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Tag: cloud cost

  • Reducing Energy Consumption With Cloud Cost Efficiency

    Reducing Energy Consumption With Cloud Cost Efficiency

    A new study from Stanford University found that it takes 75 gigajoules per year of energy for a person to have a good, long life, but the average American uses nearly four times that amount: 284 gigajoules/year. In fact, the U.S. consumes 17% of the world’s energy while accounting for only 4% of the population. 

    It’s not a new call to action that we need to do more to reduce our energy consumption. Corporations are starting to take action by implementing environmental, social and governance (ESG) programs. However, digital infrastructure is a huge contributor to energy utilization. The collective cloud now has a bigger carbon footprint than the airline industry. So, when enterprises are evaluating and managing cloud costs, they have to look beyond the economic costs and also consider the environmental cost and potential harm to the planet—they have a responsibility to use cloud services efficiently with zero waste.

    So, the questions to ask are: How do you know if your organization is using the cloud as efficiently as possible, and how do you prove the software you’re developing is cloud-efficient? An organization can have a major competitive advantage if they make cloud cost efficiency a priority for all teams involved—especially given the ongoing climate crisis and current market downturn. Below are three basic rules to ensure continuous cloud cost efficiency.

    1. Pay For and Use Only What is Needed 

    The cloud is a service that gets turned on and off, like a light switch. And, like a light switch, it should also be turned off when not in use. Also, as is the case with separate bins for trash and recyclables, organizations shouldn’t reserve large instances when a medium-sized instance will be acceptable. How much cloud is required will change over time, but it’s rooted in knowing who—which team, application, etc.—is using which cloud resource for what purpose at any given time. Ideally, no cloud resource should be left untagged and no cost unallocated, even for shared resources. Organizations can then focus on eliminating unused and underutilized resources.

    2. Understand the Impact

    Take advantage of tools that measure the carbon footprint of cloud usage. When organizations can reduce their footprint, it saves money and impacts other business metrics, such as cost of goods sold (COGS), employee satisfaction and even customer experience. Experiment with different technical levers and see how they impact the cloud costs—this will also lead to smarter choices. By empowering engineering teams with cloud cost data, organizations will enable greater efficiency from the beginning of the software development life cycle.

    3. Cultivate Conscientiously

    Cloud consumption will increase as a business grows—but is it growing efficiently? According to the Flexera 2022 State of the Cloud Report, optimizing usage is the top cloud initiative for the sixth year running, as cloud costs can spiral out of control quickly for a growing SaaS business. With accurate budgeting and forecasting capabilities, organizations can take advantage of long-term savings plans and reserved instances with confidence. In addition, addressing cost anomalies quickly will assist in the stabilization of growth. Not to mention the fact that cloud cost management products offer automated recommendations; the faster users act on cost-cutting alerts, the more money and energy will be saved in the long run.

    When an organization is reviewing cost reports and deciding which infrastructure changes to make, they should also give engineering teams real-time visibility and control over cloud costs so they can act faster and more ethically. With a corporate focus on cloud cost efficiency, organizations can brag about their reduced carbon footprint and be confident that their “Go Green” attitude is benefiting customers, employees and shareholders and, above all, the planet.

  • Four Steps to Avoiding a Cloud Cost Incident

    Four Steps to Avoiding a Cloud Cost Incident

    The recent Flexera 2022 State of the Cloud Report found that organizations waste 32% of their cloud spend, up from 3o% last year. This can be due to cloud cost incidents triggered by unused resources, malicious activity or overambitious projects and which have a massive financial impact if not found and corrected promptly.

    As an organization’s cloud infrastructure footprint matures, mapping cloud resource use and costs accurately to product lines, teams and business units becomes progressively more complicated and problematic. However, accurate cloud cost attribution is vital to understanding team resource use and determining accurate cost of goods sold (COGS) margins and is imperative to budgeting and forecasting. Organizations need reliable, granular views of the cloud environment to attribute costs back to departments and optimize a meaningful budget.

    Cloud cost spikes can blow up an organization’s budget fast and can be hard to track down, but enterprises can help protect themselves from a cloud cost incident with just a few simple steps.

    Have a Strong Tagging Strategy That Attributes Cost Granularly

    The cloud operations team needs to identify what is important to business reporting, which will help define and create a strategy for tagging. For instance, when an organization has two teams managing a particular service, the teams should safeguard the services tagged with a team identifier. Also, the teams should add another tag for the environment in which they’re running so they can allocate cloud costs across teams and environments.

