Solving Cloud Sprawl: Hidden Costs of Cloud OperationsLeave a Comment
In the very forgettable 1993 movie “Point of No Return,” Harvey Keitel delivered three minutes of screen genius in his role as Victor the Cleaner. By the time Victor shows up, our heroine, Bridget Fonda, has made a mess of her assignment to (spoiler alert) assassinate her target. With her partner shot, they must call the boss – something Fonda clearly does not want to do.
Opening the door to Victor, Fonda says, “Listen, the job’s gone a little bit bad, but I think I can finish it.”
“Your part of the job is over,” Victor replies. “I’m the Cleaner.”
I have thought about that scene many times during my years as a consultant because, in many ways, a good consultant is like a cleaner. When we arrive, we anticipate cleaning unattended areas of the organization. The type of mess varies by company: broken processes, outmoded systems, non-compliance, personality conflicts, lack of focus and, most often – sprawling budgets.
Last week Smart Factory announced a partnership with Core Catalysts to launch a new service line targeting Solving Cloud Sprawl. Cloud Sprawl is an easy way for us to describe how quickly technology budgets can explode as companies virtualize their operations.
451 Research estimates that 90% of US companies are now using some level of Cloud services. Cisco has boldly predicted that by the end of 2021 94% of workloads will be processed in the Cloud. Those statistics are exciting, but they are hiding the larger issue companies are only now coming to realize – operating in the Cloud can be surprisingly expensive.
When companies first began to move operations to the cloud a few years ago the initiative was led by IT. At first, it was just an experiment – spin up a test server and monitor performance, maybe try out hosted data – all of which was priced at pennies to use. For example, EC2 – Amazon Web Services (AWS) most popular product – is priced at $0.13 an hour or, $9.50 per month. This cost was easy to approve since it amounted to a few hundred dollars a month for an entire IT department. Developers and Administrators that had previously relied on internal purchasing requests were now able to ‘add to cart’ subscription services that could instantly modernize their teams. In the span of a few short months, IT was on a self-led mission to move everything to the cloud, all powered by the explanation that it was only a few bucks a month.
And then the invoices came due.
Sure, EC2 is only $9.50 a month but when you add Auto-scaling infrastructure, load balancers, dedicated hosts, EBS volumes, snapshots, Elastic IPs – that single EC2 instance sprawls to quite a bit more than just a few dollars a month. Large companies are now regularly budgeting anywhere from $50,000 to more than a few million dollars annually for their cloud services.
Now, that is not to say that the return on value is not worth the investment. It absolutely is. Owned data centers are costly to build, costly to maintain, and can never rival the intelligent designs of a commercial cloud. A 2019 report by OpsRamp revealed that large companies are seeing a 15% drop in overall IT spending as a result of migrating to the Cloud. For Small and Medium companies that savings is averaging 36%.
Despite nearly unanimous agreement that operations should be in the cloud, companies are increasingly faced with managing budgets that seem to break traditional forecasting models. Invoices for metered services vary widely from month-to-month. Forecasting tools and budget controls are available in the four major cloud hosts – AWS, Azure, Google and, IBM – but they have proved to be so difficult to use that an entirely new industry of experts, FinOPs , emerged in 2019 specifically to address financial accountability in the variable spend model of cloud. But, let’s be honest, those tools provided by companies like AWS are more focused on reporting than reducing costs. It’s not like they want you to spend less money.
There is hope. New tools and platforms that reside outside of the cloud are designed to provide clarity and regain control. Our team is using software and best practice to help companies reduce their cloud costs by 25% in the first month with annual reductions on track to reduce costs by as much as 50%. Our Cloud Consultants are unifying FinOps and DevOps goals that enable companies to make qualified decisions, balancing the needs of the organization to manage cost, without restricting the needs of IT to deliver speed and quality.
Cloud services are expanding at an alarming speed. In 2019 AWS added 29 new services. It is not surprising how many companies are faced with solving cloud sprawl. When your organization is trying to balance growth and efficiencies yet still manage to reduce spend, the job can get pretty messy.
Might be a good time to call in a cleaner.
—Doug Richards, Client Service and Delivery