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Cloud Financial Management – The New Focus of the AWS Well-Architected Cost Optimization Pillar

In July, AWS updated the value optimization pillar of their Well-Architected Framework to specialize in cloud financial management. information technology colleges this alteration may be a rightful acknowledgment of the importance of functional ownership and cross-team collaboration so as to optimize public cloud costs.

AWS Well-Architected Framework and therefore the Cost Optimization Pillar

you employ AWS, you're probably conversant in the Well-Architected Framework. this is often a guide of best practices to assist you to understand the impact of the choices you create while designing and building systems on AWS. AWS Well-Architected allows users to find out best practices for building high-performing, resilient, secure, and efficient infrastructure for their workloads and applications.

This framework is predicated on five pillars — operational excellence, security, reliability, performance efficiency, and price optimization. Overall, AWS has done an excellent job with these particular resources, making them clear and accessible with links to further detail.

The Cost Optimization pillar generally covers principles we've been preaching for an extended time: expenditure and usage awareness; choosing cost-effective resources; managing demand and provide resources; and frequently reviewing your environments and architectural decisions for cost.

Now, they need added Cloud Financial Management to the present pillar. Cloud Financial Management may be a set of activities that permits Finance and Technology organizations to manage, optimize, and predict costs as they run workloads on AWS.

Why Do Businesses Need Cloud Financial Management?

Incorporating Cloud Financial Management into an organization’s cost optimization plans allows them to accelerate business value realization and optimize cost, usage, and scale to maximize financial success.

This is a crucial part of the value optimization pillar because it dedicates resources and time to create capability in specific industries and technology domains. almost like the opposite pillars, users got to build capability with different resources, programs, knowledge building, and processes to become a cost-efficient organization.

The first step AWS proposes for CFM is functional ownership. the rationale all of this is often important is since many organizations are composed of various units that have different priorities, there’s not one standard set of objectives for everybody to follow. By aligning your organization on a group of monetary objectives, and providing them with the means to form it happen, organizations will become more efficient. Once a corporation is running more efficiently, this may cause more innovation and therefore the ability to create faster. to not mention organizations are going to be more agile and have the means to regulate to any factors.

What you would like to stay in Mind

When most people consider cost optimization they consider cutting costs – but that’s not exactly what AWS is accessing by adding cloud financial management to their framework. It’s about assigning responsibility; partnering between finance and technology; and creating a cost-aware culture.

In a survey conducted earlier this year by 451 Research, they found that adopting Cloud Financial Management practices doesn’t only lower IT costs. In fact, enterprises that adopted Cloud Financial Management practices also benefited in many other aspects of the organization like, growing like revenue through increased business agility, increasing operational resilience to decrease risk, improved profitability, and therefore the potential for increased staff productivity.

Cloud Financial Management increases with cloud maturity, so it’s important to twiddling my thumbs with the method and remember that tiny changes can have huge impacts and benefits can increase as time goes on.

Amazon provides you with a couple of services to manage cloud costs like Cost Explorer, AWS Budgets, AWS Cost and Usage Report (CUR), Reserved Instances Recommendation and Reporting, and EC2 Rightsizing Recommendations. But, it’s important to notice that while many CFM tools are liberal to use, there are often some costs related to labor to create ongoing use of those tools and continuous organizational processes – it's going to be in your best interest to seem into a tool which will optimize costs on an ongoing basis. Ensure your people and/or tools are ready to scale applications to deal with new demands.

By using the framework to guage and implement your cloud financial management practices, you’ll not only achieve cost savings, but more importantly, you’ll see business value increase across operational resilience, staff productivity and business agility.

Public Cloud Adoption Statistics & Market Shares Through the PMC Lens

While we monitor the market as an entire , cloud adoption statistics are indicators of market share among the massive providers.information technology consulting The ParkMyCloud platform sees a really large volume of knowledge flow through it every day , month, and quarter, and thus affords a stimulating and helpful perspective on our users. When this successively allows you to look at their usage preferences of other third-party services it are often downright enlightening.

For this post, instead of examining the granular detail of specific user preferences surely products and services, i assumed it'd be interesting to roll the numbers up and see what this says about the planet of public cloud as an entire . especially , given we are now at the top of earnings season (see our recent post here ) we thought it might be interesting to match what we see in our customer base. While obviously we only have a small percentage of the general user base of public cloud, in recent years it's increasingly been my belief that it's fairly representative of the general market. actually i might go as far on say that what we've observed in our data often appears within the public announcements some months later. the large trends like increased usage of very short lived instances (especially for data analytics workloads) or increased use of custom instances have caught our eye only to be affirmed more broadly by the market.

