Cloud has emerged as a game changer for companies in recent years because it offers scalability, security and an operating model based on variable cost structures instead of the traditional fixed-cost ways of managing IT infrastructure. There are several reasons for this change. First, in an increasingly competitive global market, companies want to deliver first-class experiences and value to their customers. Then, the pandemic drove a shift towards remote work. Plus, it triggered rapid peaks and troughs in demand that call for more flexibility. No wonder cloud demand keeps on going up.
The world witnessed cloud adoption not just in technology-centric businesses like Amazon or Microsoft but also in retail chains such as Loblaw or Walgreens. So much so that according to the analyst firm Gartner, by 2025, 51% of IT spending in application software, infrastructure software, business process services, and system infrastructure will have shifted from traditional solutions to the public cloud, compared to 41% in 2022.
On one hand, cloud offers a strategic advantage in terms of speed to market and lower cost of ownership. On the other, companies are finding it increasingly challenging to monitor and optimize cloud resources and spending. According to a McKinsey report on cloud migration opportunity, cost overruns at a global level add up to well more than $100 billion in wasted spend over the course of migration in three years.
Add multi-cloud and hybrid cloud deployments to this mix and spend leakage grows exponentially. Cloud waste averaged 30% of companies’ cloud budgets in 2021. According to the State of the Cloud 2022 report by Flexera, that figure jumped to 32%.
As the saying goes: You can’t manage what you can’t measure. Instead of getting surprised by excessive cloud bills, companies need to take a proactive approach to cloud cost management. Having talked to many of our customers, we at Digitate have identified the top challenges companies face when trying to control cloud expenditure.
The most important challenge is multi-cloud visibility. Most companies that have global operations today work with multiple cloud service providers like Amazon Web Services (AWS), Microsoft Azure, or the Google Cloud Platform (GCP). You might not automatically have access to every tier in the cloud computing stack when you employ a third-party cloud provider like Amazon or Microsoft, or a reseller, which means you lack visibility. Even though cloud providers frequently offer some built-in services and applications, they might not give you the full picture of your cloud estate and all its complexity.
Without a vendor-agnostic, centralized monitoring tool for the cloud estate, companies are in deep water. This leads to rampant cloud sprawl due to non-utilized cloud instances or services, poor performance, capacity, and compliance.
Cost management and optimization
The second most important challenge is managing cloud costs. That’s because creating new resources in the cloud is easy and just a few clicks away. However, that ease often leads to over-provisioning and underutilization. The costs associated with such actions almost never get accounted for immediately and lead to some unpleasant surprises when the bill arrives. Without regular spend tracking, benchmarking, forecasting, or anomaly detection, companies can’t plug the gaps in the cloud expenditure.
What does a good cloud cost monitoring and optimization (CCMO) tool offer?
Today, most cloud service providers offer native monitoring consoles and utilities that provide data around cloud activities. There are also third-party solutions available on the market. However, these tools don’t offer a vendor-agnostic view of the cloud estate.
Investment in the right cloud cost monitoring and optimization (CCMO) tool can help companies improve cost visibility and equip them with intelligent insights and actions to support cost optimization. Here I’ll list some features that a good CCMO should offer to support a company’s overall cloud cost management strategy.
Multi-cloud ingestion and infrastructure mapping
One of the first steps toward building a robust monitoring setup is data ingestion. With multi-cloud and hybrid clouds on the rise, a good CCMO solution must be able to ingest the cloud cost data from different cloud service providers at real-time speeds. A good tool should come with several out-of-the-box adapters or connectors to ingest data from multiple sources and cloud-native tools.
The tool should then be able to map infrastructure resources across IaaS (Infrastructure-as-a-Service), PaaS (Platform-as-a-Service) as well as CaaS (Container-as-a-Service). It should discover resources like virtual machines, disks, databases, load balancers, and virtual networks. The users should have the ability to slice and dice the data to understand the distribution by region, service provider, or business units within the company.
Better tagging of cloud resources
Tagging is a mechanism to identify a particular resource in the cloud. Tagging is a sure-fire way for a company to gain information around cloud usage and the associated costs. However, improper tagging of cloud resources exposes the company to the risk of inflated bills and under or over-utilized resources.
A good CCMO tool helps to detect missing tags or flag resources which are untagged or are missing a tag. To ensure proper tag coverage, it should offer flexibility to set tag policies at several levels including those of cloud vendors, business units, applications, technologies, and more. This helps the cloud administrators to charge back resource usage to the appropriate business unit or line of business (LoB). And from a governance standpoint, this ensures that only the right users can consume the designated resources.
Cost optimization: Reports and recommendations
Cost reporting is at the heart of any cloud optimization tool. A CCMO tool should track cloud expenditure and provide an as-is analysis that paints a picture of the current spending behavior. Anomaly detection identifies trends, finds outliers, analyzes the patterns, identifies the root cause, and raises a flag for potential issues with the cloud team. The tool should deliver right-sizing recommendations and highlight areas of potential savings to the cloud team regularly. Forecasting cloud costs also helps the team plan their budgets more accurately. Such timely reports and recommendations ensure that even the smallest of spend leakages do not fall through the cracks and end up being a huge surprise when bills arrive.
A robust cost monitoring and optimization solution at the core of the cloud cost management strategy can prove to be a real competitive advantage for companies, especially those dealing with multi-cloud and complex cloud environments spread across the globe.
ignio CloudOps: A way to realize more value from the cloud
As organizations continue to move to the cloud and are looking to derive a competitive advantage from their cloud investments, we at Digitate decided to support our customers by offering them a new module as part of the AIOps suite. This module, ignio CloudOps, provides a vendor-agnostic view of the multi-cloud environment, as well as cost analytics and automation for effective governance and optimized cloud costs.
It offers complete visibility over the multi-cloud estate with a cloud cockpit functionality that offers a single comprehensive management console for AWS and Azure clouds. The cloud cost optimization capability provides sprawl and waste reports along with rightsizing recommendations that help optimization of cloud resources and associated costs. With AI/ML at the core, the tool provides context, insights, and automation for resilient, agile, and efficient cloud IT operations.
To learn more about ignio CloudOps, click here.