6 cloud cost management tips

Martin Heller

6 cloud cost management tips
Credit: geralt (CC0)

Operating your business in the cloud is fundamentally different than operating on premises. And when operations differ, so too do strategies for containing costs.

Financially speaking, a datacenter requires a large capital expenditure for the building, additional capital expenditures for the servers and software licenses, and smaller but significant operating expenditures for powering the servers and cooling systems, and for maintenance and management.

In the cloud, there are no capital expenditures. Instead, there are significant operating expenditures, billed for server virtual machine instances, storage, network traffic, software licenses, and other niggling details.

From a cost management perspective, there are significant benefits in shifting computing load to the cloud — but there are also significant risks.

When someone wants a new server rack in your data center, there are purchase orders to approve and justifications to ponder, and the process is fully managed. It requires permission. It also takes 6 months at many companies. Once the rack has been installed, nobody pays attention to how heavily it is or isn’t used, unless its load is so heavy that it doesn’t perform well. Yes, that’s inefficient cost-wise — hence the push for VMs and containers (such as Docker) in your data center to increase server utilization.

If someone wants a new cluster of virtual servers in the cloud, it might take a few minutes to spin them up. While you might have a policy that requires management approval for new cloud resources or applies quotas to each department’s cloud resources, pretty much everybody with access to your cloud accounts can create what they want when they want, and ask for forgiveness later — if management even finds out.

Whether this freedom is good or bad depends on your point of view. From the perspectives of business agility and devops, it’s good. From the perspective of financial management, it can be good if done right, but otherwise it’s a potential disaster.

In this article, I’ll discuss how to avoid “cloud sticker shock.” I’ll start with individual technical tactics for optimizing cloud expenditures, and end with the topic of cloud spending management.


Asset utilization

According to Michael Liebow, global managing director of Accenture Cloud, cloud services can lead to a “zombie apocalypse” — not human zombies, but zombie servers. Zombie servers have little or no utilization: They cost you money but don’t do much of anything.

Liebow and his colleagues also write elsewhere about orphans, which are services left over after the resources that used them have been deleted, and gluttons, which are oversized VMs. These three pathological conditions can easily inflate your cloud bill by 20 to 40 percent, if not managed properly.

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