    When an application uses numerous resources, like a database and storage, teams should consider adding a specific application tag and break down costs by each application. It should be noted that there is no one-size-fits-all tagging solution, so enterprises will need to determine what works and try out different strategies by adding and removing tags later.

    Understand Cloud Cost Ownership to Avoid Chaos

    Ask yourself how well your organization has attributed cloud costs to teams, applications or COGS. If the answer is “Not well,” then you are missing vital information about how your cloud costs relate to your business.

    The lack of this context or visibility into resource allocation makes it unmanageable and impossible for cloud operations owners and senior leaders to agree on who is responsible for varied expenses and resources. Manual cost attribution doesn’t scale accurately or account for shared cluster resource use across teams and applications. This creates confusion that can escalate when users arbitrarily slice data and claim ownership without accountability or clear visibility.

    What happens is that costs can sometimes be double-counted with two owners—or even missed completely with no owner whatsoever. The resulting data emerges as an inferior quality that is untrustworthy and not actionable. The inability to visualize resource use in context can dilute, hinder and even defeat cost improvement initiatives and optimization.

    Cloud costs should have an owner who can ensure that cloud spending is tied to business value. Understanding who owns which pieces will help pinpoint the cause.

    Establish and Monitor Cloud Budgets

    Historical data on cloud spending is gold—it can help forecast and budget for what should be happening with the cloud’s cost footprint. If that’s not happening, then it should be flagged and investigated.

    Once you get cost data under control, organizations can get an accurate picture of where cloud spending is taking place. However, does this match the expectations of spending? By establishing and monitoring budgets at every stage of a project, organizations can have guardrails to cloud spending and prevent costs from soaring out of control when engineers overallocate on performance “just in case.” Once budgets are in place, organizations can monitor spending and right-size resources to balance actual usage, rather than estimated usage at the start of execution.

    Over time, right-sizing resources will allow for optimal spend, as well as identify unused resources that can be shut down. Organizations should identify development and test instances left running when no longer needed and shut them off.

    Implement Cost Anomaly Detection

    Organizations can shield themselves from cost anomalies by continually monitoring and optimizing cloud costs. Cost anomaly detection can help act as a barrier to early recognition before they become problematic. This is especially effective when prompt, actionable alerts can be delivered directly to resource owners via Slack or email when their forecast exceeds the set budget. The best option would be adopting a cloud cost monitoring and optimization (CCMO) tool that gives alerts in real-time when a cost anomaly occurs. These tools must be able to detect anomalies and analyze their root cause, while also allowing visibility into what went wrong to avert similar future errors.

    Executing continuous cost monitoring and anomaly detection tools for dynamic cloud environments is essential in identifying any activity that doesn’t align with expected expenditure or diverges from an established pattern. With proper monitoring, organizations can take corrective measures before the fact.

    Unwanted and unexpected cost incidents can clean out an enterprise’s budget quickly, especially as its cloud infrastructure grows. Organizations need to practice these steps to gain a full picture view of their cloud environment.

  • Designing Cost-Efficient Cloud Environments

    Designing Cost-Efficient Cloud Environments

    Today, the days of on-premises data centers are mostly behind us, and the cloud has largely taken over with the promise of scalability, flexibility and cost-efficiency. Despite these promises, the cloud often falls short of these ideals. Why?

    Because managing the cloud is hard—especially when it comes to managing its costs. There are no automatic savings the moment you sign up with AWS or any other cloud provider. Instead, realizing cloud savings requires lots of capacity planning, careful analysis, consistent monitoring, accurate forecasting and endless adjustments—it’s enough work to make anyone’s head spin.

    But the rewards make it worth the effort. If you manage your cloud correctly, it offers tremendous savings compared to on-premises environments. However, moving to the cloud without first putting a cost strategy in place can cost your organization millions as you scale in the long term.

    So, what guidelines should you follow to ensure you’re maximizing your potential cloud savings? Here are some common do’s and don’ts you can start implementing—or stop doing—now.

    Moving to the Cloud

    Migrating to the cloud is the first, and the most complex step. So before you get started, bear in mind the following:

    Do: Analyze Your Environment Prior to Migration

    Let’s face it—if you have a disorganized and over-provisioned on-premises environment, you’ll have a disorganized and over-provisioned cloud environment. Unless, of course, you clean it up prior to the big move.

    On the bright side, cleaning up your current, familiar environment is less daunting than doing the clean-up once you move to the new and unfamiliar cloud environment. Therefore, it’s critical to analyze your current environment prior to your cloud migration.

