewhere there is no such system at all, somewhere it is under configured, somewhere it is configured, but something does not work in it, etc. cloud environment.
What could be the reasons for excessive costs in the cloud
The reasons for the unnecessary expense in the cloud are often hidden in the way a company’s ground infrastructure has been organized.
In the IT cell, there has long been such a term as Shadow IT (or “shadow IT”). This is when administrators or company management do not even know about certain expenses, but they are there and funds from the budget are spent on this. For example, network traffic between servers and workstations within a company is perceived as worthless in the infrastructure.
Therefore, they do not track it and do not try to optimize it. But when unoptimized intra-corporate network traffic pours into a monthly bill from a cloud provider, everything becomes obvious.
When it comes to a company’s behavior when moving to the cloud or working in the cloud, there are several main reasons why costs can be overestimated:
1. Incorrectly selected service configurations during migration – both in size and type of service. For example, having their own infrastructure, the majority of businesses are laying down a reserve of capacities. Companies are reinsured, because within the budget period it is difficult to quickly allocate funds for the additional purchase of servers, if the need arises. When a business migrates to the cloud, the amount of required capacity is left with the same “safety net”. This is wrong – in fact, you don’t have to make such a reserve in the cloud, because in this case it is always possible to add capacity in a few minutes.
2. “Temporality” of configurations. For example, a company built an initial service for itself at a theoretically calculated capacity, in order to tweak and correct it later. But the temporary often becomes permanent, and the excess capacity is no longer reduced, continuing to pay for them unnecessarily.
3. Untimely cleaning of “garbage”. Old unnecessary data backups, forgotten shutdown virtual machines, etc. All this takes up space in the cloud, for which you have to pay.
4. Wrong migration strategy. For example, a land-based mail server can be implemented as a regular virtual machine, spending the budget on licensing and renting virtual services. Or you can migrate to Office 365. This applies to many traditional office services: file content, portals, databases, etc.
5. Late transition to newer versions of cloud services that have more capacity at a lower rental cost.
6. Many other factors that are difficult for the company’s specialists to track the work routine on their own.
How to manage costs in the cloud
To avoid unnecessary costs, you must first seriously approach the choice of the configuration of the cloud environment, and then constantly monitor the situation and conduct audits.
In the future, when the migration has already taken place, you should conduct an audit of your cloud infrastructure at least once a year to determine how efficiently the capacity is used, and also to remove unnecessary information.
Here are some tips for optimizing your cloud spending.
For performance services:
1. At the start of the project, analyze in detail the needs and create user profiles to determine the correct SKUs for each type of user.
2. Select the optimal licensing models, understanding the business needs (duration of the commit, support settings, the need to make changes to the subscription content, etc.).
3. Monitor analytics on the use of services and, if necessary, change the types of subscriptions.
4. It is also extremely important in projects to pay attention not only to the technical part, but also to the adaptation of users. This will not reduce the cost, but it will help you get the most out of your cloud investment, as onboarding exercises will allow the common worker to get better at using the cloud platform faster and better, getting the real value out of it.
For infrastructure services:
1. Correct approach to cloud infrastructure design. Even before the migration process, you should carefully work out the cloud configuration, consider the possibilities for optimization.
2. Choose the right type and size of virtual machines and proactively manage these parameters. Modern cloud platforms make it easy to change the parameters of virtual machines. If your resources are not fully utilized, you may be able to save money by using smaller virtual machines.
3. For services that do not provide for 24/7 operation – if possible, use scripts for shutting down virtual machines outside of working hours and on weekends.
4. For services that provide 24/7 work with fixed resources, use resource reservation, with the help of which cloud providers provide a discount for these virtual machines.
5. Use the features of BYOL (Bring your own license) wherever possible and permitted by the licensing terms.
6. The general recommendation for any service is that cost management should be constant. To do this, it is better to use advanced billing tools that allow you to analyze in detail costs by service more often than once a month / year when you receive an invoice for payment.
Conclusion
The first challenge for any company in the cloud is cost management. The business needs to see what is being spent on and be notified of expected budget variances. You need to identify why this is happening and prevent possible financial losses (for example, configuration errors or problems associated with unauthorized use of cloud infrastructure resources).
Companies that have been using cloud services for a long time are also interested in advanced budgeting capabilities. It is important for them to have forecasts for resource consumption, to flexibly divide costs for cloud services between departments, projects or group companies.
And the third task of companies in the cloud is self service. Customers who are fairly confident in working with cloud services often want to be able to do some things on their own, without waiting for a response from a partner or cloud provider. For example, in case of dismissal or hiring of an employee, add an Office 365 license for him on his own without signing additional agreements, make an advance payment, etc.
