The importance of looking at cloud costs in a business context
Cloud cost optimization is an essential part of your digital transformation and the only way to ensure cloud investments achieve their promised economic benefits.
Asim Razzaq wrote on September 22, 2022
To make the smartest decisions about cloud spending, businesses need near-real-time visibility into cost and usage information so teams can route charges back to the appropriate entity. However, such visibility is not easily achieved.
Many organizations misunderstand the interdependent nature and multiple operational layers of their cloud infrastructure. Knowing these is important for aligning your cloud provider’s bill with your operational goals, as well as planning and setting cost expectations, not to mention scaling and scheduling services.
To control cloud costs and optimize costs, departments need to break down cloud costs in three ways:
By product by cost center or business unit or by application, system, or service by engineering team
Organizations with multiple stakeholders may view cloud spending through different lenses, for example:
A financial view may break down costs by COGS, tenants, or end customers. A business owner may prefer to break down visibility for each product line. Engineers may need a service-based and containerized view of costs to understand where costs are being wasted.
For customers with containerized workloads spanning multiple cloud providers, achieving granular cost attribution for shared container resources is critical. When cloud infrastructure costs are not granular, determining costs becomes challenging for developers. However, if all teams know usage details and have a complete picture of the costs of those services, it will increase awareness and accountability for their cloud spending. and guides intelligent decision making.
1: Understanding costs by cost centers and business units
Finance chargebacks need to be connected to a business expense management product through a single pane of glass. This unified view of costs encourages users when the information matches the amount they were charged at the end of the month.
Senior leadership must also be connected to that single source of truth to inform their directives and decisions about cost optimization. Using an alternate source of truth (such as a spreadsheet) to judge the success or failure of an initiative is a big mistake. Having a single, common source of truth allows teams to self-evaluate, track and improve without dividing or conflicting their attention.
2: Calculating the right value: Viewing costs by product or engineering team
To calculate accurate profit margins or revenue figures for products or services designed for end users, businesses need cost information broken down by product or engineering team. First, determine which products are performing well and which need help.
Finance and engineering must recognize the functional trade-offs between speed, reliability, and cost, and be on the lookout for a bias toward speed and reliability because these data points are easier to measure and manage on an ongoing basis. Costs may not be accurately represented at the level at which these decisions are made.
3: Achieving an integrated view: Viewing costs by application, system or service
Engineering teams need to see costs at the most granular level of operations, where applications are being built and run. This enables cost-inflation anomalies to be quickly identified at the level where they are most likely to occur. When you see granular cost-optimization opportunities that are directly applicable and relevant to a specific function, you can quickly decide whether to act on them. By envisioning these opportunities, teams don’t waste time crunching data to identify which applications are the highest-value targets for efficiency improvement.
A single-pane view for multicloud usage costs, including containers and Kubernetes, lets enterprises manage bills and payments and monitor, analyze, and allocate charges to appropriate business entities such as teams, projects, applications, or products.
A final word
There are many ways to think about your costs, but the three listed above are important because they connect finance and engineering activities. They enable ideal granularity and relevance for decision making by subject matter experts at an organization’s edge, and they create a connection between the core details of how a business is run and its cloud cost management tools. A single source of truth is therefore crucial for every organization’s most important business decisions.
Instead of flying blind, enterprises need to focus on cost-focused design and economics. Cloud cost optimization is an essential part of digital transformation. Increasing your cloud cost management IQ is key to ensuring investments in these services live up to the economic benefits often promised as part of their value proposition.
About the author
Asim Razzaq is the CEO and Founder of Yotaskle. During his career, Razzak was Senior Director of Platform Engineering (Head of Infrastructure) at PayPal, where he was responsible for all core infrastructure processing payments and logins. He led the build-out of the PayPal Private Cloud and the PayPal Developer Platform, which generated multi-billion dollar payments volumes. Asim has held engineering leadership roles at early to mid-stage startups and large companies, including eBay and PayPal. His teams are focused on building cloud-scale platforms and applications. You can reach the author via email, Twitter (@asimrazzaq), or LinkedIn.