The Famous Door

Hosting a night out for 30+ business partners at Bourbon Street’s The Famous Door is undoubtedly enjoyable but comes with its challenges. Upon arrival, we opened a tab, allowing unlimited drinks for the group – a decision that would later haunt us. “Just put it on the bill” quickly escalated into an unexpectedly hefty expense.

Reflecting on this experience, wisdom suggests alternative approaches for handling large group outings at clubs. One such method involves pre-ordering a stocked fridge with a limited selection of beverages for your party. While offering fewer choices, this approach alleviates the sticker shock when the final bill arrives and helps maintain a clear understanding of the night’s expenses. In the end, The Famous Door taught us valuable lessons in setting expectations, establishing boundaries, and creating a framework for responsible consumption.

In the realm of cloud services, the metaphorical tab remains open as well. By entrusting a cloud provider with unrestricted access to your expenses, the monthly invoice becomes solely dependent on actual consumption. To prevent costs from skyrocketing, a different approach must be taken. Proactive management and careful monitoring of cloud resources are essential to maintain a balanced and sustainable cost structure.

In the traditional IT landscape, procurement follows a familiar, structured process. IT systems managers diligently oversee their platforms and anticipate upcoming workloads—a practice known as “capacity management” in ITIL terms. This proactive approach, combined with the expected lifecycle of the equipment, informs decisions regarding new purchases. Detailed business cases are developed, approval processes are initiated, and, ultimately, a purchase order is issued. The entire procedure is predictable, leaving no room for surprises and ensuring that everything remains under control.

Cost structure in a cloud environment

The cost structure in a cloud environment significantly differs from traditional IT models. As previously mentioned, cloud users pay for the resources they consume, leading to fluctuating monthly invoices. This inherent uncertainty surrounding cloud bills can be a source of concern and inefficiency. Every month, you can only hope that the invoice aligns with your budget and expectations. Clearly, this approach is neither sustainable nor scalable.

Amidst this fluctuation lies an opportunity. By proactively managing your cloud consumption, you can directly influence costs—an unprecedented advantage compared to the fixed-cost structure of on-premises systems. There has never been a more immediate connection between cost drivers and expenditures. So, where do you start?

Cloud cost 101

For starters, we need to understand that your cloud bill is determined by two levers. On the one hand, there’s your usage of resources and on the other, the rate you pay for these resources. These levers work hand in hand but require a different approach. In general – and in our experience – you can say that optimising the usage part is a responsibility that belongs to the application/product teams. Therefore, streamlining the rate is often centralised as this provides better results. In this article we will only focus on the usage element of optimization.

optimize cloud operations

The initial step is to assess your current cloud setup. Numerous actions can contribute to usage optimization, such as rightsizing resources, modernizing virtual machines, reducing waste, and ensuring resources are powered off when not in use. Ultimately, the goal is to close the gap between your requirements and provisioned resources.

While this isn’t rocket science, it’s essential to make this continuous optimization cycle work within your organization. Empowering application or product teams to evaluate and implement optimizations based on technical feasibility and cost-saving potential is key.

A central cloud team can provide valuable support by offering insights, automated dashboards, and tools to streamline the process. A user-friendly portal enabling developers to schedule resource power on/off is one example of such an approach.

By providing these resources, you can prevent teams from having to reinvent the wheel and encourage them to operate resources effectively. The ultimate objective is to foster a culture of continuous improvement, making it as easy as possible for teams to contribute to this effort.

early detection of cost spikes

Similar to finding out who in your group has a liking for pricy things at the start of the evening in Famous Door bar, discovering cost increases within a cloud environment also needs careful attention. A small change in setup might cause thousands of extra dollars to be spent, and typically cloud service providers don’t give money back.

The problem is, using simple trending algorithms or doing daily manual checks just aren’t enough. The real challenge is to detect a pattern change in an already variable environment. In simple terms: finding a needle in a haystack—and this is where AI becomes really useful.

Though an AI detection tool isn’t the only solution, when combined with good triage, follow-up and remediation for triggered alerts can greatly improve efficiency. The strength of AI could be a powerful advantage that might outdo human attempts in handling cloud costs.

Finally, to prevent surprising and costly matters at the last of month, it is very important that we use a strong anomaly detection process driven by artificial intelligence as our initial defense line in managing cloud expenses. In short, make sure you have implemented a powerful system backed by AI to detect anomalies as your first protection measure for handling cloud expense surprises towards month-end.

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