A History of Cloud Cost Management
When cloud computing entered the business world in the early 2000s, it gave companies a new option in how they approached their computing needs. Not only was cloud computing a cutting-edge advance in how businesses functioned, but it also changed how the workforce exchanged and stored vital information worldwide. Companies who adopted the technology early on saw increases in overall efficiencies and cost-benefits over those who didn’t. Today, 69% of companies have incorporated the use of cloud technology in some capacity and another 18% of companies plan to do so in the future, according to the International Data Group.
Since its beginning, dozens of more cloud services and applications have become readily available for companies to utilize. Companies continue to adopt additional services to facilitate growth and to increase functionality for both their workforce and their customers. However, all of these improvements come with a price tag. There might be dozens of different services in play at any given time and hundreds, if not thousands of users. Cloud services tend to span multiple departments to meet the needs of both business units, as well as individuals, making usage difficult to track. Without a central platform to collect this usage information, it’s difficult, if not impossible, to manage expenses. Without good data visualization, there’s no good method to ensure that a company is paying for only what they need.
What is Cloud Cost Management?
Cloud cost management, also called cloud expense management, works to ensure that a company is getting maximum usage from its cloud services, including increased efficiency, all while minimizing costs. As a result, teams have access to the resources they need, when they need them, and at the appropriate rates. Those within the company tasked with managing cloud expenses have access to a customizable dashboard that shows usage in real-time as well as instant notifications of anything operating outside of the expected ranges. Data from this dashboard can be organized into reports that aid C-level execs in understanding their current cloud usage as well as provide insights into what might change in the future.
The cloud cost management process starts with identifying and collecting all the associated data and contracts of all cloud products in use. These streams of data are then integrated into a Technology Expense Management (TEM) platform that powers the dashboard. When this comprehensive cloud inventory is complete, then the management service can put its suite of tools to use. A key focus of cloud cost management is seeking out areas where a company is spending more than necessary for their cloud usage and adjusting those services to better fit a company’s needs, often securing better contract rates and packages at the same time.
While larger savings are found through this cost optimization process, that’s not the only avenue where a company can reduce expenses. The other part of the equation is making individuals and departments accountable for their usage by setting appropriate budgets. This allows a reasonable amount of autonomy for department managers to expand or reduce the cloud services their teams use. Departments get what they need all while maintaining the bottom line. When management can see the big picture through the cloud cost management dashboard, it’s that much easier to communicate the current cloud situation at any given moment.
In addition to expense reduction, using a single platform to manage cloud usage and expenses makes involved financial processes, such as cost allocation and chargebacks, far easier. With the TEM platform in place, it’s clear to see who is using what services and how much. Many of these financial processes can even be automated using the platform’s tools, further reducing the workload.
Cloud Services Will Only Grow More Complicated, Not Less
Every year new products and applications enter the cloud, all of which are intended to increase a company’s productivity, improve connectivity, facilitate better collaboration, and enhance the customer experience. While all of these new products will make it even easier for a company to do business, each one comes with an associated expense. A company that hasn’t centralized the management of these cloud services is already wasting resources.
Should this management be left to individual business units alone, the same product could be in use separately in different departments, meaning that the company is missing out on a larger package deal. On the other hand, not all departments require the same set of programs and applications either. Should a company decide to deploy a new service across all of its business units because it’s easier than picking and choosing who needs it, they might be paying for instances of the service that aren’t being used.
Most IT departments are already maxed out with handling the ever-increasing number of technological assets already owned by the company. Adding the additional task of managing all cloud services is a recipe for failure, as it is too complex to be handled with standard spreadsheets and manual work. Not only are there dozens of cloud products and services to track the data from, but the usage data is unique to each department and individual, and each hour of the day. This alone results in millions of data points that no team could handle efficiently. With each coming year bringing new products for companies to consider, this problem will grow increasingly more complicated.
Who Benefits Most From Cloud Cost Management?
As with most technology-related services, the size of the company will be the greatest indicator of whether it makes sense to transfer management to a team of experts. Smaller companies using a limited number of cloud services might very well be able to manage their cloud product usage using existing management tools. However, even smaller companies will grow and adopt a greater variety of cloud solutions, there will come a point when their in-house management will no longer be able to keep up. While it’s tempting to simply ignore the growing challenge to effectively manage cloud costs, a growing company risks increased unnecessary expenses, underutilized or overtaxed resources, and greater difficulty allocating costs by not working with a service.
