Cracking the Cloud Cost Challenge: A Simple Five-Step Guide

11/10/23, 10:00 am

As I mingled with the thought leaders at the recent Gartner IT&O symposium in Sydney, one notion was unmistakable – the future is in the cloud, but it's the cost that's causing the storm. As we navigate an era of uncertainty, both public and private sectors are engaging in a delicate dance, trying to trim expenditure without sacrificing progress. But let's move away from the current spectres and instead, let's cast our gaze forward and ask: Can we crack the code on cloud costs?

"In 2023, Australian organisations will ramp up their spending on public cloud services to a total of $19.9 billion - up 19.3% from 2022.” - Gartner

As more and more businesses make the leap to adopting cloud-based systems, it's no shocker that the finer points of cost management often fall by the wayside. At times, the adoption of cloud technologies is executed with undue haste, neglecting the establishment of proper architecture and adherence to governance processes.

We're hearing tales left and right of companies who have seen their monthly expenses double in less than a year, from modest $7,000 to a startling $14,000. Even more head-spinning are the organisations experiencing monthly cost swings in the realm of $200,000.

Take, for instance, one perplexed customer who, despite cutting off their testing servers, was still incurring charges. With a nod and a hint, we suggested they hadn't accounted for the additional costs associated with data storage, networking, and security services. It's these overlooked expenses that can end up taking businesses by surprise.


Two Birds, One Stone: A New Cultural and Fiscal Paradigm with FinOps

Over the recent years, the term 'FinOps' has been bandied about in multiple discussions revolving around cloud technology. Often, it's the Cloud Engineers who find themselves grappling with this concept, as they're at the helm of managing the environment. 

Let's take a moment. How can we fully adopt a new approach like DevOps? It requires us to be nimble and constantly ready for delivery. It makes us focus on the product and be adaptable to change. It encourages us to share decision-making powers. But can we do all this while still depending heavily on a single tech team for business success?

As individuals with technical inclinations, our instinct is to accommodate rather than decline. Yet, the need of the hour isn't to take on more but to reach out for support. More importantly, we ought to guide the organisation on a journey that seamlessly weaves FinOps into the very fabric of its culture and operational model. FinOps, as we must understand, is not a mere checklist of tasks but a discipline and cultural practice in its own right.

“FinOps is an evolving cloud financial management discipline and cultural practice that enables organizations to get maximum business value by helping engineering, finance, technology and business teams to collaborate on data-driven spending decisions.” - FinOps Foundation

The Cycle of Cloud Cost Control: Reflect, Review, Refine

One would be tempted to say, "Let's start from the top," but managing cloud costs successfully requires more than just having the bosses on board. Here's a simple five-step guide to help you navigate this often-slippery path.

Step One: Gather your champions. This isn't just the person at the helm - your CEO, but also the CFO, the folks in Procurement, and your Cloud Leaders. The idea is to form a kind of Cloud Advisory Board, and inculcate an understanding of cloud cost management that is rooted in its relevance to the business' core goals.

Step Two: Streamline Cloud Governance for Cost Efficiency Depending on the scale of the organisation, it's advisable to appoint an individual or assemble a team dedicated to cloud governance. This ensures a comprehensive understanding of the technology portfolio, ultimately leading to cost savings and optimised expenditures.

Step Three: Empowering your cloud service users is key. Consider Japan's remarkable cleanliness. It's not achieved by employing an army of street sweepers, but by fostering a culture where everyone does their bit. It's the same principle here; get everyone on board with the mission, and you won't need an army to manage your cloud costs.

Step Four: Choose the right yardstick for success. Don't just look at how much money you've saved - that's like looking in the rear-view mirror. Instead, consider how your costs are trending compared to past solutions. A downward trend is a direct sign of growing maturity in your cloud application and architecture.

Step Five: Reflect. Review. Refine. Steps One to Four aren't a one-and-done deal. Cycle back regularly, learn from your experiences, and keep refining your approach. Because managing cloud costs isn't a sprint - it's a marathon.

Key Takeaways

  • To effectively manage cloud costs, it's not a solo journey for tech leaders - it requires collective effort and buy-in from all stakeholders.
  • The implementation of cloud cost management is a cultural shift, demanding responsible consumption and spending discipline akin to other commercial acumen.
  • Utilise the Cloud Cost Management Runbook to establish optimised architecture practices and checklists, effectively preventing cost anomalies before they occur.
  • Periodically reassess FinOps practices collaboratively with the Cloud Advisory Board and Cloud Center of Excellence, measuring success and continuously refining strategies.

Crack the Cloud Cost Challenge. Talk to NEC.

Pankit Mehta

Yang Liu
National Portfolio Manager, NEC Australia