    Start by decommissioning all assets that are not currently being used. For example, you may have a virtual machine (VM) that was provisioned for a particular project and not turned off once that project was finished. As a result, you’d have an application running that is no longer needed. Identifying and removing these resources now will lower your future cloud costs while relieving engineers of future headaches.

    Do: Create a Blueprint for Your Cloud Architecture

    Next, you need to re-architect your application stack. Don’t worry, this task isn’t as scary as it sounds. You’ll need to create a list of the infrastructure you’re using now and find its corresponding infrastructure in the cloud. Say, for example, you’re using multiple dedicated servers for message queuing. If you’re moving to AWS, you’ll need to identify similar instance types in AWS prior to your cloud migration.

    Don’t: Follow the “Lift and Shift” Approach

    It may be tempting, but whatever you do, avoid the “lift and shift” approach. There are certainly ways to optimize your current environment, so simply moving exactly what you have into the cloud is a missed opportunity to reorganize, restructure and optimize performance and costs.

    For example, you may be running VMs that are not being used, backing up unused development servers, or storing data that can be allocated to a low-cost archival storage class. Make sure to readjust your architecture to fit the cloud, not the other way around.

    Governance

    The bottom line is, somebody needs to be responsible for managing cloud costs. Depending on your company size, it can be a team or an individual, but it must get done sooner rather than later.

    Do: Ensure Cloud Spend is Managed by a Specific Individual or Team

    Sticking to a cloud budget is easier said than done, but if you delegate this task to a team or specific individual, it will be their top priority to ensure your company stays on target. They will be responsible for handling cloud budgets, establishing who can and cannot provision resources and monitoring use.

    If you fail to establish governance, you run the risk of having many individuals provisioning resources without any liability or accountability, which results in significant overspend and lots of chaos.

    Don’t: Presume Governance Is Only for Large Organizations

    Think your company’s too small for governance? Think again.

    At least one individual should always be responsible for monitoring your cloud spend and ensuring it stays in line with the allocated budget. This person will work hand-in-hand with finance to create budgets, monitor use, create billing alerts and more.

    Cloud Security

    If you’re migrating to the cloud without thinking about security, you’re making a huge mistake. It is estimated that cybercrime will cost the world over $10.5 trillion by 2025. Even worse, according to Verizon’s recent study, cloud security breaches have surpassed their on-premises counterparts for the first time ever.

    So, needless to say, security should be prioritized when moving to the cloud. Here are some tips to get started.

    Do: Develop a Layered, Multi-Tiered Cloud Security Plan

    Your cloud security strategy should safeguard both your data and IT assets in the event of a cyberattack, while being compliant with the standards and regulations specific to your industry.

    Some cloud security strategies include:

    • Building your solution with a well-architected framework
    • Using solutions like threat detection, automated patching or security auditing
    • Connecting your on-premises network to the cloud using a transit gateway or similar technologies
    • Creating enough firewall rules for traditional systems and web applications

    Don’t: Rely Exclusively on Your Cloud Provider’s Security Controls

    While many cloud providers offer great security solutions, relying on them exclusively will not help you cover your bases. AWS regularly refers to the shared responsibility model, which states that AWS covers infrastructure, but the user must secure their own applications.

    Scheduling Your instances

    The longer you run your servers, the larger your bill will be. And, unfortunately for us, creating a new VM in the cloud has become so easy that many forget to turn them off when they are no longer in use. This results in cloud costs that are up to 66% higher than they need to be.

    So, if you’re looking to cut cloud costs, keep the following in mind when scheduling your instances:

    Do: Automatically Schedule Instances

    Let’s face it, it’s easy to forget about shutting down instances after hours. In fact, it’s so easy, it can happen to even the best of us. Automatically scheduling instances, on the other hand, avoids human error while simplifying the shutdown process.

    AWS’s Amazon Instance Scheduler or Azure’s Start/Stop feature makes it easy to shut down instances from non-production environments during “off hours” and spin them back up once they’re needed. In addition to these tools, you should consider implementing alerting so you can be notified if anything goes wrong in the scheduling process.

    Do: Take Advantage of AWS Auto-Scaling

    AWS auto scaling enables you to take full advantage of the cloud’s elasticity. The technology continuously monitors your application’s capacity needs and automatically adjusts resources to fit its current use. As a result, you don’t have to spin out a large VM for your workload. Instead, you can begin with a low-spec server and add it to an auto scaling group. When demand increases, more nodes will be added to your fleet to accommodate scale. Likewise, when the demand decreases, the extra nodes will be spun down.