A different scenario is where a larger company, one who hasn’t used cloud services and products in the past, is taking their initial plunge into the cloud. Shifting responsibilities locally into the cloud is a process that needs to be handled with care. First, the company’s needs must be assessed, and a complementary suite of cloud services assembled that will best address those needs. Then, local computing needs to be transferred in a systematic way as to not disrupt day-to-day business. Lastly, a centralized system must be put in place to manage cloud usage and expenses across all departments. Without professional guidance, problems within any of these phases might result in huge financial loss, loss of productivity, and massive delays before achieving full cloud integration.
Finally, there is the management challenge of “multi-cloud” combinations where a company is utilizing services from any number of cloud vendors. These systems can be all-private, all-public, or a combination of the two. One of the biggest benefits of using a multi-cloud approach is that it distributes computing resources while minimizing the risk of downtime and data loss. However, each additional vendor effectively doubles the number of data points to track, as well as adding another dimension of complexity to cloud management. The costs of several different public cloud providers must be considered. As with companies with single large systems, companies who have adopted a multi-cloud system will find that in-house systems aren’t equipped to keep up with the amount of data these systems produce.
In each of these cases, cloud cost management can take a time consuming and difficult management challenge and transform it into usable data, actionable optimization tasks, reports, and real-time visualization of day-to-day cloud usage. They can facilitate cloud migration for those companies starting out, support growing companies who are struggling with their current cloud management systems and offer powerful tools to make even the most complex multi-cloud systems manageable.
Cloud Cost Management Services
As with any expense management of technology, strategy must always be part of the program. Companies that understand all the different facets of service that a cloud cost management program can provide are better equipped to make decisions and create long-range plans. These programs include providing life cycle management, brokering and automation, and governance across eight functional areas.
Provisioning and Orchestration
Considered critical to effective private cloud services, provisioning and orchestration allow a company to create, modify, and delete resources to quickly scale services up and down based on the current workload as well as create coordinated arrangements of automated tasks. Cloud cost management utilizes an end-user provisioning portal that draws information from templates specifically created to identify cloud resources that are compatible with the parameters of the current technology in use by the company. Depending on a company’s needs, the service can create several templates based on usage and functionality, such as just-in-time-provisioning and fleet provisioning. When provisioning is combined with orchestration it simplifies the task even further by automating critical steps, so they aren’t missed. This not only makes provisioning faster, but it also makes it more thorough.
On the user side, the cloud cost management must be able to collect and fulfill requests for changes in cloud resources as well as process request approvals of new or adjusted workflows. The fulfillment of these requests can be automated and customized depending on the role of the user and controlled via identity and access management. The cloud resources themselves are organized into the system’s service catalog which draws information from both cloud service and resource pool catalogs. Within the service request system, spending limits can be set per item to keep cloud expenses in check.
Inventory and Classification
To monitor and manage changes across cloud resources, a complete inventory of resources in use must be maintained. Initially, this process will help discover cloud resources within the company’s holdings which aren’t being utilized as well as those which might be stretched to the limit. Each of these inventory items is classified so that they may be tagged and grouped for easier identification. Part of this inventory also includes all associated policies and actions affiliated with each resource. This allows for closer monitoring of configuration changes across the cloud.
Monitoring and Analytics
A company’s well-being depends on the availability and functionality of dependable tools. Ensuring that dependability comes down to constant monitoring and analytics where performance and availability metrics are collected and analyzed against expected usage at any given moment. These analytics also monitor if cloud policies are being followed and alerts the proper individuals if they aren’t. With a cloud cost management service running, this data is fed to the dashboard so there is always an up-to-date bird’s eye view of cloud resource utilization, including alerts should any issues arise. Part of this monitoring includes automated incident management.
Cost Management and Workload Optimization
One of the biggest benefits of leveraging cloud cost management is the potential for significant savings. The strongest tool in this service is the ability to track and right-size cloud spend while aligning capacity and performance to match actual demand. In addition to ensuring that a company is paying for only what they need, the service also manages budgets and payments. This is accomplished by maintaining price lists and billing details, adhering to scheduling policies, detecting spending anomalies, and creating cost-tracking reports and forecasts. Also included within cost management is multiple-currency support, resource utilization dashboards, and computing reserved infrastructure recommendations.
