By: Dr Rabi Prasad Padhy, Head of Cloud Digital Practice Financial Services, Infosys
Digital transformation is all about enhancing customer experience by adopting cloud-based intelligence industry solutions and establishing cloud-native application development i.e., building applications directly on cloud to realize the actual benefits of Cloud. Cloud-native development is an application development and deployment approach which is the most effective way to gain application performance while reducing deployment risks. A Cloud-native development combines a modular architectural approach like microservices, Containers, API and DevOps practices to allow continuous application delivery.
Introduction:
According to the “Flexera State of the Cloud Report 2021”, Many organizations are spending 30% their cloud consumption pricing going towards waste and 70% going towards efficient spend. So, it’s essential to creating and enabling a cost Governance Model right from the beginning of the digital journey driving by cloud. Public cloud service providers (CSPs) continue to grow in popularity and top providers such as Google Cloud Platform, AWS and Azure offer competitive prices to attract enterprises and financial organizations. Cloud cost optimization is a continuous process and it reducing the overall cloud spend by identifying mismanaged resources, eliminating waste, reserving capacity for higher discounts and Right Sizing computing services to scale.
Foundation Pillars of Cost Optimization:
There are many challenges related to cloud cost optimization and few of them are poor cost visibility, Budget allocation and forecasting, Overprovisioned resources etc. To overcome these challenges, customers need to start analyzing and applying the cloud cost optimization best practices regularly. There are 5 key foundation Pillars of cost optimization. These pillars provide guidance to apply best practices in the design, delivery and maintenance of cloud environments. A cost-optimized workload fully utilizes all resources, achieves an outcome at the lowest possible price point and meets our functional requirements.
- Right-Sizing Services
- Right Pricing Model
- Right Storage Class
- Increase Elasticity using Auto-scaling
- Measuring & Monitoring
Cost Optimization Strategy and Approach:
Adopting the right cost optimization approach can help customers to control and optimize cost effectively. When we compare Cloud with Traditional Data Center Application Deployment then there is a paradigm shift of financial model from CapEX (Capital expenditures) to OpEx i.e. on-going monthly operating expense and cost structure according to the subscription plan. There are four phases of cost optimization approach that I have discussed in the below section.
Phase 1: Data Collection – This phase mainly involves capture monthly billing data for all the application environments and understanding customers cloud billing reports, services and usage trends.
Phase 2: Analysis and Interviewing – This phase involves figuring out how and why part of the service consumption keeping in mind all the best practices, offerings, saving plans, free tier utilization etc. and top cloud resource utilization by cost. This phase involves interviewing the right cloud teams to understand the app performance requirements.
Phase 3: Recommendations: This phase involves a list of recommendation and submission of a summary report to customer on what to apply first then how to apply it. It includes all the cost optimization solutions for all the applications with % of cost savings per applications and per environment.
Phase 4: Implementation: This phase involves the cloud service provider implementation steps for the given recommendations, risk & mitigation analysis details, down time requirements and high-level change management process.
Cloud Cost Governance and Management:
A good cloud cost governance model can help customers to provide clear visibility and actionable insights for cost management. It evaluate & monitor costs, limit IT spend, scale to meet need, enforce automation and create cost accountability. The key elements of the Governance model include resource tagging policy, allocating & tracking the budget per account or application environment etc. and creating polices to optimize cloud costs given in the below figure.
A Resource Tagging strategy is essential for track the resources for cloud cost optimization and helps for chargeback and Automation. A tagging policy identify which applications resources belong to which group and by whom it created. The cost governance enables cultural shift of cost optimization behavior across organizations. The Cloud Financial Management or FinOps (Cloud Financial Operations ) Process helps the organizations to involve financial team and other key stockholders in the cost optimization landscape in addition to application or business owners that will help to reduce the cost and increase the performance of the applications.
About Author: Rabi has rich experience in Hybrid IT, Hybrid Multi-Cloud and Business Transformation in the space of Advisory, Consulting, Presales and Service Delivery. At Infosys he is part of the FSDGTL Team and working as a Sr. Industry Principal. His Industry experience makes him a Cloud Business Leader who has carried experience from world’s most innovation companies like Philips, IBM, Oracle and Dell. He has played various Tech leadership roles and built Cloud Practices, Cloud Service Offerings and demonstrated thought leadership. He is a certified Cloud Solution Architect for all top three cloud service providers and Togaf 9.2 Enterprise Architect.
