Cloud costs can be a major source of stress for businesses, but they don’t have to be. For businesses looking to maximize their efficiency and profitability, cloud computing can be a powerful tool. The key is to manage it properly.
When it comes to cloud costs, many companies find themselves struggling with overspending and inefficient processes that hamper their ability to keep up with the competition. Fortunately, there are ways that organizations can turn this liability into an asset by embracing lean manufacturing principles in the cloud. By utilizing cloud intelligence technology, developing a FinOps discipline, and driving ownership of cloud spending, companies can gain visibility into their spending while still maintaining speed and agility.
High-priority Cloud Costs May Go Unchecked
Cloud spend is often marked as a high priority, if not one of the top costs, for tech-forward companies. Too often, that high-priority label leads to cloud costs going unchecked. In fact, it’s such a bloated line item that 73% of organizations consider it to be a board-level issue.
Tackling cloud costs is tough because you need to examine the cloud service itself and the infrastructure that you build upon it. Regardless of who your cloud provider is or whether you’ve gone with a public, private, or hybrid model, your cloud spend can easily get out of hand if you don’t have an underlying culture of efficiency. If certain best practices are missing from your operating model, a lack of discipline could lead to cloud waste in almost every instance.
To truly wrangle cloud costs, it is important to start with an understanding of where your cloud spend is going. Drilling into the details is the first step in creating a model where your finance, product, and engineering teams can own their costs. Once you’re into those numbers, appointing a FinOps leader to build a framework and set the operational tone is the next step in promoting cloud intelligence.
Drive Ownership Of Costs To Improve Outcomes
Building a cost-conscious model can translate to improved business outcomes by creating visibility into the cloud. That culture also comes with enhanced confidence because it means fewer surprises. However, this is only achievable if your finance, product, and engineering teams work together. Achieving this type of ownership model means assembling the right instrumentation and integrating new lean manufacturing models.
For decades, two Japanese industrial engineers from the Toyota Motor Company worked to develop a “just-in-time” production model that changed the way automobiles were produced. Despite having many different components, Toyota’s model created a lean production line that helped eliminate waste and resulted in far more efficient operations.
The lean model has been successfully implemented by countless companies since the 1970s and unsuccessfully attempted by even more who failed to understand the model’s fundamental goals. This idea of lean manufacturing goes hand in hand with the evolving concept of cloud intelligence, which focuses on enabling teams to manufacture products with maximum productivity and minimal waste. And, just like the lean assembly lines Toyota pioneered, companies will fail to achieve cloud intelligence if they don’t take time to execute the four Ps (philosophy, process, people, and problem-solving) that make the system effective.
Lean management of cloud costs means encouraging your high-performing product and DevOps teams to consider those costs early in the software development lifecycle. Supporting this understanding means gaining visibility into the problem. One way to do this is with software tagging technology that shows costs at the most granular level and assigns ownership.
If you don’t dive into the spending details, you won’t understand where the cost is coming from. Businesses often look at average numbers and make budget cuts based on that data, but this can be dangerous. Give people the tools, inspection mechanisms, and level of detail needed to understand cost per feature, cost per release, etc. This, in turn, can naturally result in more informed decision-making.
Another critical component is employing the right support. Bring in individuals with strong financial discipline and a deep understanding of technology who can put guardrails in place to keep total cloud spend under control. Employing someone like this can empower teams to build quickly while remaining cost-efficient.
More Visibility Equals Improved Speed And Profitability
Many companies in the tech sector found themselves in a state of hypergrowth over the past few years. For these companies, cost didn’t matter. They focused on building features customers wanted as quickly as possible, regardless of the overhead. Now, with a shift in the economy, many of those companies are having to reel things in and are being pressured to cut back, making cloud costs an obvious target.
Once you start delving into cloud spend, it’s easy to devote too much time to investigating discrepancies, understanding where the spend is happening, and identifying ways to reduce it. In turn, these efforts take away from critical activities like product development. So, while it’s possible to address cloud overspend retroactively, it’s far more efficient to breed cost consciousness into discipline and culture as early as possible and get out ahead of the problem.
Many companies see the issue of cloud cost as something that rests entirely in the hands of engineers. In turn, this can lead to the belief that cloud cost is an engineering “problem” and, therefore, an engineering cost. This isn’t the case. Every business, product, and finance team should take ownership of those costs in partnership with engineering. Instead of solely focusing on features, customers, and revenue, there should be a balanced investment into fundamentals like cloud costs, security, and/or platform thinking that provides leverage over time.
While these elements are undoubtedly universal focus points, spending should be too. When the entire organization is aware of these costs, you allow your team to make smarter investment decisions with better long-term results. Cloud cost is everybody’s problem. The sooner you recognize the need to assign cost ownership to all parts of the organization, the better prepared your company can be to tackle and optimize what lies ahead.