As businesses increase cloud usage, they inevitably face unpredictable cloud spend and complex cloud bills. Waiting for the bill to come every month and trying to sort through charges line by line doesn’t cut it in today’s rapidly changing world. To take control, businesses need a new approach to cloud financial management.
During VMworld 2020, we had the opportunity to hear from Peter Castaneda, Principal Product Manager at GE Digital, who shared how they implemented a cloud financial management program and successfully reduced cloud spend. Based on the discussion, we’ve gathered five best practices for cloud financial management that can help you proactively manage and reduce cloud costs.
1. Formalize a cloud optimization program (or Cloud Center of Excellence)
Whether you call it a cloud optimization program, cloud program office, or cloud management program, every organization with a presence in the cloud should have a Cloud Center of Excellence—a team responsible for developing the business’s cloud operations framework and building best practices throughout the business. The Cloud Center of Excellence (CCoE) acts as a means of communication and collaboration to unite distributed teams under a common cloud optimization strategy.
GE Digital’s cloud spend was in the multi-millions and continued to grow. With no formal program in place to proactively monitor spend or keep people accountable, the team knew there were areas they could improve and save big, but they needed everyone on board.
GE Digital started a cloud cost optimization program to take back control and ensure the organization wasn’t focusing only on speed or performance, but also on standardizing operations for cost optimization, efficiency, and sustainability. To do this, they focused on three primary components:
- Executive sponsorship: Leadership needs to recognize cloud cost as an organizational problem, and resources need to be dedicated to its optimization.
- Program management resources: Assemble a team of resources with technology, engineering, and finance expertise, with the acumen to spot trends and ask questions.
- Strategic-thinking and prioritization: Think strategically and prioritize actions by what will benefit the organization the most. By showing proof of value from the program, you'll start to establish a culture of trust.
2. Find a partner, not just a cloud management solution
The best way to empower a Cloud Center of Excellence team is by giving it support and complete visibility into the business' cloud infrastructure. Native tools can only go so far, especially when you’re using more than one cloud provider. Without a single platform to view multicloud costs, it’s difficult and time-consuming to perform showback/chargeback and view cost and usage data in context.
After partnering with CloudHealth, GE Digital was able to provide 10 times more users visibility into their cloud spend than before. Look for a cloud management solution that will partner with your CCoE, provide visibility across multicloud environments, and empower teams to make the best decisions for the business.
3. Identify optimization opportunities based on your usage profile
Once you have the visibility you need into your infrastructure, you can start to identify optimization opportunities. You can choose a generic cost optimization route by following common best practices and chasing your cloud provider’s standard recommendations. But if you have a cloud optimization program and partner that truly understands the way your organization uses the cloud and where it wants to go, you can more accurately determine your highest priority opportunities and where you’ll see the most value for the time you spend.
GE Digital has large persistent clusters, high security standards, low risk tolerance, and significant enterprise discounts. Their cloud usage profile isn't the same as every other organization, so their optimization opportunities aren't the same either.
Below is a visual of GE Digital’s priority optimization opportunities, determined by the value it brings to the business and the amount of effort it takes to execute. For many organizations, it’s common practice to turn off your development environment when you’re not in running hours. However, because GE Digital uses large clusters, if they shut down or removed nodes, clusters would start to rebalance. This is a resource-intensive action that could jeopardize performance. Additionally, if a cluster isn’t persistent, they could lose everything they’re running in that cluster by shutting it down. Because of this, GE Digital designates “running hours” as a non-priority optimization opportunity.
On the other hand, GE Digital sees a lot of value with unattached storage and identifies this as a high priority optimization opportunity. Often when someone shuts down a full cluster, they leave unattached cloud storage there. So it’s a quick win to delete large amounts of unattached storage that could increase costs otherwise.
4. Organize and tag by business priorities
If there’s no standard tagging practice implemented across the business, it can be difficult, or almost impossible to understand which assets belong to which teams, applications, or lines of business. Ensure you have formal tagging policies that align with business priorities.
GE Digital uses CloudHealth’s Perspectives feature, which enables you to view cost, usage, and performance by dynamic business groups, such as department, cost allocation code, budget owner, and project. Peter termed this capability as the “secret sauce” to their cloud optimization program, since it empowers business leaders to make better-informed decisions with visibility into how their departmental budgets are being used and optimization recommendations based on financial impact.
5. Never stop optimizing
To set your business up for success in the cloud, it’s important to create a sustainable and agile cloud optimization practice. It’s very easy to overspend in the cloud and very difficult to bring it back under control. The CCoE is responsible for establishing standards—tagging, budgets, resource requests, provisioning policies, etc.—which will lay the foundation for consistent optimization practices.
As a final point, cloud optimization is never finished. Even if you’ve progressed all the way through the cloud management maturity model, AWS, Azure, GCP and other cloud providers are constantly releasing new instances, services, and discount programs. It’s always worth evaluating new releases and market fluctuations to see if it makes sense to change your cloud strategy.
Want to learn more about how to save on cloud costs? Check out our whitepaper: Building a Successful Cloud Financial Management Practice