Cloud costs not optimized? That’s on you

It’s Monday morning and you get an irate call from the CFO. A public cloud bill just came in and it’s three times higher than last month. The overage is not in the budget and just what do you suggest to make up the difference?

Most of us have fielded these types of calls, and there is no good response. 

It’s almost too fast and easy to use the cloud and provision its resources. Without specific automated controls and reporting in place, you’re bound to get an eye-widening cloud bill at some point. It’s hardly a new phenomenon. This happens at home with sudden rises in electric or water bills that reflect seasonal usage, or cable TV bills that mean the kids have been binge-watching pay-per-view. It’s the same with the cloud.

In this IDG Cloud Computing Survey, 40% of respondents cited the need to control cloud costs as an obstacle to their ongoing use of cloud. Most of those who don’t currently control costs have no idea of their ongoing consumption or what costs they are likely to see in the future. 

Given that cloud usage spans divisions within companies, the problem becomes a bigger mess when IT tries to allocate costs among various department budgets. A company may have five departments that use a particular cloud service, so when the bill comes, the company splits it evenly five ways. HR may only use 3% of the cloud resources, but it still gets billed for 20% since the company doesn’t track actual usage.

Here’s the best advice to get your cloud usage costs back on track: Pave the road to cloud cost optimization and tracking with automated cloud cost governance and financial operations (finops) systems. These are apps that work together to do the following:

• Monitor usage by user, department, project, cloud service, etc., to determine what’s being used, when, and by whom.
• Determine the allocation of costs, given that every public cloud provider has different prices for different services.
• Plan for usage based on past usage and apply those assumptions to future usage budgets.
• Govern cloud usage via costs. Do not allow cloud consumers to use more services than the money they have in their budgets. Continuously inform them of how much money they have left. 
• Look for ways to optimize costs (such as leveraging reserved instances) or reduce them while still supporting core cloud-based systems.

If your cloud bill is more than $10k per month, you need cost governance to provide more visibility into cloud costs. That’s the first step toward optimizing your usage and expenses. Assign responsibility and ownership within the various departments to control their usage at a micro level. 

I’m often taken aback by the number of cloud users who still don’t have these systems in place. If this sounds like your situation, it’s on you to fix it.