    This helps optimize both performance and costs so you’re never paying for resources you’re not using and you always have the right number of instances to run your applications.

    Don’t: Allow Your VMs to Run Continuously

    This may seem obvious, but as we mentioned earlier, many forget to shut down VMs when they are not needed. For example, 9 AM to 5 PM on weekdays may be your peak hours. This means you probably won’t need certain VMs to run on Saturdays or at 3 AM—so why pay for them? Instead, shut down VMs during “off hours” to ensure your savings are maximized.

    Tagging Your Assets

    There’s no getting around it—tagging assets is an essential part of understanding your usage patterns and optimizing cloud costs. Asset tags are metadata labels which can be attributed to individual resources in your cloud fleet to track which application it belongs to. Usually, you can assign up to 50 tags per resource, and they can be organized and named according to your needs.

    When tagging assets, make sure to keep in mind the following:

    Do: Implement a Tagging Strategy Early in your Cloud Journey

    It’s never too early to start tagging assets. In fact, the longer you postpone it, the harder it will become. Once your spend and usage increases, which it inevitably will, you will need to have a tagging system in place in order to determine which team is responsible for each asset (so you can have them evaluate resources and costs), deactivate unneeded resources and more.

    Tags are extremely useful in many real-world scenarios. For example, if you’re not using a specific application, you can search for the tag “application” with a value of the application’s name. You will then see all resources related to that application, so you can easily delete them.

    Additionally, tags can be used to enforce budgets and prevent overspending. Simply set a budget threshold on your tag and set up alerts to notify you when you’re getting close to that threshold.

    Don’t: Embark on Cloud Migration Before Tagging Assets

    Tagging is simple if you do it in the beginning when your environment isn’t so complex. But it’s excruciatingly difficult once your environment is more mature. So, if you’re moving to the cloud, make sure to start tagging beforehand so you don’t have any regrets.

    Do: Use Reserved Instances and Savings Plans

    If you’re on AWS, using reserved instances (RIs) and savings plans can save you up to 72% over the cloud giant’s on-demand pricing. The catch is you have to commit to purchasing RIs one to three years in advance, which means you’ll need to predict your usage needs ahead of time. Despite this challenge, RIs offer tremendous savings for those that use them wisely.

    Don’t: Purchase Reserved Instances or Savings Plans Without Building a Strategy

    When using RIs, it’s crucial to develop a strategy to ensure your savings are maximized. Often, people make the mistake of purchasing many RIs, which are not used. This results in upfront savings, but no return. Make sure to come up with a plan for how you handle reserved capacity. Selling them on the AWS marketplace is a good place to start.

    We move to the cloud for the promise of more flexibility and lower costs. But to actualize that promise, we can’t expect the cloud or our cloud provider to do all of the work for us. Unfortunately, cloud savings are not automatic.

    That’s why creating a strategy that covers costs, security, and other critical aspects of cloud migration should be your No. 1 priority. Even if you’ve been using the cloud for years, you should continue to reassess your cloud cost strategy to ensure it is optimized fully. Start by pinpointing practices that result in cloud waste and creating a game plan to prevent it from happening.

    Keep in mind that new technologies are always emerging, so make sure you are aware of any industry changes which could impact your cloud cost strategy.

  • Cloud Governance Can Trim Cloud Costs

    Cloud Governance Can Trim Cloud Costs

    The abrupt need to transition to remote work last year caused many companies to migrate to the cloud or accelerate an in-process migration. Cloud has become an essential part of company operations and budgets. Last year, worldwide end user spending on public cloud services was $257.5 billion, making up 9.1% of total global enterprise IT spending, and it’s forecasted to increase to 14.2% by 2024, according to Gartner.

    Upfront Cloud Costs

    The allure of cloud for organizations is its potential to save money, increase agility and offer easier scalability. However, these promises don’t materialize without proper management. Organizations will likely see an initial rise in costs with cloud adoption. Organizations spend, on average, 12% more running a workload in IaaS (infrastructure-as-a-service) compared to when it happens in their own data center. These cost increases occur when work is lifted and shifted without modification.

    Like any change, there will be upfront costs involved with the process of migrating to the cloud that need to be considered. With careful planning, organizations can avoid surprises. Items that need to be factored in when budgeting include the cost of cloud infrastructure, labor costs associated with migrating applications to the cloud, and the monthly bill from cloud providers. Many cloud providers provide cost calculators to help organizations determine what to expect when migrating to the cloud.

