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Many people’s experience with cloud costs is limited to the roughly $10 monthly bill they receive from Apple or Google. However, this can be the case for technology companies that need to manage and process large amounts of user data second largest effort after payroll. When Snap went public in 2017, Documents revealed The company had cloud services deals with Amazon Web Services and Google worth more than $3 billion.
And if you thought your phone bill was hard to understand, try understanding cloud charges. Companies like AWS, Azure, and Google offer thousands of options, with variations that can result in amazing overruns, regardless of startup accidentally collapse A $72,000 bill during a few hours of testing or Pinterest Spend an additional $20 million to accommodate an increase in user demand.
In fact, it’s estimated that at least 30% — or $180 billion of it nearly $600 billion on cloud spend worldwide – is completely unnecessary. The culprits can be as mundane as making multiple copies of identical files or failing to clean up obsolete or unused assets. Cloud costs are often a pure black box. In our Saas Cloud Spending 2020 Surveyabout a third of decision-makers who responded didn’t even know their organization’s cloud spend as a percentage of annual recurring revenue.
Understanding the meaningful shift in cloud usage across teams and contracts can seem like a slap in the face. However, by focusing on three principles—visibility, accountability, and automation—organizations are finding ways to combat cloud spending, often saving millions while avoiding layoffs.
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Visibility: You can’t fix what you can’t see
The first step is to understand where cloud spend is going. This isn’t quite as easy as it sounds. The very qualities that make the cloud so convenient also make it difficult to track and control how much teams and individuals are spending on cloud resources. Costs can also vary depending on the type of service used, the resources consumed, and the time of day or week.
According to the FinOps Foundationa group primarily focused on advancing cloud financial management best practices Businesses are still struggling to keep budgets in line. The good news is that a new generation of dedicated tools can provide transparency. Resource tagging can automatically track which teams are using cloud resources so costs can be measured and overcapacity can be accurately identified. Meanwhile with Detection of cloud cost anomaliesusers can get notifications when the counter starts ticking wildly. But transparency is only the first step in bringing costs under control.
Responsibility: Put someone in charge
Companies wouldn’t dare allocate a payroll budget without an administrator — or an entire HR department — to carefully optimize spending. But when it comes to cloud costs, often no one is in charge.
For this reason, the second step is to establish accountability and accountability for cloud costs. Enter the emerging disciplines of FinOps or Cloud Operations. Increasingly, organizations stand up These dedicated teams can include everything from setting cloud budgets and negotiating favorable contracts to implementing technical discipline to control costs. Importantly, this is not an annual exercise, but an ongoing commitment.
In order to function, these teams must be empowered to create enforced guardrails across the organization. One of the reasons cloud spending is spiraling out of control so quickly is that teams are isolated from the cost effects of their cloud usage.
Suppose a developer is testing a new program or feature and has created a machine in the cloud for this purpose. It might seem easier to just let the machine run than turning it off and restarting. But budgets suffer when developers hog that bandwidth during latency periods. Multiplied by hundreds or thousands of users across the enterprise, the wasteful spend quickly adds up.
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Automation: The missing ingredient – AI
But even with a dedicated team monitoring cloud usage and demand, automation is the only way to keep up with complex and rapidly evolving scenarios.
The sad truth is that much of today’s cloud cost management is still custom and manual, even at some of the most technologically advanced companies. In many cases, a monthly report or summary of cloud waste is among the only maintenance performed—and highly paid engineers are expected to manually remove abandoned projects and initiatives to free up disk space. That’s like asking someone to delete additional photos from their iPhone each month to free up additional storage space.
That’s why AI and automation are critical to spotting and eliminating cloud waste.
Amazingly, the latest FinOps Foundation survey shows that less than 40% of companies have automated Reporting on cloud usage or anomalies, notifications of cost overruns, container resizing, or other statistics. However, this is only the first step in automation. The next step is to intelligently and automatically remove the waste. I’ve seen Fortune 1000 companies reduce their cloud spend by up to 40-50% by automating best practices.
For example, tools like “smart auto-stop” allow users to stop their cloud instances when not in use, much like motion sensors can turn off a light switch at the end of the workday.
Businesses that rely on “spot instances” to access excess capacity can use automation to help them access the best fare, much like Expedia gives travelers access to better deals on hotels and rental cars.
More tools are now being developed to help companies create the most cost-effective service contracts or sell excess capacity on the secondary market
As cloud management evolves, organizations are discovering ways to save millions, if not hundreds of millions. With next-level AI now taking on the arduous task of identifying and eliminating cloud waste, the backbone of the tech economy — data storage and processing — is about to undergo a much-needed overhaul.
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