Why Cloud Cost KPIs Are Still Important In Today’s Automated World

CloudHealth Tech Staff
Published:
Jan. 14, 2020
5 minute read

A few years ago, cloud cost KPIs were vital sources of information that were used to control costs and optimize cloud environments manually. Now, even though you can control costs and optimize cloud environments automatically, KPIs still have a role to play in determining the next steps on a business´s cloud journey.

A few years ago, cloud cost KPIs were mostly used for the day-to-day management of cloud costs and the periodic optimization of cloud environments. Typically cloud cost KPIs would measure metrics such instance capacity versus utilization, or Reserved Instance utilization, or cost per project; and, whoever was monitoring the metrics would make adjustments manually whenever rising trends or opportunities to cut costs were identified. It wasn't a foolproof system, but there was nothing better at the time.

As advanced cloud service expense management (CSEM) tools developed, the task of manually monitoring cloud cost KPI metrics was automated. Businesses can now configure CSEM tools to alert them to cloud wastage, under-utilized Reserved Instances, cost trends, and much more. The tools can also be configured to carry out certain functions - such as terminating underutilized instances, deleting unused resources, and revoking user access in the event of suspicious or potentially costly user activity.

Effectively, it is now possible to control cloud costs and optimize cloud environments without ever looking at a dashboard filled with cloud cost KPIs. However, in the same way as the cloud computing landscape is constantly changing, so are the ways in which cloud cost KPIs are being used. Rather than being retrospective indicators of cloud cost, KPIs are more often being used to steer future cloud initiatives and help business progress forwards in their journeys towards cloud maturity.

How Cloud Cost KPIs are Being Used Today

Extracting the maximum benefit from cloud computing is a fine balancing act. Businesses have to work out which resources are best deployed on-premises, and which are suitable for deploying in the cloud - or, in the case of an existing application, whether it is worth refactoring it and migrating it to the cloud. There are a number of tools and migration assistants that can help businesses calculate the Total Cost of Cloud Ownership, but few that can compare the relative Returns on Investment (ROI).

On-premises costs are mostly fixed, and businesses are able to calculate the cost of deploying resources on-premises with a degree of accuracy. When deciding whether to deploy an existing application in the cloud, businesses are already aware of revenues generated by the app, so it is simple to find the break-even point, after which the application becomes profitable. In a dynamic cloud environment, it is much harder to forecast costs and find the point at which an application - or project - becomes profitable.

This is where cloud cost KPIs come in useful. Businesses can measure the resource cost, utilization, and performance in a number of different test scenarios. They can also factor in different revenue scenarios, plus increased deployment speed (in the case of a new app) and the agility to make changes to the app quickly. With these metrics, businesses can compare the benefits of deploying resources on-premises or in the cloud and make better informed deployment decisions.

Getting the Right Metrics for Every Business Unit

Not everybody analyzes data in the same way, and it is likely the case that some business units will want metrics delivered in one format, while other business units will have their own criteria for determining whether a project is worthwhile, and whether it should be deployed on-premises, in the cloud, or across both infrastructures. For this reason, it can be beneficial to have a solution such as CloudHealth Perspectives - a solution that enables each business unit to evaluate metrics from a different viewpoint.

With CloudHealth Perspectives, business units can create views that align with their needs based on groups of resources determined by their tags or other metadata. With detailed and relevant information, business units can develop strategies and policies - or innovative solutions - to propose to the Cloud Center of Excellence for consideration. This process keeps cloud management on track and ensures governance of the business´s cloud environment remains aligned to business objectives.

CloudHealth to identify ways in which the platforms capabilities can help your business make better informed decisions.