The Importance of Digital Strategy and Planning in Cloud Cost Management

Cloud enables businesses to change the nature of how technology delivers value in the organisation. Poignantly, this shift is more than just selecting and implementing modern technology. Rather, it encompasses the purposeful redesign of implementation, operations, methodologies and governance practices in support and management of a digital foundation. It is this evolution that delivers the agility and flexibility required to build future-friendly businesses in an evolving digital landscape.

Digital strategy and the cloud roadmap | As noted, the value of cloud extends beyond cost efficiency. However, the management of cloud costs is fundamental to value creation. That is why developing a digital strategy is crucial in outlining the cloud roadmap. A business must understand its current state and objective future state to pragmatically design the cloud journey within its digital evolution.

Going to the cloud without a well formed strategy and plan is risky. Moreover, this approach results in the desired outcomes not being achieved, alongside cost inefficiencies.

Assessing the cloud environment | Often, a data center migration is seen as a logical starting point in a cloud journey. However, Tangent Solutions’ recommends completing a comprehensive environment assessment as the initial step in the digital strategy.

This assessment contextualises the business’s on-premise infrastructure in relation to its digital landscape. The assessment purposefully gives the team a broader understanding of the business’s current application and infrastructure usage as well as performance, alongside the identification of quick wins.

Taking the full cloud environment into consideration | Assessing current needs in conjunction with future state plans delivers a dual strategic approach to cloud delivery that ultimately benefits business. It is part of the reason many companies choose to work with specialist cloud providers, such as Tangent. A cloud service provider (CSP) following good practices will architect dynamic and future-friendly cloud roadmaps for businesses.

In parallel, these assessments give businesses granular status information about their current environment, preparing the organisation to plan sufficiently. It surfaces the environment’s inefficiencies, factoring in application limitations and broader operational cost considerations.

By exposing the risks and the Total Cost of Ownership (TCO) of the business’s on-premise environment, a company can better plan. Organisations often negate certain factors when calculating on-premise costs, including backups, space, electricity, uptime, misconfiguration issues, latency, and labour. These disregarded factors, additional limitations, and broader operational costs often prove crucial in delivering an accurate view of cloud verse on-premise costs.

Common Scenarios that Influence Cloud Cost Management and the role of Cloud Cost Management Tools

Various scenarios can lead to unnecessary public cloud costs. Some of the most pressing include;

  • Sustained use of on-demand pricing only.
  • Selecting the incorrect cloud computation for the business’s cloud environment.
  • Insufficiently configured governance controls.
  • Lack of automation within the environment.
  • Ineffective use of environmental analytics and subsequent lack of optimisation.
  • Implementing on-premise provisioning models, such as peak demand provisioning as opposed to elasticity.

Often businesses exclusively utilise on-demand pricing in the cloud, which can unnecessarily increase costs. The great benefit of cloud is that companies can architect in such a way that the organisation benefits from a diversified costing model. Depending on the vendor, alternative costings include reserved instance pricing, which can give savings of up to 80%, while saving plans give up to 60% savings and spot instances can be utilised at an agreed rate depending on availability for up to 90% savings. Using the right combination of pricing in the right situations enables businesses to gain greater cost efficiencies within the cloud.

In on-premise scenarios operating resources are spun up and turned off without technically affecting the monthly usage charges. In the cloud environment, however, the tools and capabilities operate differently, and many businesses underestimate the cost implications of not monitoring, scaling, removing, or deleting unused services and resources. As the cloud works on a usage model, organisations are charged for what they utilise.

The ability to govern and provision correctly through automation is part of the value of cloud. Essentially, the cloud environment’s management, optimisation, and innovation are imperative to cost efficiency. The cloud should be scaled in relation to real-time business needs. This is in stark contrast to on-premise environments that are mostly provisioned for 100% (or more) of peak demand, a capacity that may only be required 20% of the year.

The same premise is valid for the general running of a business, depending on the industry. A company does not need the same capacity between 8 pm and 4 am on weekdays as it would between 7 am and 5 pm. Moreover, the cloud’s ability to auto scale, when governed and architected correctly, makes it a greener business option.

This automation serves to further reduce the TCO with improved predictability, reducing reliance on manual labour and ensuring faster recovery.

Underutilising and overprovisioning resources have negative effects on efficiency and long-term costs. Proper cloud environmental assessments, utilisation reports and governance protocols are fundamental to cost management.

