Focusing on just cost optimization? You’ve already wasted money.
Everyone’s looking to reduce costs, especially in today’s economic climate. And considering that around 70% of companies are overspending on public cloud, it’s smart to pay close attention to where the money is going.
But reducing costs in the short term is just part of the equation. For more-significant cost savings and lasting cost control, you need to examine how your whole organization consumes its IT resources. This is where cost governance comes in.
Cost optimization vs. cost governance
Unlike cost optimization’s crash-diet approach — where you achieve rapid short-term wins but struggle to maintain them — cost governance involves long-term lifestyle changes around cloud consumption. It’s a regimented process that still generates rapid results, but with an added focus on continual improvements.
Start building your cost governance framework
How will you tackle cloud costs for the long haul? We recommend the following cost governance processes as a great place to start.
- Establish a cross-functional cost governance board
Build a team from various parts of the business including finance, IT operations, security and compliance as well as application owners and appoint a C-level leader as the team sponsor. Assigning a senior leader to sponsor this team helps to clear potential roadblocks and allows for quicker decision making. This leader should hold the team accountable to the cloud budget goals within the organization.
- Meet frequently
Your cost governance board should meet weekly at first, to generate momentum. Virtual meetings are acceptable, of course, as long as you follow a clear agenda and maintain good attendance. The cadence can be changed to twice-a-month or monthly once the team is established.
- Define spend targets for the cloud
The cost governance board’s finance representative can set expectations around budgets and define key metrics for cost savings goals. They can also address issues like contract terms and how much the business can invest upfront to reduce operational expenditures. The board should look to set realistic budgets for the next financial reporting period. Also, try to avoid vendor lock-in, which can derail your savings efforts.
- Review wasteful spending and execute quick wins
The first starting point around cost savings should be looking at quick wins — such as eliminating unused, overallocated or misconfigured resources. Your engagement with experienced cloud operators can rapidly accelerate this phase. Longer-term cost optimization can be established by careful evaluation of your application architectures.
- Introduce processes and policies to prevent runaway costs
Once the initial cost savings measures have been implemented, the next step is to create enforcement policies around cloud cost, usage, security and governance. With third-party tools, you can easily stay on top of these policies and be alerted to any violations. One such tool is CloudHealth by VMware, which is included in Rackspace Platform Essentials.
Accelerate cost governance through expert guidance
What’s your cost governance plan? The experts at Rackspace can help you every step of the way, with our comprehensive cost governance services. From reviewing your IT inventory to remediation, detailed billing reports, cost tagging and budget threshold status reports, we can give you the insight you need to optimize your cloud spend.
Whether you run on AWS, Microsoft® Azure® or Google Cloud Platform™, we have the platform-certified experts on hand to help you make the most of the cloud. Get started today by learning more about our cost governance services.