Talent and tools: Keys to effective cloud cost optimization
December 16, 2022
Cloud computing offers substantial upsides to businesses like rapid development and near unlimited scale and storage. But moving to the cloud also introduces cost complexity that, if left unchecked, can affect companies’ bottom lines.
As companies move their workloads to the cloud, factors such as an exponential increase in the number of data sources and volume of data, pay-per-use billing and the ability to scale resources instantly can lead to high or unexpected costs. Cost management in the cloud requires thoughtful planning and continuous monitoring. With a cloud cost optimization strategy in place, business leaders can make informed decisions around budgeting and spending, avoid overprovisioning resources, remove hidden costs and go to market faster.
Hiring talent with experience optimizing costs and using consumption-based cloud cost models can help companies better forecast and manage spend for their businesses. Additionally, organizations can invest in tools that bring transparency and predictability to cloud usage and costs. With the right talent and tools in place, companies can gain the visibility and knowledge into their cloud spending to make informed business decisions.
Common cost optimization challenges
The goals of cloud cost optimization include ensuring high-performing applications and systems while reducing overall costs for organizations. But cost optimization can be a complicated endeavor for many companies moving to the cloud.
Some of the most common obstacles include:
- Lack of transparency and visibility into cloud spending: Many companies find it difficult to track their spending in the cloud due to cloud sprawl, an unmanageable number of cloud resources and services, or even confusing and complicated bills from providers. This lack of transparency into key cost drivers can lead to hidden or unnecessary costs and uninformed conversations when it comes to budgeting or other strategic decisions.
- Inaccurate forecasting that leads to over-provisioning: Organizations may fail to right size cloud resources such as compute instances and storage to the amount actually needed, leading to deploying and paying for cloud resources that sit unused.
- Poor architecting for the cloud: A lack of foresight can lead to designing applications for cloud platforms or re-architecting legacy applications for the cloud without a clear idea of the costs involved. Some important factors to consider when architecting for the cloud include design complexity, cost to implement and operational processes and skill sets to support the system.
- Complexity in cloud costs and billing: Executives in an IBM survey predict their organizations will operate more than 10 distinct cloud environments by 2023. With each cloud service offering several options for deploying workloads, pricing models and bills quickly become confusing, complex and difficult to manage. As a result, an understanding of cloud cost models becomes increasingly critical.
- Moving applications to the cloud with little or no changes: Organizations that choose the “lift and shift” approach migrate workloads from on premise to the cloud with as few changes as possible. Since these applications are not optimized for the cloud, spending goes into fixing performance issues and migration failures.
Hiring talent that has experience tackling these challenges in the cloud, plus implementing the right technology in place to support them can help companies address cost optimization challenges proactively.
The importance of cloud-literate talent
Cloud spending is on the rise, increasing to $62.3 billion worldwide in the second quarter of 2022, an uptick of 33% from the same period last year. Yet the struggle to manage costs in the new cloud economy is a widespread and ongoing issue across industries. Gartner predicted 60% of infrastructure and operations leaders will experience public cloud cost overruns through 2024.
To overcome this challenge, companies can no longer look to traditional playbooks that rely on budgeting for data center capital expense costs on a quarterly basis. In the cloud, there must be a shift to a consumption-based mindset where costs are measured in real time on a per minute or per second basis. In this way, cloud costs need to be understood as operational expenses.
This shift to managing costs based on consumption means companies can benefit significantly from talent that understands the complexity and usage-driven nature of cloud economics. Experienced employees with an understanding of how to navigate cloud spend can help businesses translate business needs to optimal cloud usage, make decisions efficiently around cloud resources and spend allocations, and transparently track enterprise-wide cloud spend. Experienced cloud architects can design cost-efficient systems from the outset, such as choosing to build cloud-native applications that take advantage of the scalability and speed of the cloud, that ultimately supports cost avoidance.
When it comes to managing cloud costs, talent becomes a competitive advantage, and companies who invest in building teams with the right experience can drive effective optimization strategies long term.
Developing and hiring cloud talent
In the cloud, cost optimization should be an enterprise-wide responsibility where all stakeholders have an understanding of IT costs. Well-trained architects, engineers, developers and business stakeholders can all have a direct and positive impact on cloud costs for organizations.
In order to accomplish this, organizations should invest in upskilling in-house talent, for example with trainings in cloud cost dynamics, across technical, nontechnical and leadership teams. Companies also need to hire people with the right cloud knowledge and expertise. You may want to look for talent that has worked in different industries and can bring lessons learned in the cloud to your organization. We’ve found the following to be pivotal roles that organizations can invest in to grow their abilities to optimize cloud costs.