Costs that initially seem inconsequential may scale unpredictably in the cloud due to utilisation, such as storage or network egress. There are several ways businesses can store data in the cloud, depending on the business’s needs; these tiers offer some significant cost efficiencies.

Understanding organisational data is, to this point, integral to cloud efficiency. Depending on the data requirements regarding reliability of access, frequency of access and need for availability, storage can be purchased for the data on a needs basis. Moreover, protocols can be implemented to automate storage ranking dependent on usage. These elements can be managed through cloud cost management tools. Additionally, these applications can alert businesses of cost inefficiencies and enforce governance as well as compliance.

Skill, Knowledge, and Experience are Key to Cloud Cost Management

Delivering the true value of cloud requires various knowledge sets. However, at its most foundational level, the key is experience in building a well-architected cloud ecosystem, pragmatic management, and iterative updates. The well-architected cloud framework (WAF) pillars include operational excellence, sustainability, performance efficiency, cost optimisation, security, and reliability.

A WAF is a Step in the Strategy | On top of a well developed architecture, the cloud needs to account for limitations of current IT infrastructure, risk exposure as well as the shadow IT inherent in many businesses.

It makes sense that a one size fits all approach is inappropriate, as every business will have a set of variables. Depending on the business’s assessment, its current needs, budget and growth objectives, a business plan may include a hybrid, multi-cloud, or monolithic cloud model in conjunction with a pragmatic digital transformation strategy. Again, this cloud model may change with the business’s plans and growth requirements.

In essence, cloud is a foundational technology that enables digital business. The decision to move offers immense value when architected correctly. It also exposes the areas of concern within a company when it comes to tech debt, outdated practices, and possible digital risks.

An operating model based on poorly developed and maintained IP, underdeveloped governance, legacy infrastructure as well as outdated practices and processes will hinder effective cloud management while placing unnecessary pressure on digital and human resources.

Pragmatic Management and Iterative Updates | Developing, maturing, and readying business operations, processes, people, assets, IP, governance, and digital resources for the cloud is thus imperative to the business’s successful value creation and cost management in relation to migration.

Businesses need to be aware of the long-term management costs involved in maintaining a healthy cloud infrastructure. As the business grows and matures, the environment needs to morph to accommodate this growth through adopting frequent iterative updates, governance alignment and tech stack augmentation. To this point, additional umbrella maintenance and implementation costs may include internal training, maturing governance, further workload migrations, tooling changes, scaling, and testing.

Common surprise costs associated with bill shock occur due to poor implementation, lack of knowledge, insufficient governance, or not utilising the right technology at the right time for business. Every organisation needs to be aware of the consequences of not ensuring the correct implementation when it comes to building a well-architected cloud environment. Migrating to the cloud is not a linear once-off process. It requires the associated skills and long-term commitment to ensure it is executed and managed correctly.

Furthermore, cloud environments are architected differently from on-premise environments and architecting is not a ‘like for like’ shift. Compounding the reasoning behind why businesses need to augment and update practices, processes, skills, and methodologies for the cloud.

As the cloud environment grows, so does the complexity of the technologies and integrations within the architecture. Misconfiguration of requirements along with improper governance and enforcement protocols can easily lead to escalating costs, even in the most mundane instances. Some common issues include exact match spec configuration, ignoring egress traffic costs as well as hosting data incorrectly between an application and data lake.

Selecting the Right Cloud Partner Before Cloud Costs Become an Issue

Taking on an experienced cloud service provider can alleviate and expose what businesses consider cost traps before even commencing a cloud migration. A well defined and strategised cloud plan outlines all business needs and risks, along with a managed approach to cloud migration and optimisation.

According to a 2020 Study by Statista (1), the skills gap poses the biggest barrier to technology adoption, with 60% of respondents citing local talent as an obstacle. A suitable CSP is there to guide businesses through the journey, from beginning to management.

As a Tangent CSP client, organisations benefit from expertise, training, and management skills internal that are in short supply and teams may lack.

In this vein, businesses need to decide on how to procure cloud. While this may, on the surface, appear to be a benign decision, it will affect future choices and architecture. Selecting to go direct or choosing a CSP offers benefits depending on the business’s maturity.

About Tangent Solutions | Tangent Solutions offers end to end IT solutions partner for medium-to-enterprise businesses. As a solutions partner, Tangent is committed to shaping digital organisations designed to operate in a digital economy. Contact us for a cloud environmental assessment. Alternatively, find out more about moving to the cloud or cloud cost management.

1) https://www.statista.com/statistics/1239000/it-industry-barriers-to-technology-adoption/