Cloud billing: Cutting through the complexity

In this guest post, Kat Lee, data analyst at service provider Cloudreach, shares some best practice on cloud billing to help enterprises cut costs.

IT cost control and management is a hot topic of debate in enterprises, seeking to drive down the cost of operational expenditure. As the cloud adoption mentality has increasingly become “not if, when”, cloud cost control has become a key budgeting topic.

The majority of enterprises nowadays don’t just choose one cloud service provider, having realised the benefits of adopting a hybrid cloud model. But this now presents its own challenges. Each service provider has a different way of presenting cost and usage reporting, which can lead to complexity and confusion for end users.

Gartner research suggests 95% of business and IT leaders find cloud billing the most confusing element of using public cloud services. This confusion leads to a lack of governance and oversight which, of course, has a financial impact to the company.

Take stock of cloud resources

To get a handle on this, enterprises must get to the point where they know the amount of cloud resources being consumed by their teams.

The first point of action is to create a customised invoicing process to gather all the data related to cloud spend and break it down to a granular level. That way each employee and department can benchmark their usage. This will help the finance team identify any increases in spend as and when they happen and to understand the cause of them.

Cloud usage and cost reporting tools are of critical importance here. These tools are vital to give clarity on usage and cost allocation and give IT finance teams more accurate information when resource planning, avoiding overspend and an angry CIO.

Taking ownership of cloud billing

Amazon Web Services (AWS) and Google Cloud Platform (GCP)’s recent per-second billing could offer customers huge savings, but to take full advantage, end users must understand and own their billing process.

To get a handle on spend, enterprises must breakdown and allocate the costs to the right business group, department, project and individual employee. Resource tagging is absolutely vital in this regard to get true cloud governance in place and understand which project is consuming what resources.

Understanding the numerous ways cloud providers offer cost savings is vital to keeping cloud spend under control too.

AWS, Azure and GCP all offer discounts for committed usage of virtual machines, in varied ways, from upfront annual payments to reserved instances and automatic discounts on long running virtual machines. AWS also offers Spot Instances – a method of purchasing compute time at a significantly reduced cost when there is spare capacity – a virtual machine marketplace powered by supply and demand.

These cost saving opportunities are increasingly complex and the most mature cloud consumers will have dedicated resources focussed on managing costs.

Where next for cloud billing?

In the next 12 months, there is going to be increased growth and maturity in the cloud market. As enterprises increasingly see the inevitability of a move to the cloud, a key differentiator between cloud service providers is going to be how they deliver and bill enterprises for computing resources.

Having transparency and ownership over the billing cycle, and an understanding of the cost optimisation options available is the next step in helping enterprise customers make the most of cloud.

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