Taos’ Head of Product Marketing Bharat Badrinath spoke on our recent Cloud Cost Optimization for Multi-Cloud webinar event (watch it here) sharing the challenges of controlling cloud waste and best practices on how to address them. We’re continuing the conversation with Bharat here in the Taos blog together with Don Vanderzel, our Director of Product, to delve deeper into some of the topics from the webinar. We’ll go over more best practices, including how to get started and benchmarking, and talk about how the Taos team approaches cloud cost optimization advisory services.
A key data point discussed in the webinar was the industry statistic that 30% cloud spend is wasted. What other trends are you seeing that are driving the value of optimization initiatives?
Bharat – The number one initiative in the cloud for customers for this year is to optimize their cloud spend. We see that across all industries and hear that from our customers as well. In fact, 61% of the respondents to a survey by Flexera felt that was the number one focus for 2022.
Don – The recent industry reports are a wealth of information, including Flexera’s 2021 State of Tech Spend Report. The things that stand out for me are that level of waste and also the lack of governance and visibility to make executive decisions. Organizations classically use cloud native tools, which typically contain extensive and in-depth line item cost report elements. How would you be able to optimize your environment with that data? Organizations need better governance, better tooling, and high integrity data to make intelligent decisions. Another theme that stands out is that clients on average don’t know what to target as a starting point for cost comparison in the cloud. They simply don’t know.
Bharat – That came up during Q&A with the audience in the webinar. People were looking at it as cost savings compared to the current environment and what they should benchmark against. But in reality, once you’re moving from the on-prem paradigm to the cloud paradigm, there are different metrics you need to be benchmarking yourself with. Let’s say you’re spending $100K on infrastructure for an ERP system per year on-prem. You move it to the cloud and it becomes $50K. That is a big savings, but have you compared with others who are running similar systems in the cloud? If they’re only spending $25K for the same thing, then you’re wasting $25K. So it may be a savings compared to on-prem, but they need to benchmark against what is the correct governance and process in the cloud to maximize savings. A cloud partner can help with creating new governance rules and guardrails and automate them to define policies around getting resources, and how resources should be measured. Once that automation is in place and the new metrics have been defined, then you optimize.
Don – Yes, and it’s more than just the technology. It’s a process that will fuel cultural change. Once your data is process-centric and recurring, then it becomes easy to track on an ongoing basis and make adjustments.
What is the best way to get started with a cloud cost optimization process?
Bharat – The first step is moving to the cloud. You want to see the full benefits of the cloud first and then continue to optimize as the bills start coming in. Companies also have divisions with different levels of cloud maturity. Maybe some divisions are fully in the cloud and doing a really good job optimizing their spend. But those who are in the beginner or intermediate stage may be wasting a lot, because they are not necessarily applying best practices. So make sure your divisions are leveled up with best practices from the beginning so you don’t have to keep reinventing the wheel and learning it the hard way every time a division in a company goes to the cloud.
Don – What you see in the market for the first step is “go buy a tool, plug it in, and it’ll help your IT staff”. The market is saturated by software offerings claiming to do this type of activity. Some of them are good, and we use three in our own offering, but they never give you everything that you need. Instead of hitting a 30% optimization, you might be able to achieve 10% with automated tool identification alone: “Go fix these thousand things and you’ll save money.” But with that kind of data, you’re never going to get significant savings. So to drive your recurring cost down substantially with cloud cost optimization, you also need the right skill set. You can’t take an engineer who’s building cloud VMs or moving workloads and say hey, you need to analyze my estate and target areas of cost optimization. They’re only going to look at the problem from an architectural perspective, because it’s rare that a cloud engineer who is well versed in cloud architecture will also have the depth and breadth of consultative experience relevant to this kind of business analysis.
Bharat – Right, most organizations don’t have engineers who are experts in FinOps. Given this, they use cloud native tools, which show them where money is going, but not insights into savings. As Don said earlier, the expense can be very complex. So the tool is not the starting point. You need a professional services partner who is well versed in automation and delivering a targeted assessment in addition to the collected data to get you where you need to go. In other words, you need a Sherpa who can take you all the way to the top of the mountain with the right tools as support. There’s definitely a skill set gap for customers.
How does the Taos team approach these challenges for clients?
Don – In building Taos’ Cloud Cost Optimization Advisory Services, I focused specifically on the consultative services aspect of the offering because you can never get governance insights, disciplines, standards, and organizational centralized + distributed activities out of a tool alone. There are certainly a lot of great tools and product-led solutions out there, but not only does every tool have gaps, just running reports doesn’t tell you what you need to do. You have to implement the tools, analyze the data, and then translate it into actionable work streams. And that’s really key: you need more than a laundry list of problems with no guidelines or recommendations. A tool is not going to tell you anything about how to achieve significant cost savings through governance or process changes within the organization. Taos’ top tier consultative services professionals focus on these seven key elements to drive a 360° understanding as part of our investigation:
- Governance Policies
- Resource Utilization Identification
- Licensing in the Cloud
- Architectural Assessments
- Budget Allocations
- Environment Provisioning
- Organizational Assessment
These are all direct cost influencers, so if there’s no discipline in these key areas, your costs are going to be high. As part of our advisory services, we drill into detailed sub-categories under each one. Our consultants have the knowledge to take automated data and line of sight on the process disciplines, analyze those two major data streams, and then prioritize what you need to do based on your business objectives to lower your cloud costs. Using our prescriptive processes, we will certainly uncover cost influencers that are correctable and find areas that will drive your costs down. Bottom line is we know we can help you save money.
In the next Cloud Cost Optimization blog, we’ll look at more advanced recommendations on functionality vs. performance and best practices for development environments.