- Leaders that understand which cloud cost model is right for their organization. There are several cloud cost models, such as pay-as-you-go and subscription-based pricing, and leaders who can choose the right arrangement for their particular industries or business objectives will optimize costs for their organizations for the long term. For example, leaders can define a cloud storage strategy from the beginning based on a particular pricing model.
- Engineers that are well-versed in cloud computing. Today, organizations have multiple cloud providers to choose from and there are many nuances to consider in each cloud provider’s set of tools. Managing costs across these providers require specialized knowledge and training. Engineers with the right cloud certifications and experience across different hosting environments will be knowledgeable about which cloud services a business should choose and how to use them effectively to maximize cloud benefits. At Capital One, we’ve set the standard for our technical organization to possess certain levels of cloud certification through a robust training program.
- Architects who understand the cloud and set the architectural strategy for cost-efficient systems. By architecting cloud solutions with costs at the forefront, these professionals hold great responsibility for designing systems that are cost efficient while also taking advantage of the agility and resilience of cloud computing. Experienced architects can make design decisions such as where to migrate and store data and which applications can benefit from serverless computing that ultimately impact the costs of cloud infrastructure.
- Business partners who are involved in the design decision process to choose the right technology, inclusive of cost. Product teams and UX designers who understand what it costs to build out a feature in the cloud can help avoid situations where a product goes into production and the business realizes, for example, that it will take six months to get the money back. A product manager who understands cloud spend can work with engineers in making well-informed decisions on building functionality that affects costs for a business downstream.
Tools for cloud cost optimization and transparency
The flexibility afforded by cloud computing means enterprises need a timely view of their usage to fine tune cloud practices and align computing resources with actual consumption.
In order to optimize cloud costs in these ways, stakeholders need to be equipped with the right technologies. Employees should have access to tools that provide the analytics and automation to track, manage and optimize cloud costs at both granular and enterprise-wide levels. For example, automated dashboards can help track cloud usage as it’s happening and machine learning-powered analytics can predict and recommend resourcing.
At Capital One, our move to the public cloud required re-architecting our entire data environment, and we adopted the cloud data platform Snowflake in the process. We realized early on that we needed a cost optimization strategy in place to manage the cost increases associated with a sudden influx of data. We researched extensively and identified our inefficiencies, which we found included poorly written queries that were costly and warehouses that were sized incorrectly for the workload.
These findings led to our building a suite of tools to analyze and manage data more effectively, which would help optimize overall cloud costs. Predecessors to our data management solution, Slingshot, these tools helped us keep our cloud costs from data usage under control, limiting unexpected costs and reducing our projected Snowflake spend by 27%.
We’ve put together a list of the functionality each organization needs in their set of tools for cloud cost optimization:
- Visibility into cloud spending at both granular and macro levels. Enterprises need tools to give transparency into their usage and costs in order to identify issues such as excessive spending and inefficient allocation of resources. This visibility should be at a granular level, such as by user or team, while also giving an understanding of the broader enterprise usage and spending trends. As a result, businesses can understand the drivers of consumption and costs and determine where tradeoffs make sense. Tools that supply this transparency will also equip leadership with historical information to make data-driven decisions when it comes to important actions such as renewing contracts.
- Usage monitoring in real time with alerts. A dashboard that tracks cloud usage in real time allows enterprises to monitor, identify patterns and respond as needed and in a timely manner to right size their cloud spend. Alerts are also crucial so that you can set a threshold and step away from actively checking the dashboard. You will receive a notification so that if you are getting close to a certain usage, such as if you’ve left a query running, you can stop your business from incurring unwanted and unexpected costs. Real time monitoring with alerts can also give you information on your usage as you approach a contract date or if you’re about to surpass a team quota.
- Accurate forecasting and recommendations with machine learning. Machine learning tools that are refined over time can help businesses analyze historical information accurately for the benefit of future spending and budgeting. For example, a machine learning-powered recommendation tool will be able to propose actions to keep your consumption where it needs to be based on the last four months of usage.
- Automation such as autoscaling. An automation feature such as autoscaling gives organizations the ability to dynamically scale resources in the cloud according to need without human intervention, ensuring that organizations only pay for what they use. Automation also provides organizations with greater certainty in service availability and performance, such as in the event of an unexpected spike in traffic.
Optimizing cloud costs with people and technology
Cloud computing is the future for how businesses will operate and cloud costs should be a manageable process, not a source of headaches. As businesses move to and scale in the cloud, it’s imperative that they invest in the right people and adopt the right tools to promote greater transparency across the organization. Paired with a thoughtful cost optimization strategy and implementation of best practices, companies can achieve a well-managed cloud environment that helps drive business growth.