What Is Cloud Computing? | Strategies and Importance

Managing cloud costs

Without careful management, public cloud costs can quickly spiral out of control. Gartner research shows that 77% of enterprises have been “surprised” by incidents in which costs suddenly spiked and only 22% of infrastructure and operations (I&O) leaders are confident that their spending in the cloud is under control.

Unexpected cloud costs may arrive as ballooning monthly bills that destroy return on investment (ROI), as short-term spikes that interrupt critical projects, or as erratic swings that force the business into emergency budget adjustments.

Why do cloud costs behave differently than traditional data center costs? Because cloud usage is metered and billed in a “pay as you go” model, so costs are highly sensitive to usage patterns. These patterns, in turn, may vary unexpectedly due to changes in business activity, human errors such as inefficient configurations and scripting mistakes, or even malicious external attacks that can create spikes in resource utilization.

Focus on the following three techniques to build cost resilience into your cloud.

  1. Map your points of cloud cost vulnerability. Group costs by business activity or application, and work with the business to determine what areas are most vulnerable to unexpected cloud cost increases.

  2. Add “cost observability” into your cloud monitoring. Cloud cost observability is the ability to make accurate inferences about cost and financial impact from the system events recorded in cloud logs.

  3. Build a cost incident response plan. This is an emergency playbook that every organization hopes it rarely needs to use: practical instructions that will be needed by humans moving quickly under pressure. As such, it must be simple, prescriptive, focused on realistic scenarios, tested and maintained.

Estimating cloud migration costs

Each migration approach (see ‘What is cloud migration?’) has a different profile in terms of the types of costs and when they occur and there are a host of reasons that cloud migration costs go off the rails, from rushed app assessments to hidden costs. Make sure to cost and monitor each set of key activities from planning and oversight to residual (sunk costs).

If you intend to contract for cloud migration or cloud operations, be alert to potential costs that vendors place out of scope. Vendors often know that these activities will be required at some point and hope to gain additional revenue by billing extra for them once the project is underway.

Examples of work frequently “added in later” include:

  • Extra effort to “live migrate” mission-critical systems

  • Creation and refinement of operational runbooks, including automation templates and scripts

  • Implementation of backup and disaster recovery processes

  • Special configurations to meet regulatory compliance standards

  • Expanded system administration duties “above the IaaS level” to maintain databases, application PaaS environments or the migrated applications themselves

Preliminary estimates for these costs should be incorporated into the complete cloud migration cost estimate, even if workarounds or alternate vendors have not yet been identified.


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