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The Future of Cloud Cost Governance

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The Future of Cloud Cost Governance The Future of Cloud Cost Governance How the future of cloud growth and innovation calls for a new approach to Cloud Cost Governance © Cloud Cost Management LLC Future of Cloud Cost Governance | Page 1 Cloud Computing and the Future of Cloud Cost Governance Cloud calls for a new unified model of Cost Governance: Cloud brings new consumption models, and new economics. With the ability to efficiently scale and respond to changing Traditional cost management demands of computing workloads, and deploy resources any approaches used in the IT, time, customers pay only for what is used. Finance, Purchasing, and Operations functions will no Cloud services and costs are highly variable. Cloud services now must be planned, managed, and optimized in an longer be effective when environment of many new variable services options, applied to the growing architectures, and operations methods and pricing models. complexity of cloud computing. With these factors in play, cloud architecture complexity increases dramatically. There are now over a million different configuration options on AWS across regions, instance types, generations, sizes, operating systems, and tenancy options. Cloud operations governance is also vital. For any cloud migration or transformation, continuous optimization of services operations is key to ongoing cloud services performance and cost efficiency. © Cloud Cost Management LLC Future of Cloud Cost Governance | Page 2 Cloud Usage and Cost Governance is Growing More Complex Functionality Innovation: Architecture: Performance Efficiency • IOT & AI • Migration • Big Data • Refactoring • Digital • Containers Usability Scalability • DevOps • Serverless Cost Management: Reliability Elasticity Platforms: • Contracts & Discounts Flexibility • Hybrid • Consumption Model • Public • Purchasing Strategies • Private • Optimization • Consolidation Cloud systems and processes Budgeting & Forecasting: Lifecycle Management: are growing more complex, and • Cost Estimation & Spend Tracking • Oversights require a fundamentally new • Budget Allocations & Chargebacks • Controls & Risks approach to Cost Governance • Continuous Monitoring & Reporting • Policies & Processes © Cloud Cost Management LLC Future of Cloud Cost Governance | Page 3 Organizations Today are Struggling to Manage and Control Cloud Spending $250B 80% 30% Across industries, enterprise Up to 80% of organizations will 30% of cloud costs are typically cloud computing spend will exceed their cloud budgets misspent, with uncontrolled costs exceed $250B in 2020 through 2020 creating new financial risks. ? ! Cloud usage and Traditional cost Cloud spending is spending are management methods unstructured, increasing rapidly, are not designed for uncontrolled, and impacting technology decentralized “pay-as- inefficient, creating budgets you-go” cloud spending new financial risks © Cloud Cost Management LLC Future of Cloud Cost Governance | Page 4 Increasing Cloud Growth Requires New Governance of Cloud Costs & Risks Cloud Cost Challenges are a Growing Priority: Accelerating Cloud Growth: Enterprises today are wrestling with new challenges to accelerate growth using cloud computing, and simultaneously increase l Cloud financial planning disciplines to plan governance and controls to innovate with reduced costs and and achieve business objectives financial risks. l Cloud architectures designed to optimize both cost and performance Cloud Cost Governance must now answer new questions: l Optimized cloud services processes for efficiency and operational effectiveness • How can we innovate faster using cloud? • What are we spending now on cloud services? Managing Cloud Costs and Risks: • How can we reduce costs? • Visibility to monitor & forecast costs • Purchasing plans to reduce overspending • How can we balance cost efficiency with scalability and • Consumption strategies to optimize usage innovation? • Effective governance of cloud planning, architecture, purchasing and operations • What governance processes are needed to manage cloud usage? © Cloud Cost Management LLC Future of Cloud Cost Governance | Page 5 Cloud Cost Governance: Cloud Usage, Architecture, and Operations © Cloud Cost Management LLC Future of Cloud Cost Governance | Page 6 The Future of Cloud Cost Governance: Balancing Usage, Architecture, & Operations The New Cloud Cost Governance Reference Model: Cloud Cloud Cost Governance requires a balanced approach with Usage thoughtful and conscious decisions regarding cloud Usage, Architecture, and Operations. Cloud Usage: Buying Cost-Efficient Cloud Services Cloud Cloud How can we best use cloud services, and leverage their many Operations Architecture options, consumption and procurement models, pricing