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How to Set Up a Cloud Cost Optimization Process for your Enterprise

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As cloud spend grows, enterprises need to set up internal processes to manage and optimize their cloud costs. This process will help organizations to accurately allocate and report on costs while minimizing wasted spend. In this webinar, experts from RightScale’s Cloud Cost Optimization team will share best practices in how to set up your own internal processes.

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How to Set Up a Cloud Cost Optimization Process for your Enterprise

  1. 1. HOW TO SET UP A CLOUD COST OPTIMIZATION PROCESS FOR YOUR ENTERPRISE
  2. 2. • Brandon Willer • Director, Cloud Cost Strategy, RightScale • Megan Crandell • Product Manager, RightScale Presenters
  3. 3. • Cloud Cost Trends in the Market • Setting up your Cost Optimization Team • The Challenge of Cloud Bills • The Cost Optimization Process • Automated Policies • Ins/Outs of RIs Agenda 2
  4. 4. Two Solutions from RightScale RightScale Cloud Management Platform Orchestrate, automate and govern workloads across all your environments. VIRTUAL SERVERS PUBLIC CLOUDS ANY CLOUD SERVICE PRIVATE CLOUDS BARE METAL SERVERS CONTAINER CLUSTERS RightScale Optima Work collaboratively across the organization to manage and optimize clouds costs. Orchestration Cloud Workflow Plugins Monitoring Access Control Accounts/Groups Access/Permissions Tags Policies Cost Security/Compliance Operational RIGHTSCALE CMP ENGINE EXTENSIBLE ORCHESTRATION API
  5. 5. Cloud Spend is Growing 4
  6. 6. Much of Cloud Spend is Wasted 5
  7. 7. Cost Optimization is Top Focus 6
  8. 8. Companies in Early Stages of Optimizing Costs 7
  9. 9. CLOUD COST COMPLEXITY
  10. 10. • Hundreds of thousands to millions of line items each month • Need mechanism to consume massive amounts of data Cloud Bills Kill Spreadsheets 9
  11. 11. Cost Allocation - Need to breakup/showback to owners 10 Priority Tags Accounts 1 env=test 2 env=prod 3 dept=qa 4 756122054 Allocation Rules Billing Centers Dev CS Sales Prod Dev Support Demo Marketing Demo Child Billing Centers
  12. 12. • Vast difference between cloud providers in how they bill • Cloud products are priced differently (e.g. - GB vs. Hours) Not All Cloud Bills Are Made Equal 11
  13. 13. Assess, Plan, Execute, Automate Assess Allocate Plan Collaborate Action Automate Govern
  14. 14. • Need cost champions and a dedicated team • Key skill sets are financial analyst, project management, and basic technical background. • Need sponsorship from mgmt Setting up an Internal Cost Optimization Team 13 Financial / Data Analyst Project Management Cloud Technologist Executive Sponsorship
  15. 15. Assess: Uncover Opportunities to Save Assess Allocate Plan Collaborate Action Automate Connect Cloud Bills Uncover Waste Identify Actual Opportunities Prioritize
  16. 16. Allocate: Assign Costs for Showback Reporting Assess Allocate Plan Collaborate Collaborate Automate “Bucket” costs into hierarchical groups, for example: ● Dev Teams ● Business Units ● Departments Combination of account or tag grouping Action
  17. 17. Allocate: Provide Reports for Cloud Users Assess Allocate Plan Collaborate Collaborate Automate ● Build Custom Reports and Dashboard ● Define Budget Alerts when costs are forecast to exceed plan Action
  18. 18. Plan: Key Areas of Focus Assess Allocate Plan Collaborate Action Automate IaaS Savings ● RightSizing - Relaunching with appropriately sized instances ● Instance Scheduling - Turn off during non-working hours ● Low cost regions - Move to geographically close locations ● Superseded Instances - Migrate to newer, cheaper instance types ● Azure AHUB Reserved Instance Discounts ● Existing RI or CUD Modification ● New RI or CUD Purchase Plan Storage Savings ● Unattached Volumes & snapshots ● Redundancy options (AZ vs regional) ● Lifecycle management (Hot/Cool/Cold) ● Migration to Azure GPv2 Tiering ● Premium to Standard Disk PaaS Savings ● Optimize Backup policies ● Rightsizing PaaS Discounts ● RedShift ● RDS ● ElastiCache ● DynamoDB
  19. 19. Plan: Build actionable plan to remove waste Assess Allocate Plan Collaborate Action Automate Use initial assessment as springboard for action Tackle costs based on lowest hanging fruit first Many cost saving activities are dependent on one another, build project plan
  20. 20. Collaborate: Work with resource owners Assess Allocate Plan Collaborate Collaborate Automate Find owners of resources to reduce waste Needs to be evidence based. Build cost analysis for each mini-project Share recommendations using RightScale or shared spreadsheets Action
