Cloud Adoption a Cost Savings? Not if you Overlook the Fundamentals

09.09.14
Dan Phillips
Co-founder & Chairman of the Board

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Dan Phillips, CloudHealth Technologies CEO and Co-Founder

The 2014 Future of Cloud Computing Survey revealed that business SaaS adoption increased five-fold to 74% and PaaS adoption increased nearly six-fold taking it to 41%. These are impressive growth rates that illustrate just how cloud computing is becoming increasingly strategic to business success. However, the same drivers of cloud adoption, cost, scalability and agility are also resulting in a dramatic increase in business management complexity. The wide array of cloud providers, services, and point tools from which to choose are driving a level of complexity that perpetuates the underlying issue of a company’s inability to track and record their cloud service costs.

cost savings

Unlike traditional data center and premise-based solutions, cloud computing has three primary challenges: disparate data integration, high velocity change in cloud infrastructure, and extremely complex pricing models. When you combine these forces, organizations can be crippled in their ability to execute a cloud-centric business model that can be measured, trended, analyzed, optimized, planned and forecasted. The ability to allocate actual usage and cost for cloud resources across business departments, customers, and products/services can seem nearly impossible.

Example: A large SaaS company focused on security services uses the AWS cloud for its infrastructure. They have more than a dozen departments and business line owners responsible for product development and delivery, customers, and service contracts. Business line owners and product management are deploying cloud services and infrastructure. Finance is asking IT for a breakdown of cost and usage by department, service and customer.

These are not easy questions to answer when cloud resources are shared, used on-demand, and can auto scale as needed to meet usage spikes. Managing a cloud environment becomes more complicated when you also consider the number of cloud objects, configuration items, and variables that are constantly changing. The data generated in a cloud ecosystem each day becomes inconsumable.

An average customer using Amazon with 10K active cloud configuration items (instances, volumes, storage, network I/O), across 18 variables will generate more than 180K cloud attributes being tracked at any given time, or 720K hourly and 17.28M daily, to collect, store, trend and aggregate.

Understanding cloud spend from a business perspective is crucial for effective cloud management. In order to gain the necessary business insights across people, process and technology, companies need a holistic view of their applications, infrastructure, and business groups, allowing them to:

 

  • View and optimize cloud usage by customer, service, product and department – to ensure resources are being fully utilized by each product line owner and the associated costs are in line with the budget
  • Employ detailed asset management across all core system management products
  • Gain visibility into usage, performance and financial metrics across the cloud ecosystem
  • Create business groups that align with reporting environments
  • Analyze cost trends (steady? seasonal? In line with revenue?) on a monthly basis
  • Ultimately charge back costs based on the insight provided

 

Cloud computing has created extraordinary opportunities for companies worldwide. If you are one of the 70 percent of respondents transitioning to the cloud within the next 12-24 months, be strategic by taking the time to implement a cloud management strategy with an eye toward cost allocation. This can make the difference between being a company that simply operates in the cloud versus one that truly thrives in the cloud.