In moving to the cloud one of the most important concepts is the transition from CapEx to OpEx management of resources. This brings both benefits and challenges which most companies are ill equipped to organize an approach around. I find that customers frequently either don’t know, or haven’t prepared their environment to properly manage costs and engage the business in owning those costs. A cynical person would believe that vendors like Microsoft wouldn’t care whether you are spending good money, or bad money, but that isn’t the case. Satya Nadella recently commented that Microsoft’s mission is to be the cloud with the best alignment between business value and cost. I believe this statement is one statement that any business should shift toward. The alignment between business value and cost is critical to your future in the cloud and the future of the technology organization’s role in engaging the business.

A few things to consider when thinking about cost management in the cloud.

• Cost management needs to be transparent and understandable across the enterprise and enable cost owners to take action
• The tagging for cost management needs to be normalized to allow for efficient management of costs
• A consistent practice needs to be implemented inside a business to review and manage costs both by the owners (app owner) and the center of excellence (corp governance)
• The application owner needs to have clear ownership of costs, as without that ownership the action will never follow
• Cost management starts immediately once using the cloud, not once costs are large enough to care about. The management of costs is a muscle memory that you need to understand early on before it is a problem, not after its a problem.
• Applications and their related app owners need to budget for their apps and manage that budget against expected ROI for their platform. As technology becomes an integrated part of how the business delivers its core mission, the relationship between costs and value needs to be clear.
• CIOs need to prepare that the business will be the main consumer and owner of IT spend, not a central IT department. The corp-IT organization’s job is governance, policy, enablement, etc. A “high focus” IT organization then also becomes focused on innovation, engagement, product development.
• If leveraging a multi-cloud environment, leverage native tools as close as possible to the operational environment, such as Azure Cost Management when leveraging Azure. For aggregation, pull data into PowerBI or leverage a tool like ServiceNow. Avoid the temptation to leverage a “multi-cloud CAS” instead of leveraging the tools right in your platform and close to the application owner.

A few examples from Azure Cost Management’s latest release I thought were worth highlighting.

Targeted Budgets with Filters and Forecasts:

The definition of a budget, filtering on it, forecasting projected spend, adjusting based on that spend. These are all tools that Microsoft is doing a new job of integrating in their August release.

Customizable, Save-Able Views:

Application owners need to see data in a way which is meaningful to them and allows them to properly manage costs. The creation of customized views that can be easily shared, collaborated on, etc. are key components of managing costs effectively.

Production vs. Non-Production based on tagging:

Of course, this can be used for any comparison, not just production vs. non-production, but the ability to define and leverage groupings can be very effective at challenging the way we look at information and optimizing.

Business Units based on tagging:

Another example of effective tagging, leveraging business units to understand where costs are coming from, then breaking down based on applications and owners.

If you haven’t defined your cost management strategy now is the time to start, along with the overall governance of your environment. Not addressing it brings along a significant amount of technical debt that is difficult to correct. Now is the time.

Nathan Lasnoski