  21. 21. Action: Basic Project Management Assess Allocate Plan Collaborate Collaborate Automate Define scope and build plan Schedule resource owners and execute on deliverables Analyze and track savings Action
  22. 22. Automate: Implement Automated Outcomes Assess Allocate Plan Collaborate Collaborate Automate Setup automated policies ● Automatically delete unused storage ● Automatically resize overprovisioned instances ● Notifications when resources untagged Action
  23. 23. RIGHTSCALE POLICIES
  24. 24. Breaking Down a Policy
  25. 25. • Out-of-the-box and custom policies • One policy engine across all your clouds & services • Policies for any resource, regardless of how provisioned • Combine and test data from any API-enabled data source • Take any action on any API-enabled cloud/web services • Powerful workflow language for robust logic and actions What’s Unique About RightScale Policies 24
  26. 26. From Alert Only to Fully Automated Resolution 25 Alert only Alert Approval Automated resolution Fully automated resolution Move toward full automation as you gain confidence in policy conditions
  27. 27. Policy Incidents • Policy Incidents are triggered events (email or action). • Full history and audit trail can be found in the Incidents page, along with all detail associated with that incident.
  28. 28. UNDERSTANDING RESERVED INSTANCES
  29. 29. • AWS • Reserved Instances (RIs) • Enterprise Discount Program (EDP) • Azure • Reserved Instances (RIs) • Enterprise Agreement (EA) • Google • Sustained Use Discounts (SUD) • Committed Use Discounts (CUD) • “Negotiated” Discount Discounts by Cloud Provider
  30. 30. In exchange for the discount you must: • Commit for 1 year or 3 years • Agree to specific parameters that limit where the discount can be applied • Pay up front and/or agree to pay for the RI monthly even if you don’t use it It’s like buying a gym membership - you pay even if you don’t go. What Is a Reserved Instance (RI) 29 A discount “coupon” that will be applied to a running cloud instance that meets the parameters of the RI you purchased
  31. 31. RIs Are Not Always the Best Way to Save 30 Savings for RI based on m5.large running Linux in US East. RI savings will vary based on instance type and region
  32. 32. AWS RIs Azure RIs Google CUDs Buying Parameters Region or AZ Instance family or size Operating system Network type (VPC, Classic) Region Instance family Instance size Scope (Subscription, Shared) Region Project-scoped Machine type (General purpose or Memory-optimized) Exchangeable Convertible RIs: Yes Standard RIs: No Yes No Changeable Standard RIs: AZ (if Regional), Network, Instance size (if Regional and Linux) Yes, by exchanging or you can just change Scope Apply flexibly across vCPU and memory units consumed Returnable Can sell on Marketplace (often impossible to find buyers) Yes - return fee is 12% of remaining value No Payment Options No Upfront Partial Upfront All Upfront All Upfront No Upfront AWS/Azure RIs, Google CUDs: Key Differences
  33. 33. Example Usage/Cost Pattern Production and 24x7 dev usage Weekday dev usage * Data from real (anonymous) customer use cases
  34. 34. Example Coverage x% coverage of steady-state 33
  35. 35. Understanding Reserved Instance Coverage 100 instances 50 Reserved Instances 50% RI coverage 50% On-Demand pricing
  36. 36. Reserved Instance Purchase Plan 35
  37. 37. Monitor & Manage Utilization of Existing RIs 36
  38. 38. Instance Size Flexibility xlarge large large medium medium medium medium large medium medium Original footprint Option 1 Option 2 Option 3 Modify RIs within instance family …
  39. 39. AWS Convertible RIs, Exchanging Azure RIs RI value $100 RI value $50 RI value $50 RI value $30 RI value $30 RI value $30 RI value $30 RI value $50 RI value $30 RI value $30 Prorated value of RI Equal trade Pay $20 true up Convert or Exchange RIs based on value Pay $10 true up
  40. 40. • RI recommendations from your cloud sales rep will be self-serving • They want you locked into their cloud • Consider other savings opportunities • Consider future changes in cloud use • Think coverage % • 100% coverage is almost never right • Carefully plan your RI purchases • Track utilization and adjust RIs as you go • Plan for how you will allocate costs RI Takeaways 39
  41. 41. You need tools to manage cloud cost complexity Put in place a team to focus on cloud cost management Identify savings opportunities Make sure you can allocate and report costs across the org Project management and collaboration are key Automated policies help you keep things optimized RI planning and monitoring is an ongoing focus Summary 40
  42. 42. Contact sales@rightscale.com for more info Q&A 41

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