How to take control of your multi-cloud costs

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Uncontrolled proliferation and poor cost optimisation are driving multi-cloud bills up, but with the right tools and strategies CIOs can take control and cut expenditure.

Cloud and cost-savings are supposed to go together. Cloud removes the need for upfront investments, enabling enterprises to do more with less and pay only for what they use – and so it is to little surprise that in a recent IDG and Dell Technologies VMware study IT leaders said economic benefits were the joint biggest priority (along with application modernisation) when looking to invest in cloud solutions.

In theory, adopting a multi-cloud model can create even more cost optimisations. There are fewer risks of vendor lock-in and organisations are free to choose resources on a per-application basis, promoting agility and competition in the most cost-effective way.

Why, then, are some organisations going into cloud in a spirit of cost-conscious optimism, only to get hit by an unpleasant surprise?

According to research conducted by the Enterprise Strategy Group, on behalf of Dell Technologies, some 54% of enterprises in Western Europe have found that running some of their workloads in public cloud is costing more than it did on-premise. 58% suggest that some public cloud workloads are costing more than they expected. So are the cost advantages of cloud not adding up? They are, but CIOs attempting to make the most of them face some tough barriers along the way.

Cloud complexity on cost and visibility

Over half of CIOs find that having more workloads running across multiple cloud services, often in complex deployments across hybrid cloud environments, can be a recipe for creeping costs. Approximately 50% of respondents feel they have a hybrid cloud management problem, while those who feel environments are getting more complex outnumber those who feel they’re getting simpler by seven to one. The more complexity increases – and the more they embrace self-service IT models and Infrastructure-as-a Service (IaaS) – the more difficult it becomes to maintain overall vision and control.

This ties into a general lack of visibility over multi-cloud. On the one hand, it can be difficult to keep track of rising costs when workloads are running on different platforms maintained by multiple providers. On the other, handling bills that may contain thousands of line items is a serious challenge for hard-working CIOs that are becoming increasingly integral to business transformation. According to ESG’s research, 52% of CIOs believe that use of public cloud has either not improved or had a negative impact on their ability to gain visibility over the IT environment. Only 48% feel it has had a positive impact.

This leads to situations where end-users launch cloud services in an ad-hoc fashion, then leave what some have termed ‘zombie services’ running, adding cost to no tangible benefit. Forgotten applications and abandoned initiatives, sometimes the result of shadow IT, can leave now unwanted services up and running, adding to the bills. Oversized, under-utilised virtual machines only make the problem worse.

Cloud has become a hugely competitive business, and many organisations are lured in by low headline costs. It’s only once they’ve gone through the pain and expense of migration that they find that scaling up can be expensive and that there are often hidden costs. What’s more, Rightscale’s 2019 State of the Cloud report found that while cloud costs were a huge priority for enterprise, many respondents weren’t even doing the most basic cost optimisations. Many businesses make little use of automation to shut down idle workloads or fail to make the most of cloud provider discount options. Tellingly, while respondents to the survey estimated the amount of wasted cloud spend at 27%, its authors measured the actual waste at 35%.

Taking control of the costs

What, then, can companies do to reduce their multi-cloud costs? Up to a point, it’s a question of doing your homework, understanding pricing structures and becoming aware of hidden costs both for existing services and potential new ones. It also helps to do anything that can improve visibility of workloads, services and costs, whether that’s making use of the management tools provided by cloud vendors, or using tags to clarify what resources are being used where and for what purpose.

Companies also need to do anything they can to reduce waste, whether that’s ensuring that they’re not overprovisioning cloud resources for relatively undemanding workloads, putting in policies that control proliferation or avoiding data duplication. There are even savings to be made in turning virtualised workloads into containerised workloads, which use fewer RAM and storage resources. Getting to grips with existing cloud workloads and taking control of future workloads makes it easier to rationalise, so that you’re not running unnecessary services or using excess resources to do so.

As the Rightscale report suggests, organisations can also make more use of automation, using tools to automate cloud management instead of relying on manual controls. For instance, you might want to automate sleep or shutdown for idle or under-utilised workloads so that they’re not consuming resources – and incurring cost – while they’re not being used. Resources used by non-priority workloads could be switched to accelerate crucial business tasks. Meanwhile, smarter data orchestration can help avoid duplication or the unnecessary movement of large datasets between multiple clouds and central servers – provided this doesn’t have an impact on performance.

Communicating cloud costs

Cost-conscious CIOs might also want to rethink how they engage with employees and senior leadership. CFOs expecting major IT cost reductions may need help understanding why these may not happen overnight, or may need guidance on how these new cost centres operate. Meanwhile, teams keen to launch new applications and services might need a more detailed picture of the full costs involved. This doesn’t mean acting as a gatekeeper and constantly saying no, but setting budgets and making it clear that with freedom comes responsibility. Cloud-based workloads may be faster and cheaper to get up and running, but there are still real costs involved.

Procurement strategies may also need reworking. Using cloud provider discounting for reserved instances could help reduce ongoing costs, as could working with a multi-cloud brokerage or aggregator. Here, the broker can purchase large blocks of cloud resources at a wholesale rate then sell them on to you, and while they still make a profit that rate should still be lower than the one you might negotiate individually. Working with a managed service provider can also help reduce the burden and management costs of handling contracts and agreements with multiple cloud providers. Some can even automate movement of workloads and data between clouds to ensure you’re getting the best performance or the most cost-effective mix. Work with an expert partner, such as Dell Technologies, and you have the expertise on hand to build an efficient, consistent multi-cloud platform where it’s easier to maintain visibility, control creeping costs and eliminate risks.

CIOs can also take advantage of a growing range of cloud monitoring and cost optimisation tools. Some are tied into specific cloud vendors, with tools designed specifically for AWS, VMware environments or Microsoft Azure. Others, , operate across multiple clouds. These tools come with different price tags and cost structures, but there are open source options, like Walmart’s OneOps, as well as more premium, enterprise-grade tools. All, though, can help improve your visibility into your multi-cloud environment and empower you to optimise the costs.

When moving to the cloud, CIOs often face difficult discussions around cost and ROI, but the shift to a new, more efficient multi-cloud platform can be an opportunity to change the conversation with the board and CFO, to focus more on business outcomes than on budgets. Yet the best way to control costs and deliver those business outcomes is to stop attempting to run a complex multi-cloud environment on your own, and to use a platform that delivers a more consistent, easy to manage multi-cloud approach. With integration, transparency and arbitration part of the service, along with management and automation fundamental features, it becomes much easier to run applications in the right cloud environment and in the most cost-effective way.

The power of Cloud: Impact On Applications

Cloud is increasingly integral to business transformation. Are you harnessing it to drive optimal results?

A new IDG study consulted CxO and senior IT leaders in large enterprises in EMEA to study the impact of cloud environments on their businesses.

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