Cost management challenges in the cloud

When it comes to cloud cost control, these are some of the big challenges enterprises face.

Cloud adoption is no longer an if. Instead, more and more enterprises are asking the question, what (to move to the cloud) when (to move it) and how (to choose the right architecture and services).

From the cost perspective, there are four phases of a typical lifecycle that a workload goes through and the key questions that should be asked during each of these phases:

Planning

• What cloud resources do I need?
• Who should be able to create them?
• How much should it cost?
• Who owns the cloud budget for the applications?

Migration

• Have I considered cloud costs before and after Go-Live for each application?
• Have I taken into account the migration plan for my budget?
• Have I benchmarked my cloud architecture to validate the initial sizing and budgets?

Operations

• How much am I spending on each application?
• Is it in line with my expected budget?
• Are there any surprises?

Optimization

• Am I using my resources in the most efficient manner?
• Am I utilizing cloud features to reduce cost?
• Can I control costs as my apps evolve?

However, As enterprises move more and more workloads to the cloud, they often miss out on addressing these questions, resulting in a situation commonly called the cloud sprawl.

At this point, the enterprise usually would have lost visibility and control on their cloud landscape and costs, and start to see (often substantial) cost overruns. Let’s deep dive into some of the reasons why this happens:

Cost Ownership

This is a key challenge. To utilize the full benefits of the speed and agility that cloud provides, modern IT usually provides a common services framework, wherein the business teams are allowed to manage the cloud resources for their applications themselves. While this is the recommended practice, cost ownership often falls through the cracks. We’ve seen customer situations where IT creates accounts and projects for business teams to use, and then hands them over to the business teams, but still owns the costing and billing.

What results from this arrangement is that the business teams get a free reign to create resources, which they do, often well outside of their allocated budgets. They are also neither aware and often not bothered with the mounting spends since they are not the ones footing the bill.

This is usually made worse with the fact that IT does not have strong cost reporting mechanisms to bring visibility into the who and what of the budget overruns.

Budgets and TCO

Doing an initial cloud TCO is absolutely essential to arrive at a budget for your cloud landscape. When this is done done, stakeholders have no visibility into what their infrastructure is going to cost. Cost saving is often one of the big reasons for cloud adoption, but not doing this exercise results in a bill shock to the enterprise and often takes the steam out of the cloud adoption momentum.

Even when enterprises do a TCO exercise, they often do the TCO for the final production landscape. They sometimes miss taking into account the migration plan, DevOps processes and Go-Live dates, and also do not sufficiently size for them. This causes situations where costs skyrocket even before the application is fully migrated. Dev/Test environments tend to severely bloat up and eat into the overall budget.

Visibility

Even when enterprises have done initial sizing and defined cost ownership, having day to day visibility into the cost is important. Because it’s very easy to create resources in the cloud (within minutes), waste becomes a concern. Resources may be created for temporary use but never shut down. We have also seen situations where hackers have obtained access to customers’ cloud accounts and created hundreds of servers. The problems with lack of visibility can be summarized as below:

• Stakeholders do not have granular visibility and actionable insights into their cloud landscape
• Continuous monitoring not in place, resulting in month-end bill shocks
• Projections on cloud utilization trends not available

Governance

Building the correct cost governance is a key pillar of the overall cloud governance framework. Problems occur when some of the following governance structures are not put into place:

• Tagging and labeling strategy is required for both automation and charge-back/show-back. When a comprehensive tagging strategy is missing, it gets very difficult to do a deep dive into billing data to identify which applications resources belong to and who created them.
• Enterprise level access control and provisioning policies, when not clearly defined and enforced for cloud, result in unauthorized actors to create resources. Controlling who can create what resources is essential to manage the cloud sprawl.
• Cloud governance requires behavioral change across organizations. Enterprises that try to retrofit existing processes that work on-premises to the cloud, will lose the advantage that come with it. On the other hand, moving to cloud without training the various stakeholders on the new governance models also result in lapses and corresponding loss in visibility and tracking.

Automation

Even when governance models are defined, for large landscapes, enforcing governance manually comes close to not enforcing it at all (imagine the labor involved in tagging 1000 VMs manually). When tools and automation strategies are not used and applied across the entire cloud landscape, IT teams always play catch up and endure a lot of manual work to keep the landscape in shape.

Similarly, when cost management and remediation tools are not used, manual compliance, cost reporting and optimization become simply untenable, and are often abandoned.

Optimization

Public clouds are evolving fast. They already provide innovative features like autoscaling, that are not available in on-premises environments. In addition, they provide innovative costing models, and multiple discount options.

Lastly, they come up with new managed services that not only allow the customer to pay only for what they use, but also lift the management overhead for these services. Enterprises miss out on these benefits when:

• Apps don’t utilize cloud features to optimize cost (e.g. autoscaling)
• Enterprises don’t use Cloud platform discounts
• Enterprises don’t do periodic reviews for validating evolving application architectures

In future blogs, we’ll talk about building a comprehensive cloud cost management framework to address these issues.

This blog was written with Faisal Mushtaq and was originally published on the GlobalLogic web site as part of our ongoing cloud series. To find out how GlobalLogic can help in your cloud migration journey, please reach out to us at cloud@globallogic.com.