Cloud Is Now for Grown-Ups

Public cloud has come a long way since we were all worried about the levels of security and availability associated with the delivery model. Now there needs to be a greater focus on costs, that is of course unless your company has money to burn.

I recently asked my daughters, aged 6 and 8: “What are grown-ups for?” Their responses, as you might expect from children, were:

The 6-year-old:

“Grown-ups are there to look after childrens [sic] and make sure they don’t get squished!”

The 8-year-old:

“Grown-ups are there to buy children things and to help them do things.”

This shows that even young children appreciate the importance of security, finance, and operations. And cloud, like life, needs someone to do these potentially boring, unglamorous, and non-exciting activities that, if not done, lead to misery and unhappiness.

Cloud needs its own version of grown-ups.

The Rising Need for Cloud Grown-ups

Yes, I know, it’s a bit judgmental. Sounds like I’m either suggesting that, until now, the people using the cloud weren’t grown-ups or perhaps somehow didn’t appreciate security, finance, or operations. (I’m aware that I tend to exaggerate.)

There’s no denying, however, that there has been an increase in the appreciation for such “boring” aspects of cloud, especially in the finance area.

It’s been a couple of years since I listened to this excellent webinar from RightScale, with guest Mark Dickerson from Technicolor, on the topic of multi-cloud. Among the angst and frustration, he reported that finance was a significant problem, including:

• Whose responsibility is it? The cloud techies don’t do it, the IT service management (ITSM) delivery managers don’t do it, and finance wants only the final answer, not to have to work it all out.
• Oh my! Each cloud service provider does billing differently!
• How do we create, and who maintains, a constant downward pressure on cloud costs?
• That feeling when the cloud bills arrive and it looks so out of control.

Significant Wasted Cloud Spend Drives Users to Focus on Costs

This year’s RightScale State of Cloud Report confirms that cost management is now the #1 challenge with public cloud for those companies that have been doing cloud long enough for cost mismanagement to “bite them on the backside”:

• Cloud users underestimate the amount of wasted cloud spend
• Survey respondents estimate 30% waste, while RightScale has measured actual waste between 30 and 45%
• Despite an increased focus on cloud cost management, only a minority of companies are taking critical actions to optimize cloud costs, such as shutting down unused workloads or selecting lower-cost clouds and/or regions
• Optimizing cloud costs is the top initiative across all cloud users (53%) and especially among mature cloud users (64%)

There’s No Hiding Place in the Cloud

The wonderful and scary thing about public cloud is that the costs are transparent and in your face. There’s no hiding them. You can see who is consuming which cloud resources and incurring what resulting costs.

In response, tech-savvy “cloud plumbers” turn down (resize resources) and turn off cloud resources in response to workloads. They use clever cloud automation like AWS Auto Scaling Groups to run on one VM during the quiet nighttime, then scale up to ten VMs across multiple datacenters during the business day, then back down to one when customers “leave” again.

If they didn’t do this, the waste numbers would be quite staggering. Take this sample model for instance, where the standard VM is an m4.large at 10¢ per hour.

• There are about 720 hours in a month, so for ten of these VMs to run non-stop per month it costs 10¢ x 10 x 720 = $720.
• Through the practice of winding down to just two VMs overnight (12 hours from 6pm to 6am) and at weekends, you’re saving 10¢ x 8 x 108 x 4 = $346, which is 48% and matches the wastage that RightScale sees when people don’t use cloud elasticity to save money.

Imagine the 48% saving on monthly cloud costs that are in the $100k range, and you can thus see how your Head of Cloud Services can make the CFO sad or happy based on the effectiveness of their operational and financial stewardship.

The Rise of the Cloud Cost Optimizers

It’s a busy market when it comes to companies selling cloud cost optimization tools/capabilities, though there are signs of consolidation with Microsoft recently purchasing Cloudyn.

Some vendors like CloudRanger offer to automate cost savings by turning off cloud resources to limit waste. Others like CloudhealthTech go a little further to analyze your cloud usage and recommend other ways to save money like purchasing reserved instances instead of using on-demand.

Clever startups like Spotinst go further and let you use spot instances like they were on-demand — with all the savings but none of the pain — and they share your success by taxing the net saving as their fee.

Then there’s organizations with a unique approach like Strategic Blue (full disclosure: my employer) who offer managed cloud procurement through sophisticated data science and financial tools to not only reduce waste by right-sizing and right-buying, they also help you buy the cloud on your terms. Not every organization can accept public hyperscale cloud provider terms and conditions.

So, if your organization is using cloud, then it will need to get a grip of the grown-up aspects of security, finance, and operations before too long. Of these three, finance is crucial because if cloud is seen as expensive, then it won’t be long before non-cloud or “enterprise cloud” vendors are rocking up at your door with total cost of ownership (TCO) models that make public cloud look expensive when it really doesn’t need to be.

Is cost management your number one cloud issue? If it’s something else, then please let me know in the comments below.