    Managing Cost

    A factor that is key to managing cloud costs is planning for the monthly cloud bill. Without proper monitoring, this is where overspend can occur—57% of IT leaders have exceeded their cloud budgets at some point, according to a 2018 Softchoice survey. One of the issues is the lack of visibility that leaders have into their cloud costs. A lag in your cloud billing data makes it difficult to make accurate decisions, which can be the case with spend reports from cloud providers that are 12 to 24 hours old.

    A lack of timely visibility into current costs and the inability to forecast future costs leads to cost overruns and blown budgets, which is why having a product that provides the most up-to-date information and monitors your budget is important. There is no use in budgeting if it’s not being monitored. Let me repeat: an unmonitored budget is useless.

    Timely visibility and monitoring your budget fall under financial control of your cloud—one of the three pillars of cloud governance. Cloud governance includes the development and implementation of budget controls, as well as controls to manage access and ensure ongoing compliance.. A cloud management product can help with this by not only keeping your budget under control and alerting you before you go over that budget, but also by finding saving opportunities through ongoing optimization.

    Using these tools means you can automatically find out about ways to save your organization money.

    The other two pillars of cloud governance, managing access and ensuring compliance, also impact your overall cost in the cloud. A robust governance and management solution establishes proactive protocols that can automate tasks such as account setup and ensuring compliance with your security standards. Automating controls will save your organization time and money. Monitoring and ensuring that your cloud is secure will help you avoid costly security breaches. When adopting the cloud, a plan for implementing cloud governance should be at the forefront to help you realize the cost savings of cloud.

    Despite the initial costs of scaling to the cloud, in the long term, cloud adoption does result in cost savings. Once organizations move away from managing on-premises data centers and implement cloud governance in their cloud environment, that’s when opportunities for innovation can happen due to time and money being saved. For example, when Riso, a printer and digital copier manufacturer, migrated to AWS, the company cut its total IT operational costs by 55%. Avery Dennison, a manufacturing company that specializes in labeling, saw an annual run rate savings of $5 million due to investing in cloud-first initiatives. These are just some examples of how the cloud has helped companies optimize their costs. It can be possible for your organization to reap similar benefits with proper planning and the implementation of cloud governance.

  • Using Automation to Control Cloud Costs

    Using Automation to Control Cloud Costs

    By building in cost control automation from the very beginning, you can keep your cloud costs low while encouraging innovation.

    Infrastructure automation has become vital for every modern sys admin and operations team. Applications and systems are evolving from single-host mainframes to distributed microservices architectures. This automation has gone from basic operating system installation and setup to full-blown multistep deployments of production code from a single developer’s commit. By automating these mundane processes and eliminating the element of human error, production systems are much more stabile than ever before.

    But why stop at automating deployments? There are other elements that need to be automated, too. One of the main ones is cost control.

    Continually rolling out new infrastructure without ever taking a step back to analyze the cost often leads to the panic-driven cloud-bill-based phone calls from your finance department. Instead, applying automation to your cloud costs can help you to save money, so you never have that unpleasant surprise of a major bill.

    Scaling Up Without Ever Spinning Down

    Developers and operations teams often use infrastructure automation early in application development and deployment processes to get servers and databases deployed and functioning. Modern automation tools aren’t just powerful, but they’re also quick to deploy and fit into your current workflow. This is fantastic, but the problem is the automation effort can taper off once the environments are running—too often, users and teams move on to the next project before figuring out a way to keep costs from getting out of control. Then it’s too late, and users simply accept that money needs to be dumped into the deployment pipeline to keep everything on task.

    Easy-to-use automation is the key to spinning these environments up efficiently. It also can be key for keeping the costs of these environments low. Sure, you may need to keep the production systems scaled up for maximum application performance and customer satisfaction, but what about the test lab, sandbox environment, dev systems, UAT servers, QA deployments, staging hosts and other pre-production workloads? Having giant environments with system sizes that match production can be useful for some testing, but leaving it all running can be easily doubling your cloud costs. This is true for each environment you have, including for elements that are only used for a fraction of the time.

    As your infrastructure automation toolkit grows and evolves, there are a few things you should start building into all of your applications and deployments. These include:

    As this list grows, there’s one more thing you need: continuous cost control.

    By building in cost control automation from the very beginning, you can keep your cloud costs low while maintaining the flexibility required to keep up the pace of innovation. Without this, your costs are destined to rise faster than you intended, which will then cause headaches (and endless meetings) in the future. It may not be coming out of your bank account directly, but saving money at an enterprise organization is everyone’s job. Automating this is the key.

    — Jay Chapel