Distributing applications and workloads across different cloud providers is an established trend among companies, but it risks causing a loss of control over costs. Managing cloud costs has become a vital aspect for modern businesses, as an increasing number of processes and infrastructures rely on cloud solutions. This shift has introduced a new layer of complexity in assessing and controlling the associated costs.
Cost Analysis
Addressing this complexity requires a diversified approach. It is essential to treat costs as a single entity and then analyze them from three different perspectives: the resource view, the microservices perspective, and the tenant view.
Resource View
An in-depth look at costs aims to analyze the cost-effectiveness of individual cloud components and then assess how much of those resources is actually being used. This detailed analysis allows for a full understanding of all aspects of the investment.
Microservices Perspective
This focuses on the specific usage of different services within the cloud environment. Zooming in on specific parts makes it possible to understand the impact of each portion on overall management.
Tenant View
This focuses on all costs incurred by the organization in relation to third-party products and services hosted within its own cloud infrastructure, used primarily to support the day-to-day operations of internal staff.
Forecasting Multi-Cloud Costs
Accurately forecasting costs in cloud computing requires a set of tools and strategies. As a general best practice, it is advisable to combine the analysis of past spending with future plans – taking into account any scheduled changes to the cloud infrastructure, the lifecycle of current applications, and cloud investment plans – in order to establish both current and future budgets.
This process requires close collaboration between Finance, IT, and Management teams.
The goal is to develop shared forecasting models and key performance indicators (KPIs) that will serve as the basis for setting budgets aligned with business objectives. There is no universal forecasting method that can suit all organizations. Cloud spending is inherently variable and can be difficult to predict, as it varies greatly depending on the processes, applications, and structure of the company itself.
The FinOps practice defines a set of success metrics for classifying and allocating cloud costs. These indicators vary considerably depending on one’s level of operational maturity.
What are the main factors to consider when building a cost forecast for your company?
- Cost Classification and Allocation: According to FinOps practice, complete allocation is achieved when at least 80% of cloud spending is assigned to a FinOps practice operating at specific maturity levels, such as the Crawl level (80%) or the Run level (90%).
- Optimized Forecasting Models: Forecasting models use cloud usage data adjusted for discounts, enabling more accurate cost prediction.
- Forecast Accuracy: Acceptable variances from actual spending are established, with specific accuracy levels for different maturity stages.
- Forecast Notifications and Updates: Relevant stakeholders should be notified when forecast deviation thresholds are exceeded, thereby reducing the risk of over-budget consumption.
- Forecast Frequency and Updates: The frequency of forecasts should include interim updates to allow for any budget adjustments.
- Business Unit Accountability: Business units should have the freedom to manage their own budgets based on forecast data, improving accountability and alignment with spending expectations.
Unfortunately, traditional tools are no longer sufficient for efficient analysis. In fact, each individual cloud provider has its own platform for viewing the costs associated with its services. In a multi-cloud environment, this requires a significant investment of time and never provides a true, comprehensive overview of costs.
Xautomata’s cloud cost management module bridges this gap. We have developed a tool that gives you complete visibility into cloud costs regardless of the provider. Thanks to XA technology, you can have a single platform that collects, classifies, filters, analyzes, and forecasts future cloud-related spending.
This multidimensional analysis and the advanced tools offered by Xautomata are crucial for making informed cloud budget decisions. They allow for a deep understanding of the company’s specific needs, optimizing resource allocation and aligning spending with business priorities. Improving governance and reducing cost overruns are fundamental steps toward success in the multi-cloud era.
