Understand and Manage Costs in the Cloud

Understand and Manage Costs in the Cloud

Governing costs is a major concern when adopting cloud technologies. After all, who likes a surprise cloud bill? If you can’t explain an increase in your monthly cloud bill because you added new employees, acquired a company, or grew in another way, you need to get to the bottom of it before wasting thousands of dollars.

The best bet is to begin from day one with an idea of what you will be spending, (here’s a pricing calculator for Azure), and an implementation of basic cost management controls and tools. These can be optimized later in the cloud governance maturation journey. Even though computing and storage cost rates are lower in the cloud, you pay for what you use. As physical constraints of infrastructure capacity and speed of availability don’t exist in the cloud, many organizations have been shocked by massive cloud bills that are driven by resource sprawl. It’s like when we all gained weight during COVID because our sweatpants had unlimited capacity!

High-Cost Usual Suspects

Time and time again with clients, we see some of the usual suspects when it comes to driving up cloud costs. Here are some examples:

  • Continuously running development and test environments
  • Large scale evaluation and testing infrastructure not deleted after use
  • Endless backup and replicated copies of unneeded and unused data
  • Virtual machine, database, and other snapshots
  • Over provisioned resources

The availability of virtually full instant snapshots and unlimited capacity, combined with the scale of the cloud, is likely to lead to cloud resource usage that dramatically exceeds expected costs. Without automated custodial tools, actual cloud resource consumption will be much higher than planned.

A recent study revealed that public cloud spend was over budget by an average of 13 percent, and organizations expect their cloud spend to increase by 29 percent in the next 12 months.¹ This trend indicates it’s more critical than ever to get a handle on forecasting and cost optimization.

Lack of Visibility is a Major Concern

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 continuously monitors your budget is important. There is no use in budgeting if it’s not being monitored.

Timely visibility and monitoring your budget are critical components of cloud governance. Cloud governance includes the development and implementation of budget controls, as well as controls to manage access and ensure ongoing compliance.

Building a Cost-Conscious Cloud Governance Model

A cost-conscious organization can divide its thinking into three different areas:

  1. Visibility: For an organization to be conscious of costs, it needs visibility into those costs. Your cloud governance team is responsible for ensuring consistent, reliable cost reporting and performance telemetry. Visibility in a cost-conscious organization requires consistent reporting for the teams adopting the cloud, finance teams who manage budgets, and management teams who are responsible for the costs. This visibility is accomplished by establishing:
    • The right reporting scope
    • Proper resource organization (management groups, resource groups, subscriptions).
    • Clear tagging strategies
    • Proper access controls
  2. Accountability: Accountability is as important as visibility. Accountability starts with clear budgets for adoption efforts. Budgets should be well established, clearly communicated, and based on realistic expectations. Accountability requires an iterative process and a growth mindset to drive the right level of accountability. The cloud governance team can help optimize deployed assets, change discounting options, or even implement automated cost-control options like blocking deployment of unplanned assets.
  3. Optimization: Optimization is the action that creates cost reductions. During optimization, resource allocations are modified to reduce the cost of supporting various workloads. This process requires iteration and experimentation. Each reduction in cost reduces performance. Finding the right balance between cost control and end-user performance expectations demands input from multiple parties. The cloud governance team is responsible for ensuring that the monitoring and cost-reporting tools are consistently deployed.

More Cloud, Less Cost

Many organizations take advantage of Microsoft Azure’s discounting mechanisms, including Azure Reserved Virtual Machine Instances. It can help you significantly reduce costs—up to 72 percent² compared to pay-as-you-go prices—with one-year or three-year terms on Windows and Linux virtual machines (VMs). When you combine the cost savings gained from Azure Reserved Instances with the added value of the Azure Hybrid Benefit, you can save up to 80 percent.

Lower your total cost of ownership by combining Azure Reserved Instances with pay-as-you-go prices to manage costs across predictable and variable workloads. In many cases, you can further reduce your costs with reserved instance size flexibility.

What’s more, you can now improve budgeting and forecasting with a single upfront payment, making it easy to calculate your investments. Or lower your upfront cash outflow with monthly payment options at no additional cost.

Wherever you are in your cloud journey, CIO Advise, Inc., is here to help. Reach out to us for a cloud governance evaluation and cost-benefit analysis to ensure you’ve got the best pricing model that works for your organization.

Successful Cloud Governance: 7 Key Components

Successful Cloud Governance: 7 Key Components

The cloud allows organizations to save money, improve and accelerate innovation, and be agile in meeting market trends and competitive pressures. However, without a solid cloud governance model, costs can skyrocket and security becomes risky. Companies must create access, cost, and security rules to manage data and applications in the cloud without impeding employees’ ability to take advantage of cloud benefits.

It’s a tricky balance, and every organization will have slightly different requirements, but cloud governance best practices should follow these seven general guidelines.

1. Security Management

In more than 80 percent of today’s ransomware attacks, cybercriminals exploited common configuration errors in software and devices, which can be remedied by following security best practices.

This means that ransomware actors are not often using new and novel techniques. The same guidance around timely patching, credential hygiene, and a thorough review of changes to software and system settings and configurations can make a difference in an organization’s resilience to these attacks.

