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Is Cost Optimization on the Cloud essential?

Cloud computing ushered in a new era of low-cost computing and rapid development with the help of managed services that help with undifferentiated heavy lifting. As many enterprises have found out, the road to the promised land has many challenges and barriers. When does Cost Optimization in the Cloud become relevant?  Enterprises typically follow  Cloud Transformation Maturity Model and we can look to it to give a clue.

Stages of Cloud Adoption: 

Enterprises typically follow the 5 stages of cloud adoption. Smaller enterprises and startups typically follow an abridged version of the plan or skip entire steps and take an opinionated approach right from the beginning based on their teams’  prior experience.

Evaluation and Prototyping :

This is the stage when there is an initiative – usually at the CTO office level to start towards migration to the cloud. The focus of the initiative at this stage is on high-level goals and evaluation of multiple cloud vendors to find a good fit at a strategic level.  The initiatives are well-funded at this stage ( compared to the scale of operations). They shortlist a vendor/ vendors, build some small POCs to evaluate the platform, the tooling around it, how much customization is possible and the global reach of the provider. There is no real application development at this stage. Based on the evaluation, they choose a vendor, prepare a roadmap and identify pilot applications to move to the cloud.

Pilot Migration :

They identify one of the teams to migrate their application to the cloud. The focus at this point is to lift and shift the application from on-premise to the cloud. The team is not really skilled at the best practices of the cloud. Once the application starts working in the cloud, they look at non-functional aspects such as privacy, security. This typically takes up a lot of time and effort as the enterprise is initially very cautious (rightly so) with the threat assessments. The R&D team also realizes that there is more to moving to the cloud from a non-functional perspective and starts factoring in that time and effort. At this stage, they will also formulate some extra guidelines in terms of security and privacy policies to follow during development like security by design and privacy by design. Cost is typically not a focus at this point.

Taking a single application to Production. Adoption by multiple development teams:

The team which started development looks at taking the application live on the cloud. Other R&D teams star the process of either new development or moving their applications. The key thing to note is that while there is focus on getting security/privacy right, there isn’t much focus or appreciation on shifts needed to make cloud adoption successful. This is typically the time when the organizations feel the growing pains on the cloud. Since there is no clear-cut guidance, each team takes a slightly different approach. The very reason that motivated the company to choose the cloud provider – the flexibility it offers for a variety of scenarios works in bringing all-around chaos.  The IT team suddenly finds itself overwhelmed by different types of requests. The lack of coherent policies leads to an explosion in costs. This leads to intense scrutiny of the cloud costs. The teams look for better ways of Cost Optimisation.

Cloud Optimization:

The teams formulate a governance mechanism on how and when to use a set of resources, put in place a set of tools to automate actions prescribed in the governance mechanism. The teams also reorganize to best manage their applications in a self-service way.  They institutionalize the use of automation and DevOps. Building Cost-aware applications become a focus for the teams since they own the applications and their management.  There is a broad realization that while the Cloud can deliver massive cost savings, it takes a significant change in the way they architect the applications, how they need to think about their infrastructure about ( e.g programmable and disposable) and how the teams manage the applications. Cost Optimization in the cloud requires a mix of tactical measures in terms of curbing wasted expenditure, putting in place a governance mechanism and re-architecting the applications to be Cloud Native.

Being Cloud Native:

By this stage, the organization is well versed with Cloud Native practices and the starts application development using the  Cloud-Native best practices. The organization institutionalized Cost optimization and it becomes a part of regular DevOps process. There is a high level of automation and continuous data-driven monitoring, analysis, and remedial actions. This keeps the cloud costs under check and the organizations realize the true gains of moving to the cloud.

Cost Optimization:

Enterprises typically see a need for cost optimization once they are in the third stage of the maturity cycle. As the scale of cloud adoption increases, formulating a set of policies, practices and having a tool set for automating many of the activities is essential to manage the cloud adoption complexities.

As the  excellent AWS Cloud Transformation Maturity Model white paper from Amazon indicates,

AWS Cost Transformation Maturity Model
Courtesy: AWS Cloud Transformation Maturity Model

one of the key transformations is to “Implement a continuous cost optimization process – Either the designated resources on a CCoE or a group of centralized staff from IT Finance must be trained to support an ongoing process using AWS or third-party cost-management tools to assess costs and optimize savings“.

and the outcomes to measure the organizational maturity as optimized is

Optimized cost savings – Your organization has an ongoing process and a team focused on continually reviewing AWS usage across your organization, and identifying cost-reduction opportunities.

The cost optimization becomes an essential and continuous activity on the cloud.


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