When one of the main goals of cloud migration is to reduce IT costs, it can be frustrating to see cloud spending rise out of control. In fact, managing spending is now the chief cloud concern of businesses, overtaking security (Flexera 2023 State of Cloud Report). Customers who have been convinced that adopting the cloud would put the brakes on their IT spending can be surprised to encounter unexpected bills and potential financial headaches.
But what are the reasons that cloud costs can rise after migration? And how can service providers help take control of costs to inspire peace of mind?
Why are cloud costs rising?
One of the main reasons why cloud costs can rise after migration is due to a lack of visibility into costs at each stage of the migration itself. Many service providers can struggle to accurately estimate cloud usage during the migration process, due to the complexity of licenses held in the technology estate. Without real-time visibility from the start into cloud usage, service providers can't effectively prove current vs. future costs which often results in unnecessary overspending.
Cloud costs can also rise after migration when responsibility for cost management is spread too thinly across a business. This can lead to confusion and lack of accountability amongst teams, making it difficult to identify and address cost inefficiencies. At the same time, traditional measures of centralized cost management, for instance the SPLA model, aren’t sufficient to deal with modern hybrid and multi-cloud environments.
Another factor driving up cloud costs is provider discounts going unused. Many cloud providers offer discounts for long-term commitments, such as reserved instances or volume discounts. However, in complex cloud and licensing environments, it can be easy to overlook or fail to utilize these discounts and causing businesses to spend more than they need to.
Use FinOps to regain control of costs
The good news is that there is a way to get a long-term grip on cloud costs. FinOps provides a framework for managing cloud costs that brings together finance, operations, and technology teams to optimize cloud spend. With FinOps, service providers can gain real-time visibility into cloud usage and costs, helping them to make informed decisions about capacity planning, resource allocation, and cost optimization.
FinOps also provides a centralized cost management strategy, ensuring that cost management responsibilities are clearly defined and assigned to specific team members. This approach helps service providers to identify cost inefficiencies and implement cost-saving measures.
Finally, FinOps can help service providers take advantage of unused provider discounts. By regularly reviewing cloud usage and spend, service providers can identify areas where they can utilize discounts, such as reserved instances or volume discounts. This approach ensures that service providers are not overspending on cloud resources and are taking advantage of all available cost savings opportunities.
The FinOps platform for service providers
With the Octopus FinOps platform, service providers can effectively manage their cloud costs and ensure that they and their customers are getting the most value from their cloud investments. They can look deeper and move further, achieving full data clarity for total cost control.