Four Tips for Optimum Cloud Services Expense Management

Cloud services provide users with several advantages – scalability, better matching of revenues and expenses, frequent and automated updates, immediate availability, and enhanced security – just to name a few.

However, those advantages also come with monthly bills that are more complex than many tax returns. The itemized list of charges that accompany a monthly cloud bill for a typical Global 2000 customer can include between 10 and 20 million rows of data delivered in a confusing Excel spreadsheet.

With so much detail, typically delivered in a format determined by the cloud provider, which may or may not integrate well with your accounting and other financial systems, it is all but impossible for an enterprise to understand each month's cloud charges, determine cost/benefits, easily (if at all) recognize any billing errors or to manage and/or optimize cloud costs in real time or over time.

However, there are ways for companies to have better, meaningful insight into their actual cloud costs and understand the myriad of details that these bills tend to contain.

Four tips to better manage cloud services bills

1. Establish a cost-aware culture: This is similar to how security is approached at most forward-thinking companies today. Security is everyone's job, not just that of the chief security officer and of anyone reporting directly to him or her. Similarly, everyone within the organization should be aware of cloud- and development-related costs and the beneficial impact (across the business) of reining them in.

2. Create a “Cloud Center of Excellence:” Such a center helps establish excellence as a central theme in your organization, with benefits extending out beyond better managing your cloud-related expenditures. Your company’s cloud center of excellence is a cross-functional team, with each person having different skills, experience, and responsibilities for working with your cloud capabilities, understanding what your cloud provider is delivering, the associated charges, etc. With these capabilities, your cloud center of excellence team would be responsible for establishing and enforcing the cost-aware culture in your organization.

3. Develop a robust tagging strategy: By thoroughly tagging cloud-related expenses, you can quickly and painlessly describe the data in such a way as to provide the necessary details about the item (i.e., If I am looking at 'John's Storage Expense' and have John, Storage, and Expense all tagged, then it is easy to see how each of those has changed over time. So, I could quickly see if John's spend, my Storage spend or my Expense spend had increased over time). But for such a strategy to work, you need to ensure that it is enforced. It only takes someone to neglect tagging items properly for a very short while, and you will be extremely challenged to find what you are looking for. It is much like misplacing a paper file, but rather than attempting to find a file in a drawer, cabinet, or even a file room, you could instead be searching through 10 to 20 million rows in hundreds of monthly files in excel, something akin to searching for 'a file in a warehouse' featured in the last scene of Raiders of the Lost Ark.

4. Establish an ongoing review process: You can’t establish a cloud billing management system, or any other system for that matter, and just assume that it will operate smoothly. Even if it operates as expected initially, there’s no guarantee that it will continue to do so in the future. There could be new cloud-related expenses that weren’t included in the original cloud bill management design, new cloud services that were released, or the latest generation instances that are more price/performant. With an ongoing review process, you can also ensure that you are running on the most cost-effective and performant instances; you can catch unexpected jumps in spend, and you can identify any idle resources for possible elimination – why pay for something that you're not using?

A final word

Cloud bill management can indeed be an extremely complex issue, but by adopting the four ideas above, you can have a much better handle on what exactly you are paying for each month, enabling you to see opportunities to better manage or eliminate some expenses and to recognize where you are indeed seeing where your cloud investments are providing the best returns.

David McNerney is the Product Manager for Virtana Optimize.

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