Quantifying Cost Management Efficiency

person in server room

It clearly follows that the more inefficient something is, the easier it is to find efficiencies. If your role is in finding and eradicating inefficiencies the better and quicker you are at it the harder it is to find further wins that continue to justify your role! Some people might choose to work slower, leaving known inefficiencies for a later review to spread them out over a longer time but this is not really in anyone’s interests.

Cloud cost management and optimisation is no different. At the start of a cloud adoption journey, there is a steep learning curve technically and organisationally with relatively high levels of uncertainty on requirements. Inevitably this introduces inefficiencies that create great opportunities for later efficiency and cost optimisation drives. The more mature an organisation is in their cloud adoption the gentler the learning curve becomes with each new initiative or operational development so the lower the initial waste and subsequent savings are. This means that at best the rate of cost savings that can be demonstrated decreases but at worst you are only ever explaining cloud bill increases without accompanying savings.

When you cannot stand behind a big savings number that represents your optimisation efforts what can you stand behind? Maybe you’ve implemented standards for cost-conscious design which avoid introducing inefficiency from the outset, now you stand behind processes that can demonstrate the degree of compliance to those standards. Maybe you’ve created a process that identifies resources that are no longer required and can be stopped entirely, scheduled to run for shorter periods or under different pricing models. Now you stand behind measures that indicate success when no resources meet these criteria or when the average time between optimum change and actual change is as short as possible. Maybe you’ve accessed savings possible from making commitments to cloud resources rather than always paying the on-demand premium rates. Now you stand behind measures of utilisation rates of those commitments and the speed at which the process to identify and implement commitment saving potential operates. Maybe you use an external broker specifically tasked with finding optimisation actions and providing savings you cannot obtain direct from the cloud vendors themselves. Now you stand behind their reports, service delivery measures and audit trails. With all these sorts of measures together you can provide assurances without necessarily actually implementing new optimisation actions.

To do this you need to be clear on what types of optimisation opportunities are available and how they can be measured. Our white paper on cloud cost management and optimisation may give you some useful food for thought in this regard.

What do you do to explain an ever-growing cloud bill? If you really have done as good an optimisation job as you can, cloud bills will grow in proportion to the demand you are placing on your cloud estate. For example, if an online store is processing more transactions it may be reasonable to expect that it should require more cloud capacity to do so. An increase in costs would, therefore, be accepted provided it was not disproportionate. At this time ideally, you would stand behind a cost per transaction measure and your optimisation efforts would be marked by the extent to which the cost per transaction shows a downward trend at varying levels of demand. This sort of measure could also then be used in evaluating new application releases not just on their delivery of functional capability.

To do this you need to understand measures that are important to the business and then how to identify elements of cloud spend that can be attributed to their delivery. Our Clarity & Transparency services not only provide such an attribution mechanism but also a means through which inefficiencies and anomalies can be identified to prompt mitigation actions. 

We would welcome the opportunity to discuss this further with you but in the meantime, you may also wish to review how our Managed FinOps services provide further savings to those direct from the cloud vendors as a next step in delivering savings to your organisation.

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