Controlling cloud costs

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So, you’re thinking about migrating, or have just migrated, your infrastructure to the cloud. You want to move your business forward, leveraging all the technology can offer. But, you also need to control costs to ensure ROI. As with many IT decisions, the promise (lower costs, more flexibility, greater scalability) can often be at odds with reality (spiraling costs, vampire applications, vendor confusion).

Controlling cloud costs starts by focusing on three critical areas: cloud vendor costs, cloud migration costs and cloud optimization/maintenance costs.

Cloud vendor costs

Choosing the right cloud vendor is the foundational step in controlling cloud costs. With major players like Microsoft Azure, Amazon Web Services (AWS) and Google Cloud dominating the market, when evaluating cloud vendors it’s essential to align their offerings with your specific requirements and existing technology stack.

Consider factors such as compatibility, expertise and integration capabilities. For example, SQL Server on Azure is going to look nearly identical to SQL Server on AWS or any other platform. But, if your applications utilize Python, the way Azure treats it versus other providers can be quite different. You want to avoid a situation where you have to pay more due to how your applications are built.

Pay attention to licensing fees, contract terms and upfront costs versus long-term maintenance expenses. Third-party consultants can provide valuable insights and unbiased guidance in navigating vendor selection and negotiating contracts.

Cloud migration costs

Businesses often account for the technical costs, the server and storage components, of a cloud migration. What many fail to factor in are the “human” costs: planning, services and processes.

One of my favorite adages is, “Failing to plan is planning to fail.” I always recommend to clients that they engage in an in-depth discovery period before starting any cloud migration.

During the discovery phase, senior architects, developers and IT leaders can conduct thorough assessments of existing infrastructure, data dependencies and application requirements. This ensures accurate cost projections and establishes meaningful timelines.

Without this discovery and planning phase, you risk incurring costs in the tens, if not hundreds of thousands of dollars. For example, maybe your on-prem server was maxed out all the time, and nobody knew or cared because it was still getting the job done. When you spin up cloud resources, they can scale out automatically and add more power to take care of these processes. More resources means higher costs. If resources grow exponentially, that can have debilitating, even business-closing levels of cost.

Cloud optimization/maintenance costs

Once you’ve migrated to the cloud, ongoing optimization and maintenance are critical to controlling costs and maximizing value. Cloud environments offer scalability and flexibility, but without proper management, expenses can quickly escalate.

You might have a piece of code that calls the SQL server a billion times. And locally, nobody cared because it’s just doing that from server to server on your intranet. But when that code is the cloud, you have to know and recognize that those are now separate servers, and as a result there is a data IO cost on both ends. Unless you optimize it, you’re paying extra for an unnecessary process.

Same with storage. This can be a major cost vampire, depleting the budget with you not even knowing it. You don’t want to pay for a hard drive to be sitting there ready to run, especially on a high-performance solid state server. Moving those terabytes of data from a premium to a cold tier can save you thousands or tens of thousands of dollars.

By understanding the nuances of cloud pricing models and leveraging available tools and expertise, businesses can effectively manage costs while maximizing the benefits of cloud computing. Be sure to engage and educate your finance team on new cost structures. They should be educated on cloud offerings enough to communicate any potential billing red flags to the engineering team. This will further help the team optimize to control cloud costs before they spiral.

This post is adapted from a Sourcing for Innovation podcast. You can watch a preview of and listen to the whole conversation below.

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