Three best practices for security management include:

  1. Prepare to defend and recover: Adopt an internal culture of Zero Trust, with assumed breach, while deploying a system of data recovery, backup, and secure access.
  2. Protect identities from compromise: Minimize the potential for credential theft and lateral movement, where attackers attempt to find cloud admin privileges, with the implementation of a privileged access strategy should an attacker gain entry.
  3. Prevent, detect, and respond to threats: Defend against threats across all workloads by leveraging comprehensive prevention, detection, and response capabilities with integrated security information and event management (SIEM) and extended detection and response (XDR) capabilities. Risky behavior notifications should be coming to you in real-time.

2. Compliance Management

Organizations must ensure that if they are storing data in the cloud, they are taking the necessary steps to maintain data compliance, or substantial penalties can result. You must consider high-impact data privacy and data governance regulations such as GDPR, PCI and HIPAA. General Data Protection Regulation (GDPR) gives rights to people to manage personal data collected by an organization. HIPAA health record compliance varies state by state. Payment card industry (PCI) compliance helps ensure the security of each one of your business’s credit card transactions.

Cloud governance ensures that sensitive data such as credit card or health record information isn’t emailable. GDPR controls ensure that personal data doesn’t leave the country if you have global offices.

3. Financial Management

Many businesses are finding that cloud costs can become out of control if not properly governed. And worse, there is very little insight into how much is being spent. Instances fired up for one project may never be deleted. Increasing capacity to support a burst in compute demand may never be throttled back. Lack of detailed billing and the complexity of distributed applications can simply mask costs from stakeholders. Looking at monthly bills from multiple providers offers no easy way to tie costs back to specific projects, applications, or business units.

Ideally, cloud governance provides real-time information in a single viewing plane that can eliminate uncertainty and avoid over-spending. To work, it must include the ability to automatically tag and de-commission resources, embed policy management and provide role-based access control to resources. And most critically, any cloud cost management solution must be implemented in such a way as to not slow down application development and delivery.

4. Data Management

As the ability to collect, store and analyze data expands, so does the challenge to effectively manage that data. Your governance strategy and practices should include clear guidance to manage the full lifecycle of data in your organization.

Begin with a data-classification scheme. Not all data is equally valuable or needs comparable levels of security. Sensitive and confidential data warrant more security controls than public information. The best practice for data in the cloud is to encrypt all data in transit and at rest—consider this your default behavior. Other controls, such as who can access or update data types, will vary according to the data classification and functional requirements around how the data is used.

Governance policies help data owners, product managers and application developers understand how to protect data based on its classification. This includes guidance on how to manage the lifecycle of data, such as how long to store data and when to move data from high-performance (and high-cost) storage systems to lower-cost archival systems. Manual data lifecycle management does not scale well, and it is prone to errors. Take advantage of cloud providers’ data management tools to automatically migrate data to different storage systems or delete data that is no longer useful. This is native to Microsoft Azure cloud management through sophisticated AI.

5. Operations Management

A clear, well-defined operations management practice is one of the best ways to prevent shadow IT operations from creeping into your cloud environment. Good cost monitoring and performance monitoring can also help identify when cloud resources are deployed outside of normal operating procedures. It may be a good idea to set up temporary sandboxes for a development environment to ensure that data doesn’t stick around too long once it’s no longer being used.

6. Performance Management

Performance management in cloud computing focuses on monitoring applications and infrastructure resources to ensure you deliver expected levels of IT services and efficient usage of cloud infrastructure.

For example, a consumer investment company was in the early stages of a cloud-enabled application innovation effort. Agile processes and DevOps were maturing well, but application performance was spiky. As a more mature transformation, the company started a program to monitor and automate sizing based on usage demands. The company eliminated sizing issues by using Azure performance management tools, resulting in a surprising five percent increase in transactions.

Azure Monitor helps you maximize the availability and performance of your applications and services. It delivers a comprehensive solution for collecting, analyzing, and acting on telemetry from your cloud and on-premises environments. This information helps you understand how your applications are performing and proactively identify issues that affect them and the resources they depend on. Learn more about Azure Monitor.

7. Asset and Configuration Management

A big challenge for organizations is to maintain a dynamic array of cloud infrastructure resources within the bounds of what they expect to deploy. Azure has several offerings to facilitate asset & configuration management including:

  • Azure Security Center is a unified infrastructure security management system that strengthens the security posture of your data centers and provides advanced threat protection across your hybrid workloads in the cloud – whether they’re in Azure or not – as well as on premises.
  • Azure Active Directory is an identity and access management-as-a-service solution that combines single-on capabilities to any cloud and on-premises application with advanced protection.
  • Azure AD Privileged Identity Management is a service that enables you to manage, control, and monitor access to important resources in your organization. These resources include resources in Azure AD, Azure, and other Microsoft Online Services like Office 365 or Microsoft Intune.
  • Azure Policy helps you manage and prevent IT issues with policy definitions that enforce rules and effects for your resources.
  • Azure Information Protection helps secure email, documents, and sensitive data that you share outside your company.

Cloud governance provides understanding, security, and trust around an organization’s data. Cloud computing should be viewed not as an IT project, but rather as a business strategy. Let us help you with that strategy to propel your business forward.