Key factors to help you keep your cloud costs under control

After all, a cloud deployment should bring not only the promised business flexibility, but also the structural cost reduction for managing the entire IT landscape that’s always been an important driver for the journey to public  cloud. Yet, figures from RightScale in the ‘State of the Cloud’ research report show that 80% of respondents, ranging from those just starting to use cloud to the most experienced cloud experts, see cost management as the biggest challenge – even more than ensuring a safe environment and any associated compliance challenges. There’s even a name for it, with all financial aspects related to the cloud now called Cloud Economics. So, how do you ensure that the Cloud Economics in your project are flawless? It is all about managing expectations and costs, along with providing insight into business benefits and real-time reporting. And above all, strong integration between all these elements.

Manage expectations

Day-to-day cloud practice suggests that the impact of deploying cloud is underestimated. Or, in other words, the overall understanding of what it entails is too limited. For example, many assume that costs will rise only in the infrastructure domain. However, this leads to disappointment, or a false picture. The impact of cloud adoption should be assessed from the widest possible perspective. Moreover, those expectations must be proactive and made transparent with relevant internal stakeholders beforehand to prevent unpleasant surprises.

Gain awareness of costs

We all know the typical characteristics of a cloud environment, such as ‘on-demand’ deployment of capacity and the ‘pay-per-use’ principle. But don't forget the ease with which new functionalities are implemented. This also has the potential to be a major pitfall. Many software developers, administrators, or testers are not always able to oversee the costs involved in the development of new functionality. Managing costs starts with awareness, insight into the consequences and a corresponding sense of responsibility.

The development of a clear cloud architecture can help with this cost awareness. The road to fully automated Continuous Integration / Continuous Development (CI / CD) application development can also be used to get costs under control. In this way you can choose to place responsibility for costs at the operational level. This gives self-managing agile teams clear incentives to act within budget, or to act according to their own profit and loss responsibility. These are relatively simple measures that can be implemented quickly.

4 factors contributing to cost control – with a focus on business benefits

Providing insight into business benefits is perhaps the most important part of Cloud Economics. Within many organizations, reporting on business benefits is still a major challenge. In the absence of measurable metrics, it is not always clear which business performance has improved.

That is why the following factors should play a part in your cloud project:

• Strive for true performance improvements in change and innovation processes; for example, reducing the time it takes to make new applications available (Time-to-Market)
• Automate the deployment of putting applications into production. This will significantly reduce the number of production disruptions, while ensuring costs are cut and made transparent
• Move safety and compliance checks to the "front" of the automated process. This prevents delays in deployment. Ultimately, this also contributes to reducing safety and compliance risks
• Build in innovation as a measurable outcome. Innovations are becoming available faster and faster, delivering economic benefit much earlier in the development/deployment cycle

It would be great if it is possible to express these improvements in concrete business value. However, to make this happen it requires a full understanding of the context, whereas the 4 factors influence the outcome indirect.

Real-time insight through thorough reporting

Everyone with responsibility for costs must have access to current reports. Monthly reports are no longer enough in a dynamic cloud environment – by the time they are released, the damage is often done. Experience shows that this is an area where there is still much to be gained. Real-time reporting in which costs and revenues are compared to each other is still at an early stage. This is not easy either, because cloud developments are so dynamic and new services are constantly being added. Nevertheless, it is essential to build thorough reporting to ensure everyone has a handle on costs, including where they are being incurred and how they can be reduced. 

Closing

Of course, letting costs get out of hand in cloud projects is bad news at many different levels, not least for the ammunition it gives to the notorious cloud doubters, who now have the chance to say “we were right”. The usefulness of the cloud has proven itself. But it would be a shame if that were canceled out with an unmanageable cost challenge. In short, putting Cloud Economics high on the agenda is in everyone's interest.