How can CIOs improve cloud cost management?

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Cloud is now a core component of the IT provision for the majority of enterprises. IDG’s 2020 Cloud Computing Survey found that 81% of the companies surveyed were already using cloud computing infrastructure or running applications in the cloud, up from 73% in 2018. On average, these companies expected to allocate about a third of their total IT budget to cloud computing in the next year. Yet many respondents also cited obstacles to their continued use of cloud, with the biggest – as cited by 40% – being the need to control cloud costs.

Eric Knorr, editor-in-chief for InfoWorld, puts this down to a range of factors, including a lack of governance and poorly configured cloud workloads. "Without proper policies in place," he argues, "LoB managers, for example, may spin up cloud services that are redundant with functionality already in place."

But are there any steps that CIOs can take to improve their cloud cost management? We reached out to leading CIOs, technologists and IT leaders to find out.

For Larry Larmeu, enterprise technology leader at Accenture, cloud cost control begins with visibility: "The first concern around cloud cost management is ensuring that you have an accurate picture of your organisation's cloud use," he explains. "Surveys show that companies often have astronomically large amounts of cloud use that is not being tracked centrally. Once you have a handle on exactly what you have, you can start to employ cost management tactics like right-sizing and auto-scaling."

David Walliker, Chief Digital and Partnerships Officer at Oxford University Hospitals NHS Foundation Trust, agrees that visibility is crucial. He believes that organisations should ensure that "resources are correctly allocated" and "that you consistently optimise and have accurate growth projections."

Walliker concludes that resource allocation is the most critical element; a point echoed by Christopher Adjei-Ampofo, CIO and head of procurement, at Uphold, who argues that capacity planning and policy has a major role in controlling cloud costs.

Perhaps too many cloud evangelists focus on the benefits of being able to spin up instances and services at a minute's notice, when what’s more important in terms of cost control is ensuring that redundant or unnecessary services aren’t left to run in perpetuity. "Ensuring that cloud instances are properly decommissioned when no longer in use is key," says Larmeu. "Many companies spend massive amounts of money on resources no longer in use."

Adjei-Ampofo concurs. "Regularly review your cloud assets to make sure that every asset is tracked and registered with owner, purpose and approved," he recommends. "You’ll be surprised how many redundant assets still exist and which are still incurring usage costs." He also suggests that organisations "use a top-down approach to identify services which are the main contributors to your monthly spend, then focus on how to reduce their costs."

Many of the CIOs and IT leaders we spoke to believe that automation and optimisation have a part to play. Adjei-Ampofo suggests that companies "take advantage of automation services for processes such as installation, configuration and management of the IT estate. Remove as much human intervention as possible. This not only reduces human effort but also avoids human mistakes, which in turn reduces costs."

Others focus more on how behaviour can drive cloud cost upwards. "When you move from on-prem to cloud provision, more than the technology changes," says Laura Dawson, a CIO working in the Higher Education sector.

"This means developing a great deal more commercial savvy, so people who would have been the technical experts on the data centre may need to shift their skills and roles considerably to get a good understanding of the different costs involved and how you manage them."

One of the big issues, she feels, is understanding the variable costs involved in cloud and the behaviours that could drive those up. This means that IT leaders need to develop skills in financial modelling, contract management and negotiation, not to mention – importantly – "gaining authority of your colleagues to help change their behaviours," she says.

Adjei-Ampofo also believes that these are underappreciated skills, and recommends that companies work with a dedicated account manager at their cloud provider and establish regular meetings to review their usage and services.

"This will give them an opportunity to discuss your business objectives and offer cost saving solutions," he says. Adjei-Ampofo also thinks it vital to make sure organisations are aware of contractual agreements with cloud providers, especially termination date and pricing model. He feels that CIOs should negotiate early to take advantage of their position as existing customers when renewing contracts. "There are a lot of savings to be made if you negotiate right," he adds.

Some CIOs believe in leaning into the strengths of hybrid cloud. "From an administrative perspective, the use of the cloud and hybrid clouds enables implementation of dynamic policies, faster encryption, drives down costs, and provides more transparency for access control," says Chuck Brooks, president of Brooks Consulting International and Georgetown University Faculty in the Graduate Cybersecurity Risk Management Program. "This can mitigate both risk and cost." However, Brooks also asserts that it's vital to bring security into the equation early on: how and where data is secured is a fundamental aspect to any cloud programme.

Stephane Nappo, vice president and CISO for Groupe SEB, concurs, suggesting CISOs can be brought in to assist cloud control efforts by defining the service level requirements of security, monitoring and operations recovery aligned with asset sensitivity and business stakes. "The main element you cannot delegate to your cloud service provider," says Nappo, "is your responsibility for security, compliance and customer trust."

Regaining control of cloud costs boils down to a series of measures. Businesses need visibility and an accurate picture of their cloud use, and central tools to allocate resources and track how they’re being used. They need the ability to identify their major cloud cost centres, but also to drill down and find cloud instances that aren’t being used and decommission them to reduce unnecessary outlay. Here, platforms such as VMware’s CloudHealth can help, delivering greater visibility across the organisation’s entire cloud ecosystem, providing in-depth analysis and reporting to help firms track their cloud usage and minimise their wasted spend.

What’s more, once businesses have this overall visibility and can drill down into the details, they’re better equipped to plan for capacity and optimise according to their growth predictions. They can harness centralised tools and automation to simplify management and reduce the workload, and either negotiate a better deal on their cloud costs or obtain support from third-party partners who can help. Through CloudHealth, for example, they can align their cloud investments with strategic goals, and ensure that they’re working with their cloud providers in the most cost-effective way.

To find out more about how VMware’s CloudHealth could help enterprises manage and optimise their cloud costs, visit cloudhealthtech.com.

Learn more about Dell Technologies and VMware solutions powered by Intel® : DellTechnologies.com/uk/ControlYourCloud