Multi-Cloud Cost Management: Navigating Uncertain Economics

Multi-Cloud Cost Management: Navigating Uncertain Economics

Helen Yu 25/04/2023
Multi-Cloud Cost Management: Navigating Uncertain Economics

Are you concerned about managing costs while expanding your business using multi-cloud? You are not alone.

As more companies shift from traditional solutions to the cloud, managing usage across multiple platforms and different pricing models has become a top concern for many C-suite executives. But with the right balance of offense and defense, creating a center of excellence team, benchmarking, and rightsizing, multi-cloud cost management doesn’t have to be a daunting task.

In one way or another, every company becomes a tech company. In an uncertain economy, the right tech could determine a company’s survival. Which brings us to cloud technology.

Businesses are quickly realizing the benefits of using the cloud, and their decisions reflect this. According to Gartner’s ‘cloud shift’ research, by 2025, 51% of IT spending in application software, infrastructure software, business process services and system infrastructure markets will have shifted from traditional solutions to the cloud. Additionally, spending on cloud technologies in application software will increase from 57.7% in 2022 to 65.9% in 2025.

And while businesses work to expand to new regions, reach new customers, grow the bottom line, or respond to decentralized IT and other unique requirements, multi-cloud has become an unavoidable reality that’s top of mind for many C-suite executives.

When I ask executives what their biggest driver is for growth, the response is typically digital transformation, but when compounded with controlling cost and security, many are concerned with how to proceed. They understand the need to move to the cloud but realize that the process can be complex, and that this transformation can prove to be a challenging goal.

One reason is that using different cloud platforms comes with the potential for higher costs, and a significant overspend can quickly outweigh the benefits of multi-cloud. So how can you navigate managing usage across multiple cloud platforms and different pricing models? 

This is where I lean into my passion for yoga. Multi-cloud cost management comes down to a balanced approach.

Build Up Your Offense and Defense

In VMware’s April Multi-Cloud BriefingVMware CEO, Raghu Raghuram, explains this balance through an offense and defense analogy that he says many CEOs reference when outlining their plans for future growth. While companies build on new digital capabilities — increasing employee speed and productivity and building next-gen technologies — they are running their offensive strategy, but they cannot forget a strong defensive strategy as well. This means optimizing spending on technology, modernizing the infrastructure in data centers — making it more efficient, scalable, and cost-effective — and creating a zero-trust model at the enterprise level.

We’ve heard the line, “defense wins games,” echoed through locker rooms, dugouts, gyms, and fields across the country. While offense has the high-scoring excitement, it means nothing if there isn’t defense there to balance it out. And the same goes for cloud cost management.

Raghuram explains how product portfolios have the potential to achieve both. “That’s the beautiful thing about the VMware portfolio at this point in time. It’s really unique in helping our customers achieve offense and defense,” he says.

Creating a Center of Excellence Team

Babe Ruth once said: “The way a team plays as a whole determines its success.” Beyond offensive and defensive strategies, you may not realize multi-cloud cost management requires a team functioning at optimal efficiency and leaning on one another to make the best decisions. In April’s multi-cloud briefing, Purnima Padmanabhan, SVP and GM, Modern Apps and Management, VMware, explains the importance of building what she refers to as a “center of excellence team” for multi-cloud cost management — encompassing team members from finance, operations, security, DevOps and developers.  

For instance, when DevOps and FinOps work together, that collaboration brings an increase in visibility. The clearer your visibility, the easier it is to make decisions that are critical to company success. Using a centralized cost management tool helps gain visibility across environments so you can view costs holistically.

In this video, Padmanabhan discusses cloud cost and visibility with John McLoughlin, senior director of product management, VMware, who speaks to optimization from both a customer and vendor perspective. Interestingly, McLoughlin recalls the challenge he and his team faced when attempting to translate a raw billing file of cloud into something that mattered to business metrics and to ensure they really understood how to optimize that data.

Padmanabhan and McLoughlin explore the importance of understanding that optimization goes beyond cost and that to get the highest business impact you need to have a policy-based approach that considers cost as a solution rather than a tool.

“Never think of cost as an isolated discipline,” says Padmanabhan. “You’re managing your cost to a particular business objective, and often the business objective is not just cost reduction and isolation, but cost has to be combined with performance and security characteristics.”

Benchmarking and Rightsizing

By using cloud FinOps visibility, companies can benchmark where they are at with their resource mix and cloud spend to uncover inefficiencies. A cost-efficient organization would run as follows: developers would choose the architecture knowing the cost implication of their choices, and the owner of DevOps (responsible for setting up the developer pipeline) would know the implication of the number of jobs they run, the location of each job and cost impact. The company would have visibility into each capability of cloud and services and understand how to tie that to business metrics and optimize proficiency.

What I find is that companies think they know where they are at, but, in reality, they are missing important pieces of the puzzle. As Padmanabhan points out, VMware ties all these aspects together. “Rather than thinking of performance management, security, and cost as multiple disciplines, we are bringing them to a single platform. And not only are we bringing them to a single platform, but we are also making it available through the entire cycle of an application.” 

While downsizing is an easily understood practice in business, rightsizing is the strategy for optimal multi-cloud cost management. This means rightsizing the CPU, memory, and individual container, with this in mind: go for the least possible costs for the performance and security you want to achieve. For example, you might want “x” minutes of latency or geo availability across the Americas. This further underscores the need for a center of excellence team that can interpret multi-cloud from a variety of viewpoints. 

Know your cost constraints and performance opportunities with the right team in place, and you’ll maximize your investment with educated risk. Multi-cloud cost management is more than just writing code and putting tools in place, it is solving customer problems and growing your company with intentionality to win. 

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Helen Yu

Innovation Expert

Helen Yu is a Global Top 20 thought leader in 10 categories, including digital transformation, artificial intelligence, cloud computing, cybersecurity, internet of things and marketing. She is a Board Director, Fortune 500 Advisor, WSJ Best Selling & Award Winning Author, Keynote Speaker, Top 50 Women in Tech and IBM Top 10 Global Thought Leader in Digital Transformation. She is also the Founder & CEO of Tigon Advisory, a CXO-as-a-Service growth accelerator, which multiplies growth opportunities from startups to large enterprises. Helen collaborated with prestigious organizations including Intel, VMware, Salesforce, Cisco, Qualcomm, AT&T, IBM, Microsoft and Vodafone. She is also the author of Ascend Your Start-Up.

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