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How to keep your cloud spend in check

In Software & Cloud Economics, Managed & Subscription Services, Training & Events

Don’t let your organisation’s cloud consumption burn a hole in your IT budget

Cloud. It’s a small word that represents massive spend by organisations today. By the end of this year, Gartner predicts that spending on Software as a Service (SaaS) to be $85.1 billion, on Infrastructure as a Service (IaaS) $39.5bn and on Cloud Application Infrastructure Services (otherwise known as Platform as a Service or PaaS) $18.8bn – totaling a whopping $143.4bn, and for 2020 we can expect to see that spend grow even further, to $171.8bn.

Many organisations are having difficulties controlling those spiraling costs. That is partly because of cloud’s allure of cheaper running costs and being easy to implement. It’s also that several organisations are adopting a cloud-first strategy, where they are giving their teams free rein to spin up new cloud services to bring about greater business advantage.

Although this predicament has been caused by different units in the business, it’s ultimately the responsibility of the CIO or IT leader to ensure the company doesn’t burn through its entire IT budget in just a few months.


How the costs mount up

There’s no denying that cloud spend is complex and difficult to manage, and there’s a host of reasons why. Starting with a lack of visibility of where cloud resources are being consumed – many cloud services are spun up by business units with little or no recourse to the IT department and being able to pinpoint the use of SaaS applications across the organisation has become a huge challenge.

SaaS is a major contributor to “shadow” or Business Unit IT (where a BU is sanctioned to buy and consume cloud services) as the procurement and deployment of cloud applications doesn’t require specialised IT resources or integration into complex data centers. It’s become all too easy for anyone within the organisation to buy or subscribe to cloud services and bypass centralised procurement or specified procurement policies. This leads to unforeseen, unplanned, unbudgeted spend appearing on the monthly bill.

When it comes to IaaS, costs can grow even faster. Without the right tools in place, cloud resources are not optimised, servers can be running 24/7 unnecessarily, expensive software can be left idling on forgotten servers. This cloud sprawl results in unknown and unplanned cloud services appearing on the bill. Speaking of the bill, vendors are less than transparent when it comes to detailing which services have been run up and by whom. This results in organisations being unable to attribute the costs to the right business unit and not being able to tell where they are paying too much for services that aren’t adding any value.

Other reasons, such as workloads being spread across different public and private cloud platforms, or regional pricing differences (where it may be cheaper to run the same cloud resources in one region than in another) will also contribute to these mounting bills. Another factor is that the roles and responsibilities for managing cloud spend and consumption often exist outside of those that manage the traditional on-premise Software Asset Management (SAM) and license procurement. Often, organizations who have existing and well-established SAM best practices have yet to extend this to their cloud environments, in any case the solutions they have anyway cannot adequately cover the management of cloud resources.


So what can be done?
How can IT leaders get the necessary insight and align with the rest of the business when it comes to spending on cloud services? As in many disciplines, Cloud Spend Management involves people, process and technology. It is an essential part of good IT governance and requires robust management processes – just like best-practice SAM.

Cloud services – IaaS, PaaS and SaaS – management principles and budget controls have many similarities to traditional SAM practices and require similar governance and management processes. Follow SAM best principles and apply them.

Policies are an essential tool for managing cloud resources just as they are for on-premise assets. IT procurement needs to work closely with the business to ensure the services one business unit requires isn’t creating duplicate or a higher expense than if the service is procured centrally.

Managing the lifecycle of cloud assets is just as important as it is for managing on-premise assets. Get insight into all cloud usage, don’t just rely on the data the vendor shares. Use a tool that will provide you with the right knowledge to puts you in a position of control. Introduce automation, let people spin up new virtual instances at the point they need them, but add in an ‘end date’ when the virtual machine will be decommissioned. If VMs are spun up for a training course, ensure that they is only live for the duration of the course, why let it run overnight and burn more money?

Manage the licenses. It’s presumed that as there is no ‘off’ button that licenses don’t need to be managed in the cloud. However, it is possible to be over-licensed in the cloud, and savings can be made on matching the right license to usage. Do your users need an enterprise license or can they make do with a standard one? Check usage against consumption and you may be able to downgrade the license or remove it altogether.

With the right tools and processes in place you can make informed decisions and ensure cloud technologies are giving the organisation all the benefits it signed up for without the detrimental effects of overspend.

If you're struggling with a strategy to migrate your services to the cloud then our Cloud Easy Advisory services may be what you need. Aimed at helping our customer's assess their current infrastructure and deploy a plan for what can be migrated.

Is your cloud spend spiraling out of control? Why not speak to a Crayon SAM experts today.