Some of the items we glance at each quarter include:

Relative changes within the proportions of consumers exclusively using one among our supported cloud providers ;

Relative changes within the proportion of consumers using multiple clouds (typically two or three different providers); and

The total number of accounts each customer has with each provider.

Over the last year approximately it's been interesting to ascertain the shifts occurring within the first of those measures – customers making exclusive use of one cloud. Putting to at least one side a clear caveat which is that customers could produce other cloud accounts not brought into the PMC platform, we've observed that some 95% of users are exclusively employing a single cloud. There are some shifts within the relative proportions using either AWS and Azure, AWS and GCP and Azure and GCP but the numbers here are so small compared to those employing a provider exclusively, that it's hard to draw any strong conclusions.

Figure 1: Changes in Customers Making Exclusive Use of Cloud Provider (Source: PMC).

However, once more putting the general representativeness of the PMC user base to at least one side, we will doubtless see some meaningful changes over the last six quarters during which clouds are being exclusively employed by our customers. The chart shown in Figure 1 above, shows the relative changes over the last 18 months, with Q6 being March-May 2020. it's therefore likely that we picked up a number of the COVID-19 related shifts, but will see more within the coming quarters.

To show these changes I even have rebased the info (Q0) then checked out the relative changes over the amount . So for instance , you'll see that exclusive Azure users grew their footprint amongst our customer base by some 9.2% by Q5 and ended the amount up 6.2%. there's a transparent upward trendline for Azure during these last six quarters, versus AWS and GCP which are showing a flat to a small downward trajectory. As mentioned above the proportion using multiple clouds has stayed fairly static.

 will be interesting to ascertain how these cloud adoption statistic trends play out. Based upon what we are hearing anecdotally from our customers, there has been tons of growth within the marketplace for Virtual desktop infrastructure (VDI) within the move to remote working, which Azure are the most important beneficiary of the shift. With employers increasingly alerting staff to the possible realities of home working throughout the winter months, we expect it likely that the trend continues.

Figure 2: Cloud Revenue Growth: AWS, Azure and GCP (Source: Venturebeat)

What we do know from the earnings numbers is that the expansion in cloud revenue numbers is slowing down for all three providers with the steepest declines being reported by AWS (although actual earned revenue remains increasing for all three). information technology education

In such an environment, competition for market share is probably going to urge even more intense then monitoring these shifts is probably going to become even more important to trace .Is This the One Use Case Where a Multi-Cloud Architecture Actually Makes Sense?

There’s tons of mention multi-cloud architecture – and apparently, tons of disagreement about whether there's actually any logical use case to use multiple public clouds.

How many use multi-cloud already?

First question: are companies actually employing a multi-cloud architecture?

According to a recent survey by IDG: yes. quite half (55%) of respondents use multiple public clouds: 34% use two, 10% use three, and 11% use quite three. IDG didn't provide a term definition for multi-cloud. Given the limited list of major public clouds, the “more than three set” could be counting smaller providers. Or, respondents might be counting combinations like AWS EC2 and Google G-Suite or Microsoft 365.

There certainly are some using multiple major providers – together example, ParkMyCloud has a minimum of one customer using compute infrastructure in AWS, Azure, Google Cloud, and Alibaba Cloud concurrently. In our observation, this is often frequently manifested as separate applications architected on separate cloud providers by separate teams within the greater organization.

Why do organizations (say they) prefer multi-cloud?

With quite half IDG’s respondents reporting a multi-cloud architecture, now we wonder: why? Or a minimum of – since we humans are poor judges of our own behavior – why do they assert they use multiple clouds? On survey, public cloud users indicated they adopted a multi-cloud approach to urge best-of-breed platform and repair options, while other goals included cost savings, risk mitigation, and adaptability .

Are these good reasons to use multiple clouds? Maybe. the thought of blending service options from different clouds within one application is more a dream than reality. Even with Kubernetes. (Stay tuned for a rant post on this soon).

Cloud economist Corey Quinn discussed this on a recent livestream with ParkMyCloud customer Rob Weaver. He asked Rob why his team at Workfront hadn’t yet completed a full Kubernetes architecture.

