How to Cope with Baffling Cloud Costs

Over the past couple of years, IT organizations are at full speed migrating their products to the cloud as part of their...

Written by Niel Patel · 4 min read >
cloud computing services for small business 2022

Over the past couple of years, IT organizations are at full speed migrating their products to the cloud as part of their DevOps transformation plan. It’s a noble impulse, considering how beneficial clouds are for the business. What’s the problem then? You might ask. The problem lies in year-to-year growing cloud spending.

According to Flexera’s State of Cloud report, 36% of IT business leaders (of 750 responders) said their annual cloud spend exceeded $12 million and 83% claimed that cloud spend goes up to $1.2 million a year. In comparison to last year’s 20% – over $12 million and 74% – over $1.2 million this year’s figures show an unfortunate growth. How to migrate to the cloud and build a cost-effective cloud-based infrastructure without extra unseasonable waste will be discussed here.

Why are businesses so excited about clouds ?

Why are clouds so popular now? With various cloud computing services providing, such business giants as Amazon (AWS), Microsoft (Azure) and Google (GCP) have taken the lead in the market. Here are main cloud benefits you might be interested in:

  1. Effectiveness. Cloud computing services are operated on a global network of reliable data centers, which are constantly upgraded. 
  2. Cost. Cloud computing cuts expenses on purchasing hardware/software, configuring/running data centers, getting packs of servers, experts’ support and other services.
  3. Speed. Cloud computing services are designed to provide self-directed service when needed. It means that even a wide range of computing resources can be contributed just in a few minutes. 
  4. Security. Cloud providers are focused on providing security and protecting your products, infrastructure and sensitive data with a large scope of policies, technologies, and other commands that strengthen your security stance.
  5. Reliability. Cloud providers enable data backup and disaster recovery for users to be sure that if anything happens their data is mirrored and saved on the provider’s network.

Why is Cloud Spending Out of Control?

We just discussed how cost-efficient clouds are. And now we tell you that cloud spending rises. How can it happen? Clouds are supposed to help with money waste, aren’t they?  Yes, you’re right, however, FinOps practitioners name a gigantic $45 billion in cloud spend annually, uncovering “…a little secret about the clouds that the bill never goes down” in their recent report. The survey demonstrated massive sprawl of cloud spend, and a desperate struggle to control and optimize it. We can name a few reasons why companies get into this money trap: 

  • Time deficiency. Cloud migration and infrastructure building with hard deadlines will likely lead to making mistakes and grabbing every service possible or skipping important steps. As a result, bills do not go down and businesses don’t get satisfying outcomes.
  • Experience deficiency. Teams are not experienced enough to complete cloud migration and configure correct cost optimization management.   
  • Skill deficiency. Teams might experience a lack of necessary skills especially if we talk about small business and startup teams. 
  • People’s deficiency. Small teams might not find people to complete such a time and energy-consuming task after all. 

Additionally to all mentioned reasons from the organizations’ side of the fence we should name one more very tricky reason why clouds become more and more expensive year by year. The problem is that major cloud providers are often not really clear about cloud pricing. It’s not that they are trying to trick us, no it’s not like that! However, dealing with tangled cloud price mapping might be difficult for people who are not cloud gurus. Let’s consider this simple example, your aim is AWS Lambda (cloud functions execution) and you have a web application using the CloudFront CDN. You design such flow — when a customer interacts with the app it triggers an HTTP request through an API gateway that invokes a Lambda function that takes in the data and stores it in DynamoDB. Easy, right? But not so fast. With this scheme, you will be consuming 4 cloud services. Surprised? Let’s do the math, you’ll need CloudFront CDN to catch the data, API Gateway to route the HTTP requests, Lambda itself to handle the request and finally, DynamoDB for storing. Each of them charging good, you can grab a picture of bills with ugly numbers falling on your head pretty soon. You should think about cloud pricing before you even start considering working with clouds. Only careful planning can save you from wasting unreasonable spending, time and energy.  

How to get cloud costs under control 

IT organization cope with cloud costs and start saving utilizing one of these three ways:

  1. Make cloud cost design a part of SDLC (software development lifecycle). It might seem a bit overwhelming but costs should be part of the SD life-cycle. In this case, taking that cost transparency is very crucial, you will need a strict tagging methodology for every cloud service to be tagged to each microservice that it is consumed by, per environment, per team.
  2. Who should know about the spending? It’s good to have a budget holder person but the whole developers and IT operations team should monitor the expenses, which will encourage the right engineering and financial behaviors. Also, we recommend breaking your annual budget into monthly parts that will help teams set their budget goals and reach them. Infrastructure right-sizing and auto-scaling can be done using as many ways and tools as you wish from Github functions-as-a-service to Kubernetes Kube Downscaler. More importantly, is to get that it’s a continual process of assessment and it involves good monitoring around your application and infrastructure.
  3. Use a separate product that will streamline and automate cost data via increasing visibility. To keep teams and budgets on track is a very time and energy-consuming process. When manual, it involves most of your and your teams’ resources spent on planning, tagging, right-sizing and, of course, on managing.
  4. If you want your team to be involved in the budget management process and you don’t want them to be focusing on money issues only, you should utilize a product to increase the visibility of your spending. With such products as Cloudhealth or Cloudwiry in hand, you will be provided with spending insights for each service to help optimize budgeting and prevent extra spending.
  5. Turn to DevOps outsourcing companies. It is a very good idea for SMB and startups because of the lack of skilled professionals experienced enough to include a cloud-cost phase into SDLC, create a product that will streamline and visualize cost data or at least, implement decent cost-optimization automation of your cloud-based infrastructure.
  6. We get how overwhelming this whole thing with budget management and teams involved in it might seem. That is why we propose to you one of the easiest and resource-saving ways to take baffling cloud costs under control. If you want to build an effective, cost-efficient cloud-based infrastructure you should consider shaking your hands with mature DevOps teams who will not only provide cloud computing, cloud migration, existing cloud infrastructure upgrade or cost-optimization automation services for you but also support your team with the necessary expertise and tech documentation. 

Bottom line 

More than 90% of companies spend more than a million dollars a year on cloud services considering their focus on coping with the problem of unreasonable spending. Lack of time, lack of skilled professionals, lack of experience in cloud operation and, of course, complex pricing map from cloud providers makes selecting services quite confusing. Thus, adding the lack of explicit billing visibility often causes losing control of costs. Frankly speaking, the main problem is that organizations lack responsibility for managing cloud budgets. Budget planning and managing have to become just as much a part of the project lifecycle as development and delivery.

We suggest three practical ways how IT businesses can manage budgets and take cloud costs under control: including budget management into SDLC, using a product that provides cost visibility and optimization or turning to mature DevOps service companies for them to plan, design and implement cost-efficient cloud-based infrastructure for your team. Plus, a professional DevOps team will provide effective cost-optimization automation of your infrastructure in the cloud for you not to experience money losses in the future.  

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