Luiz - Fotolia

Tip

Collaboration is key to earning cloud computing cost savings

Many organizations turn to the cloud for greater flexibility and dynamic scalability, but IT and financial teams must work together to address the complicated pricing scenarios.

Will Kelly
By
Published: 18 Aug 2020

With organizations facing budget uncertainties amid the global pandemic, cloud teams need to collaborate with their finance and accounting counterparts to effectively control costs. This requires interest and input from employees not traditionally considered cloud collaborators, such as the chief experience officer and midlevel managers.

If cloud usage goes unchecked, organizations can find themselves spending a lot on the cloud or spending too much -- and there is a difference between the two. The former involves decentralized purchases of cloud services or racking up large bills with system integrators and other professional services firms. The latter occurs when you spend too much on the cloud because of infrastructure mismanagement, such as phantom resources, not using an economical public cloud region or not right-sizing resources.

Organizations effectively control IT costs differently in the cloud than they do with traditional on-premises infrastructure. Doing so falls under the umbrella of cloud governance, which is a cross-functional team pursuit that also addresses resiliency, security and compliance over cloud systems and services.

Cloud governance roles and responsibilities strike a balance between agility and fiscal responsibility. This approach takes away cloud control from a centralized body, such as a change control board, and governs cloud services through a new segmentation of roles and responsibilities. And while cloud governance covers a broad range of topics, for the purposes of this article we'll focus on cost controls and the practical ways cloud and finance teams can work together to optimize their cloud spending.

Unite cloud and finance teams to earn cloud cost savings

If you already subscribe to the belief that your entire business must assimilate to a cloud culture, cloud and finance collaboration should be natural.

When you develop your organization's cloud roadmap and forecast expenses, you need to bring in a finance team representative. Collaboration at this point should focus on understanding the impact of key performance metrics or any effects a move to the cloud would have on your organization's budget.

A solutions architect with technical infrastructure skills and a grounding in cloud economics can help bridge the gap between departments. They can work with the finance team to create business use cases and financial forecasts to document potential expenses and show how optimization of those resources could produce cloud computing cost savings.

Alternatively -- or in addition -- your organization could pay for cloud certifications for finance team members and create a similar hybrid role in the finance department. Review the following areas where cloud and finance teams need to collaborate.

Cloud migration

A finance team representative needs a spot on your cloud migration team. Focusing on cloud computing costs early could save you money down the road. The migration phase is when you should start collaborating on spending forecasts and other financial modeling activities to begin analyzing your cloud costs.

This is where businesses can adopt cloud migration as a service (MaaS) offerings, which have tools to help estimate the cost to move off premises. Cloud providers have calculators to estimate the cost to migrate and run workloads in the cloud, and third parties continue to add features that provide a more holistic view. For example, SurPaaS is a MaaS offering with a financial modeling feature that enables you to model cost and operations planning. Migration teams can customize the migration cost for each public cloud and compare those prices against each other. This kind of tool enables you to plan for the financial implications from the start.

Cloud provider contracts

Finance and cloud teams must also cooperate around tracking and capturing cloud provider contracts, so they can fully assess the impacts of those deals. The goal here is to avoid decentralized cloud purchases, once commonly referred to as shadow IT, that keep certain cloud spending off the finance department's official books.

For example, a line of business can set up an AWS account using an employee's credit card and funnel reimbursements through corporate expense reporting procedures. This can raise concerns around security, but it can also end up costing the business more money than it should. When companies pool their various cloud resources into a single billing account, they're more likely to demonstrate spending at a scale that results in deeper discounts from cloud providers eager to retain that business.

Cloud management prerequisites

Cloud and financial teams also need to cooperate on cloud management platform requirements.

Finance groups will want itemized reporting to capture costs they must defer and allocate to profit and loss over the term of the cloud provider contract. Some companies may have similar processes in place for on-premises software that can help seed a discussion here.

Your cloud and finance teams should also collaborate on change management, stakeholder outreach and project management activities during the cloud migration lifecycle. Revenue recognition and lease accounting standards need to factor into your overall cloud project plans.

Cloud budget reporting

The teamwork continues after the finance team releases a cloud budget. IT needs to implement and configure reporting and alerting that notifies stakeholders when spending will hit a budget threshold. Cloud management platforms -- such as CloudBolt or cloudtamer.io -- support budget threshold alerts to help stakeholders monitor cloud spending.

Companies can also control a cloud budget through a cloud brokerage that includes a service catalog and financial management tools. The financial management component of the brokerage then alerts a stakeholder that it's time to add more money to their cloud brokerage account.

You'll also need to analyze usage and spending trends to get cloud spending under control. It's imperative to keep close track of your spending during the first three to six months of a cloud project, as it's only during this time that you start to see your spending trends as more applications go into production. Create reports in your cloud management platform for later analysis.

Dig Deeper on Cloud infrastructure design and management