This article “Public Cloud: The new gold rush” was contributed by Mikkel Brun Naesager.
They’ve found gold out West!
So started the California Gold Rush in 1848, and so begins the Cloud-age Gold Rush. The FinOps Goldrush.
The Wild West has been replaced by Azure and AWS, and instead of battling Desperados and Stagecoach Robbers, we’re now battling two bald men in Seattle seeking to extract every last cent from the companies whose bottom line we protect. The Prize? Gold. Or rather Dollars. Lots, and lots of Dollars. With fortune comes fame, recognition, career opportunities, and the benefit of knowing you are the deciding factor in whether your company reaps the benefits of Cloud or drowns in unchecked bills.
Hi. My name is Mikkel Naesager. Like you, I have dedicated my career to fighting back against greedy Software and Hardware vendors, and against internal waste. I don’t like overpaying for things, and I definitely don’t like not being in control. In my work I now undertake the management of cloud costs – or FinOps – for some of the largest companies in Northern Europe, as well as some of the smallest.
I’ve volunteered to share my perspective on two things:
I’ll start with the first. Infrastructure as a Service (IaaS) and Platform as a Service (PaaS) are the most genius invention of the 21st century. At least if you’re the vendor. I’m not here to discuss the pros and cons of IaaS and PaaS, that is irrelevant. That battle has been won by Cloud, and IaaS and PaaS revenue has surpassed $100,000,000,000.00 in 2020. That’s Billion, with a B. Yet, most of Azure and AWS’ customers would say they invest very little in managing that spend, because it is still “small”. And therein lies the genius bit. By spreading the costs over thousands of line items, and charging per hour, and billing per month, Microsoft and Amazon have made the true size of Cloud spend almost invisible. The only people who truly see the scale of spending in the cloud are those who to take the monthly bill, multiply it by 50, and say “would we run this by ITAM/Procurement/Finance if we were to invest this much money in an IT platform, or sign this large of an outsourcing agreement”.
The sad reality is this – most companies do not manage their IaaS and PaaS spend. And those who do, often ask overworked DevOps teams to “also take care of ensuring it’s cost efficient”.
The result? A massive pool of low-hanging savings hiding in plain sight. Our numbers across €100M plus of analyzed spend suggests the difference between an unmanaged cloud spend and a well-managed cloud spend is around 50%. Not 10, not 15. 50.
Yet, no-one seems to be doing it. DevOps aren’t taking the time, and often don’t understand the nuances of licensing schemes and payment models. Finance stays clear as it’s too technical. Procurement are overworked and tied up in signing all the new vendor agreements needed to support the ambitious digitalization agenda.
In other words, we’re faced with the biggest opportunity of the decade, a chance to truly shine and make an impact in a very big way.
Interested? Here’s how to get started.
There are many things you can do to manage cloud costs, but odds are, you have not yet been formally dedicated to this full time, so you have to balance your time between Audits and everything else you’re doing and this new Cloud prospecting adventure. So, I’ll give you one thing you can do in very little time.
First the basics, cloud spend is a function of “unit price x unit quantity”, or “P x Q”. Each area has its savings models. Today I’ll share the most basic model for Q.
You’ll need a database and access to detailed usage reports from Azure and/or AWS. (you can find out how to get this here). Once you have it, sort the spend by cost (descending) and grouped by resource name. Take the top 50 most expensive resources and find out who “owns” them. Ask that person 3 questions:
Typically, these 50 resources will comprise the majority of your cloud costs (the Pareto Principle, aka the 80/20 rule, is alive and well in the Cloud), and in the process of finding out who uses them, you will be able to remove at least 10-15% of your overall cloud bill. That is a huge amount of savings for not too much effort.
It’s all about finding that first nugget of gold. You can then leverage that nugget to be allowed to spend more time doing FinOps, and get management buy-in to start doing optimizations like Reservations, BYOL Licensing, Consumption model optimization etc. I’ll share some of the biggest bang-for-the-buck savings next time.
Till then, have fun saving and taking part in the FinOps Goldrush.
Where to start with cloud cost management
Who is responsible for cloud savings?