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6 best practices to manage private cloud costs
Private cloud doesn't have to break the bank. Use these best practices to implement an intentional cost management strategy that meets private cloud's unique challenges.
A properly configured and managed private cloud has the potential to be more cost-effective than public clouds. But the keyword here is potential. A private cloud doesn't automatically guarantee lower costs. Businesses must implement a deliberate cost management strategy tailored to the right environment.
With private cloud, businesses can often expect the following:
- Lower operating costs. While private clouds can require large upfront Capex, operating costs are often lower. With your own infrastructure, you don't have to pay monthly bills to an infrastructure provider.
- Flexibility and control. Private clouds give businesses full control over their hardware and software configuration. They can select the most effective setups to optimize costs, whereas, in public clouds, they have to settle for whatever is offered.
- Better performance. Since private clouds don't share hardware, they avoid the noisy neighbor issue and deliver better performance relative to the CPU and memory capacity.
Whether a private cloud is more cost-effective than a public cloud depends on how a business configures, uses and manages it. Follow these best practices to address the unique cost challenges of private cloud.
Increase visibility
The first step in managing private cloud costs and ensuring ROI is gaining more visibility. Calculating private cloud costs can be challenging because both the upfront cost of your cloud infrastructure and your ongoing Opex must be considered.
To calculate costs, businesses should monitor the following expenditures:
- Hardware. Total cost of the hardware, which can be amortized into monthly cost units.
- Maintenance. Replacement hardware, such as new disk drives swapped into existing servers.
- Staffing. Staff for private cloud setup and maintenance.
- Hosting. Space inside the data center that hosts the private cloud.
- Energy. Electricity bill for running the private cloud, unless this is built into hosting costs.
- Networking. Fees for any interconnected services that move data from the private cloud to other environments.
By monitoring this data continuously, businesses can better understand their private cloud spending. They can also translate these costs into monthly expenses and compare them to public cloud estimates for similar workloads.
Don't decommission hardware prematurely
The largest factor in determining total private cloud ROI is the length of time cloud servers remain in use. If you spend $1 million purchasing servers but only use them for two years before spending another $1 million to replace them, your ROI is not likely to be high. Effectively, your servers now cost you $500,000 per year.
To improve cost-effectiveness, private cloud admins should ensure they don't decommission servers before their usable lifetime is over. Strive to extend server lifetime by properly cooling servers to prevent overheating. Also, replace components, like hard disks, that are liable to fail before the server that hosts them.
However, don't be so eager to keep hardware in service that risks workload crashes due to unexpected hardware failure.
Maximize server density
The more workloads you can fit on your servers without overwhelming them, the fewer total servers you need. By extension, this means paying less for your private cloud. This is especially true if you're building a new private cloud from scratch or scaling up an existing one. The ability to fit more workloads on a server reduces the amount of hardware you need to purchase.
Consider using technology like containers and Kubernetes, which can spread workloads across servers, leading to improved server efficiency.
Optimize software licensing costs
Rather than purchasing new licenses for software platforms that you deploy in your private cloud environment, consider transferring licenses you already own within other environments. For example, if you own an OS license for VMs you currently run in the public cloud, check whether you can transfer the license to servers you intend to set up in your private cloud.
The rules on license transfer vary significantly from one vendor to another, so check the details of your licensing agreements to see whether transferring is possible. If it is, transferring licenses can be more cost-effective than purchasing new ones.
Properly allocate costs
It's important to allocate costs to their respective departments or business units. This is where chargebacks come in.
Businesses use chargebacks to determine which percentage of their cloud infrastructure belongs to specific business units. A business can then log those unit costs accordingly. This enables a more granular view of cloud spending. Chargebacks can also determine whether a business unit is over- or underconsuming its allocated private cloud capacity.
To implement chargebacks, monitor how much server capacity in the private cloud is in use and by which parts of your business. For instance, you might discover that dev/test workloads take up 20% of your server space. This indicates that the development team is consuming one-fifth of the cloud's capacity. Now, you can accurately allocate those specific costs toward the right department.
Consider bursting to the public cloud
A common cost management challenge in private clouds is handling temporary spikes in load. Higher loads require more infrastructure. However, if you only use that infrastructure temporarily, your infrastructure ROI will be less than excellent, since you'll have servers sitting idle except during periods of high traffic.
One way to mitigate this challenge is to burst private cloud workloads into the public cloud. This entails configuring workloads so additional workload instances can spin up in a public cloud environment during periods of peak demand. When load decreases, you can shut down the public cloud infrastructure. This strategy helps you obtain extra infrastructure when you need it without paying for it on an ongoing basis.
Chris Tozzi is a freelance writer, research adviser, and professor of IT and society who has previously worked as a journalist and Linux systems administrator.
