IT Brief New Zealand - Technology news for CIOs & IT decision-makers
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Making the most of cloud without the hefty price tag
Wed, 10th Aug 2016
FYI, this story is more than a year old

As cloud becomes mainstream, organisations are looking at how they can lower the total cost of cloud ownership, according to new information from CenturyLink.

Stuart Mills, regional director, ANZ, CenturyLink, says TCCO is becoming a priority for most organisations using cloud services, as they look to overcome bill shock.

“Cloud is no longer brand new. Most organisations have been using cloud services for long enough to know that the promised cost savings aren't always forthcoming,” explains Mills.

“Most organisations move workloads to the cloud to reduce costs and get a better handle on budgets, only to find that their monthly bill is much higher than they expected,” he says.

Mills says organisations looking to lower their TCCO must uncover the hidden costs of cloud, so they know exactly what to expect when the bill arrives.

He says using a cloud service that self-optimises, automatically scaling down compute load when not needed, can dramatically reduce the cost of cloud solution for the organisation.  

“When organisations don't know exactly what they're paying for, or how much, they can quickly rack up excessive charges,” Mills says.

“For example, a company may over-provision their cloud allowance; it's like leaving every light on in the house even when no one's home, this approach to cloud resources will lead to unnecessary charges,” he explains.

Mills says many companies that experience bill shock become reluctant to take advantage of the flexibility of cloud because they worry about getting another big bill.

Accordingly, they impose limits on how people can use the cloud.

“This can be reasonable in many cases but, if it comes at the expense of delivering faster or better services to customers, then it may be counterproductive,” says Mills.

In addition, organisations should put clear policies in place regarding the use of cloud resources.

“Your cloud provider should offer a dashboard that lets you constantly assess what you've spent on cloud resources, so you can stay on top of budgets,” Mills explains.

“This will also help identify whether resources are being used optimally or, for example, if people are using cloud resources but forgetting to turn them off at the end of the project or campaign,” he says.

If possible, Mills says businesses should set cost alarms that notify key decision-makers when costs are close to budget limits.

“This lets them make decisions sooner rather than later about how to manage or avoid overruns.

Businesses should also avoid giving users carte blanche to use cloud resources whenever they want to: instead they should put procedures in place to use non-cloud resources first.

Guidelines and caps can also help keep usage under control, Mills adds.

“It can also pay to revisit your pricing model. Many businesses are also reluctant to commit to cheaper, long-term contracts initially because they're unsure sure how much capacity they will need,” explains Mills.

“Conversely, some businesses chose to maximise their cloud capacity just in case they need it. Either way, it's possible to reduce costs immediately by changing the current arrangement,” he says. Mills says organisations should create an enterprise cloud that line-of-business users can deploy freely, supported by appropriate security policies and budgets.

This gives users the functionality and flexibility they need without having to rely on internal IT to deliver their IT needs for them, he says.

“Shadow IT occurs when users can't get what they need from authorised IT procedures. They may then use a company credit card to buy cloud-based services online to fulfil their needs,” he explains.

“This won't necessarily be recorded as an IT expense but it does contribute to the overall cost of IT and cloud services,” Mills notes.

“It can also introduce security vulnerabilities into the organisation, so it's important for decision-makers to be aware of shadow IT,” he adds.

“They can then take steps to protect the organisation or, in some cases, adopt a similar technology or approach in a carefully-managed way.

By taking a few key steps to gain more visibility into how they're using the cloud, Mills says choosing a cloud service that self-optimises and bills based on workload used, and coupling this with policies and processes to reduce costs, organisations can avoid bill shock and reduce their TCCO.