Cloud Migration, Backup, and Disaster Recovery
The cloud has multiple perks, but one of the most compelling is the way it can protect data as compared to local systems. Cloud cost management takes this protection to the next level by ensuring that a company’s data remains secure under any circumstance by providing tools to enable data protection, disaster recovery, and data mobility by way of snapshots or data replication. Backup and lifecycle policies are created for both object and block storage as well as the ability to restore from specific points-in-time. Should services need to be shifted from one cloud to another, the service can also generate instance migration recommendations.
Security, Compliance, and Identity Management
A significant concern with the cloud is how to ensure that a company’s systems, data, and infrastructure remains secure. The first step in protecting these systems is to put in place policies, controls, procedures, and technologies engineered to work together to create comprehensive coverage. When it comes to compliance, cloud-delivered systems must meet the standards that customers face, such as HIPAA compliance in healthcare. Vendors must be able to deliver the same level of protection that a company needs. Of course, none of these programs will do any good if malicious parties can get into the system. It is the goal of identity management to ensure that only authorized individuals have access to sensitive data and company resources.
One of cloud computing’s greatest strengths is giving companies the option to pay for only what they use. When employed with the proper controls and monitoring in place, a company can shave expenses down to precisely cover what they need without overages or underutilized resources. Chargebacks allow accurate cost assignments to those who use IT resources. However, because cloud services aren’t evenly used or distributed, it’s often difficult to get a complete picture of a company’s cloud spending. Cloud cost management takes this chargeback information and populates cost-tracking dashboards and reports to create accurate budget definition and visualization.
Advantages of Cloud Cost Management
Today’s cloud services offer operational benefits when used with precision and expertise. Employing cloud cost management to oversee the use of these services gives companies the expertise they need to reap the full advantage of savings and benefits. There are five clear benefits to consider when looking at cloud cost management.
Starting in the planning phase, cloud cost management’s proactive approach can ensure a company is choosing the right set of resources to meet and not exceed their needs. As part of the planning, they consider ways to take advantage of discounts based on volume or advance payment. Costs are further decreased by tracking usage by department and employee, holding accountability for cloud usage, and making adjustments accordingly. Also, by using a could cost management provider, many of the day-to-day IT chores like running software, networks, and servers are shifted off the shoulders of the employees, freeing them up for more strategic work.
As an essential component of IT business operations, predictability allows for accurate forecasting which enables long-term calculations of profits and operating expenses. Often this predictability is sacrificed to allow greater portability with cloud resources. With cloud cost management in place, all cloud resources are closely monitored to spot trends in usage which allows for more accurate forecasting and greater predictability.
Through processes such as automated scaling and load balancing, cloud cost management helps enterprises reduce overages and make the most of their cloud resources. Spending and chargebacks are analyzed to identify areas of optimization and computing, storage, and network services that are added or removed to meet the demands of the current workload.
A company’s workforce is most productive when the applications and resources they use perform smoothly. Cloud cost management ensures that cloud resources are right-sized to precisely fit a company’s needs without overprovisioning, which equals overpaying; or under-provisioning, which causes performance to suffer.
Detailed visibility of the organization’s cloud usage and architecture is vital to ensure good cloud cost management. With key data being fed into the dashboard constantly, a company can stay on top of what is happening in the cloud and be alerted should anything shift away from what is expected. This visibility not only serves to manage costs associated with cloud usage, but it also allows for greater governance and increased security.
Why Choose MobiChord For Cloud Cost Management?
As the fastest growing TEM on Inc. 5000, MobiChord is staying on top of the competition by constantly adapting and improving its services to match what today’s businesses need to manage their technological estate. They are the only native TEM provider on the ServiceNow platform, which makes them an easy choice for companies already benefitting from ServiceNow who are looking for more visibility and control for IT.
MobiChord seeks to actively reduce cloud costs by providing companies with an accurate picture of their cloud spend and pinpointing areas suitable for right-sizing. Using tools and data such as cost allocation and chargebacks, they help hold business units responsible for their expenses. With MobiChord managing cloud-related manual work, such as invoice processing and billing, IT and finance teams are freed up to dedicate their time and efforts toward more strategic initiatives. And finally, with MobiChord’s native integration with ServiceNow, a company can bring highly detailed cloud expense, usage, and inventories data into the platform and create actionable analytics and reporting.
Curious to learn more about MobiChord’s Cloud Expense Management Solutions? Contact us today!