Rob said, “we had everything during a datacenter, and that we decided, we’re getting to AWS. We’re going there as fast as we will because it’s getting to make us more flexible. Once we’re there, we’ll find out the way to make it save us money. We did basically lift and shift. …. Then, all of the sudden, we had a huge deal come up, and that we had to travel into another cloud. Had we taken the approach of writing our own Lambdas to park these things , now GCP comes along. we might need to have written a totally different language, a totally different architecture to try to to an equivalent thing. the thought of software-as-a-service and making things modular where I don’t really care what the implementation is features a lot useful .”Corey chimed in, “I tend to offer tons of talks, podcasts, blog posts, screaming at people within the street, etc. about the thought that multi-cloud as a best practice is nuts and you shouldn’t be doing it. Whenever I do this , I always make it some extent to caveat that, ‘unless you've got a business reason to try to to it.’ you only gave the right example of a business reason that creates sense – you've got a customer who requires it for a spread of reasons. once you have a strategic reason to travel multi-cloud, you go multi-cloud. It is sensible . But designing that from day one doesn’t always make tons of sense.”

So, Corey would say: Rob’s situation is that the one use case where a multi-cloud architecture actually is sensible . does one agree?

Where Are You on the Cloud Spend Optimization Maturity Curve?

Cloud spend optimization is usually top of mind for public cloud users. It’s usually up there with Security, Governance, and Compliance – and now in 2020, 73% of respondents to Flexera’s State of the Cloud report said that ‘Optimize existing use of cloud (cost savings)’ was their #1 initiative this year.

So – what the heck does that mean? There are some ways to spin it, and while “cost optimization” is broadly applicable, the strategies and tactics to urge there'll vary widely supported your organization and therefore the maturity of your cloud use.Having this discussion within enterprises are often challenging, and perspectives change counting on who you ask within a corporation – FinOps? CloudOps? ITOps? DevOps?. and out of doors of operations, what about the road of Business (LoB) or the appliance owners? Maybe they don’t care about optimization in terms of cost but in terms of performance, so actually optimization can mean something different to cloud owners and users supported your role and responsibility.

Ultimately though, there are variety of steps that are common regardless of who you're . so as to facilitate this discussion and understand where enterprises are in their cloud cost optimization journey, we created a framework called the Cloud Cost Optimization Maturity Curve to spot these common steps.

Cloud Spend Optimization Maturity CurveWhile cloud users might be doing any combination of those actions, this is often a representation of actions you'll fancy control cloud spend so as of complexity. for instance , Visibility in and of itself doesn't necessarily prevent money but can help identify areas ripe for optimization supported data. And taking scaling actions on IaaS may or might not prevent money, but may assist you improve application performance through better resource allocation, scaling either up (more $$) or down (less $$).

Let’s probe each during a little more detail:

Visibility – visibility of all costs across clouds, accounts, and applications. this is often cloud cost management 1.0, the power to ascertain cost data better through budgeting, chargeback, and showback.

Schedule suspend – close up idle resources like virtual machines, databases, scale groups, and container services when not getting used , like nights and weekends supported usage data. this is often commonest for non-production resources but can have an enormous bang in terms of savings – 65% savings may be a good target that a lot of ParkMyCloud customers achieve even during a free trial.

Delete unused resources – this includes identifying orphaned resources and volumes then deleting them. albeit you'll not be using them, your cloud provider remains charging you for them.

Sizing IaaS (non-production) – many enterprises overprovision their non-production resources and are using only 5-10% of the capacity of a given resource, meaning 90% is unused (really!) so by leveraging usage data you'll get recommendations to resize those under utilized resources to save lots of 50% or more.

RI / Savings Plan Management – AWS, Azure, and Google provide the power to pre-buy capacity and obtain discounts starting from 20-60% supported your commitments in both spend and terms. While the savings make it worthwhile, this is often not an easy process (though it’s improved with AWS’s savings plans) and requires a really good understanding of the services you'll need 12-36 months out.

Scaling IaaS (prod) – this needs collecting data and understanding both the infrastructure and application layers and taking sizing actions up or right down to improve both performance and price . Taking these actions on production resources requires strong communication between Operations and LoB.

Optimizing PaaS – virtual machines, databases, and storage are all physical in nature and may be turned off and resized, but these top the maturity curve since many PaaS services need to be optimized in other ways like scaling the service up/down supported usage or rearchitecting parts of your application.

For more ways to scale back costs, inspect the cloud waste checklist for 26 steps to require to eliminate wasted spend at a more granular level.