discounts, and billing & payment methods? Cloud Architecture: Designing Services with Cost in Mind How can we optimally design, configure, and deploy a cloud environment to support our compute workloads with the most resilient, scalable, and cost-efficient approaches? Cloud Cost Governance requires a new, unified model Cloud Operations: Cloud Continuous Optimization for Usage, Architecture, and How can we continuously evolve, grow and enhance our cloud Operations, each working with services tracking cloud usage and costs, balancing supply and demand to optimize services and cost efficiency – while meeting the other, in order to manage business objectives? spending and enable innovation © Cloud Cost Management LLC Future of Cloud Cost Governance | Page 7 The Future of Cloud Cost Governance: Driving Optimization and Efficiency $$$ + + = Cloud Usage Cloud Architecture Cloud Operations Cloud Governance Purchasing & Consumption Models Designing with Cost in Mind Continuous Optimization & Performance Managing Cloud Efficiency • Budgeting, forecasting, • Cloud services planning, • Cloud cost reporting and • Cloud cost governance and reporting cloud total cost estimation optimization integrated monitoring and controls spending by cost center • Cloud architecture to meet with services operations across all cloud functions • Mapping consumption to innovation objectives • Cloud operations • Process definitions and business cost drivers • Contract management balancing performance, ownership of cloud apps scale, and cost planning, services design, • Account management, discounts, spend model and cloud purchasing asset tagging, and cloud mapped to cloud usage • Continuous cloud cost optimization in end-to-end cost chargebacks • Cloud design, usage & • Cloud operations & lifecycle processes services model defined • Benchmarking cloud operations model fully costs against industry integrated across lifecycle • Automation of • Cross-functional peer levels and standards • Cost-efficient cloud performance alerts, cost coordination of cost remediation management processes • Identification of cloud migration & modernization cost savings methods strategy • Cloud financial and • End-to-end management operational risk oversight and spending management plan in place accountability © Cloud Cost Management LLC Future of Cloud Cost Governance | Page 8 Cloud Usage: Buying Cost-Efficient Cloud Services © Cloud Cost Management LLC Future of Cloud Cost Governance | Page 9 Cloud Usage: Buying Cost-Efficient Cloud Services Cloud Usage: Buying Cost-Efficient Cloud Services How can we best use cloud services, and leverage their many options, consumption and procurement models, pricing discounts, and billing & payment methods? Cloud Services Offering Types and Options: Optimizing cloud services • Compute, storage, networking services requires a robust understand • Database, containers, serverless, etc. of cloud services economics. • Emerging apps, services, and event-driven functions Cloud managers are now Consumption & Procurement Models: required to continuously learn • On-Demand Instances new service types, • Reserved Instances consumption & procurement • Spot Instances models, pricing discounts, and • Savings Plans billing & payment methods. • Etc. Pricing, Discount Levers, and Payment Structures: • Pre-Paid • Partial-Upfront • As-Consumed • Etc. © Cloud Cost Management LLC Future of Cloud Cost Governance | Page 10 Cloud Usage: The Key to Cloud Cost Governance Cloud Usage, Consumption, and Cloud Cost Governance: Understanding cloud pricing, usage, and consumption models and their architecture implications is a major factor in optimizing cloud costs. Enterprises need optimized Cloud usage and consumption is based on how cloud instances consumption models and are purchased, metered, and priced. Compute instance options instance configurations that come in a wide variety of types and sizes, in several general best fit their usage patterns, consumption modes. How these instances are deployed, using the “right size” and consumption model, are a crucial element of and support their application cost optimization and cost governance. workload requirements for performance, capacity, and “Right-sizing” involves selecting the right compute services at security. the right size for a given workload, using the most optimum consumption model and procurement structure. This requires a good understanding of the workloads, their characteristics and drivers, and how they can be purchased and consumed. Use right-sizing to match instance workload profiles to the capacity needs for compute, storage, network & database. © Cloud Cost Management LLC Future of Cloud Cost Governance | Page 11 Cloud Usage: Right-Sizing Services Type to Cloud Architecture Instance Types and Cloud Usage Consumption Models: Right-sizing is best accomplished
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