Headline / Subhead Vertical
V3.1
Develop a Cloud Consumption Strategy
Optimize your cloud deployment to stay ahead of the demand curve.
Info-Tech Research Group, Inc. Is a global leader in providing IT research and advice.
Info-Tech’s products and services combine actionable insight and relevant advice with
ready-to-use tools and templates that cover the full spectrum of IT concerns.
© 1997-2012 Info-Tech Research Group Inc.
Info-Tech Research Group
1
Introduction
Without a proactive cloud consumption strategy, over-provisioning, and
under-utilization will tend to consume any cost-related benefits of Cloud.
This Research Is Designed For:
This Research Will Help You:
 CIOs and IT leaders trying to maximize
 Adapt your capacity planning to a cloud
efficiency and value to the business.
 COOs and CFOs looking for greater cost
accountability and value in IT infrastructure.
 IT infrastructure managers trying to
maximize efficiency and cost transparency to
senior management.
environment.
 Manage complexity of planning across
multiple solutions by applying service tiers.
 Leverage third party management and
monitoring solutions for capacity planning
and cost accounting.
 Manage increasingly empowered
stakeholders and align IT with the business.
 Prepare for the future with people and
processes equipped for continuous
optimization.
Info-Tech Research Group
2
Executive Summary
Situation
• Organizations are moving to the Cloud to lower costs and increase scalability.
• Cloud flexibility, scalability, and agility can lead some to believe that planning and managing deployments are not as
necessary as with traditional deployments.
Complication
• Cloud infrastructure and platform deployments change the ease of usability in IT services and provision.
o Incremental capacity increases are easy for large numbers of non-administrative IT users to deploy; organizations are
experiencing ‘cloud sprawl’ (excessive provisioning and underutilization of resources) which leads to overspending.
o Variability of capacity creates uncertainty in the operating budget as consumption patterns vary from month to
month, which make budgeting for cloud spending difficult.
o Without control, this creates the risk of low value services being deployed and a lack of visibility of cloud service
costs.
Resolution
• Apply a governance layer using service tiers to simplify the planning process, maintain consistency, and ensure the right
resources are being deployed for the appropriate use cases.
• Use tools built on service providers’ APIs to identify areas for cost savings and optimization (e.g. underutilized
resources), including predictive analytics to forecast traffic fluctuations.
• Take advantage of granular metering to provide cost accounting (billing, chargebacks, “showbacks”) and tie usage to
value, business units, strategic objectives, etc.
• Practice “just in time,” lean or agile provisioning, and approach cloud operations as continuous deployment, i.e.
continuously improve configurations to take advantage of various costs and benefits of private and public clouds.
Info-Tech Research Group
3
Understand the costs and benefits of Cloud
What’s in this Section:
• Look at IT from a cloud-oriented perspective
• Find opportunities for IT to create value and
efficiency
• Beware of common risks and costs of cloud
infrastructure
Sections:
Understand costs and
benefits
Forecast resource consumption
Manage Cloud capacity
Account for cloud consumption
• Identify your organization’s needs
• Understand opportunities created by cloud
ecosystems
Info-Tech Research Group
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Cloud infrastructure forces IT to adopt a new strategy
Delivering IT “as-a-service” means IT leaders need to focus more on positive
outcomes such as business satisfaction, user experience, and value.
Impact of Cloud Adoption:
As expected:
Response time
expectations
• IT leaders who responded to our survey were
likely to perceive that cloud adoption
correlates with:
Service level
expectations
• Increased consumption or demand
• Increased server sprawl, i.e. unnecessary
or sub-optimal provisioning
However:
Volume of
consumption
Respondents who
perceive a decrease
Server Sprawl*
0.00%
Respondents who
perceive an increase
20.00% 40.00% 60.00%
Source: Info-Tech Research Group, n=26
• IT leaders were more likely to perceive an
increase in “soft” indicators:
• Response time expectations
• Service level expectations
Info-Tech recommends developing a cloud
consumption strategy grounded in people and
processes before addressing technology.
In a cloud environment – particularly a public cloud environment – there will be daily opportunities to
continuously decrease costs. Develop roles and processes to continuously use these opportunities –
not just for cost savings but to increase satisfaction and value to the organization.
Info-Tech Research Group
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Find opportunities for IT to create value and efficiency
Cloud infrastructure creates new opportunities to align IT capacity planning,
capacity management, and cost visibility.
1
Capacity Planning Opportunities
Plan
• Analytic tools to help forecast demand and identify opportunities
for efficiency are widely available, due to commoditization enabling
third party monitoring and management tools to flourish.
2
Manage
Capacity Management Opportunities
• Elastic resource capacity can be provisioned and de-provisioned
in minutes, driving efficiency and quality of service by diminishing
gaps between supply and demand.
Account
• Network-based management consoles enable self-provisioning on
demand, decreasing project delays and administrative overhead.
3
Cost Accountability Opportunities
• Granular metering enables IT to track costs to specific projects,
business units, and users for greater visibility into spend in relation
to capabilities and benefits.
This solution set will help IT and finance
managers optimize costs of current or future
cloud infrastructures.
See Info-Tech’s Embrace the Cloud research to
decide whether to adopt cloud infrastructure.
Info-Tech Research Group
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Cloud is providing avenues to align actual usage with capacity
that traditional deployments can not
The traditional “step-jump” capacity planning model leaves room for suboptimal consumption of IT.
Traditional Model
Public Cloud Model
• More hardware has to be purchased as
needed or planned – this takes time
• Capacity is allocated on demand in a matter
minutes, aligning capacity with usage
• Very difficult to match current and
planned capacity to actual usage
• Flexibility must be managed to attain the
most value and reduce any over/under
use
Info-Tech Research Group
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Prepare for the risks that come with new opportunities
Planning, managing, and accounting for cloud infrastructure requires IT to
develop new processes and skills as service providers.
Info-Tech Insight
1
Self-service has both favorable and
unfavorable consequences.
• Cloud makes it easy to manage infrastructure, reactively making it
too easy to overlook critical capacity planning and miss
opportunities to decrease medium- and long-term costs.
Cloud infrastructure empowers
developers, project managers, and other
IT staff to provision resources when
needed, which also relieves the
administrative burden on IT operations
staff.
But self-service creates a governance
responsibility to ensure the right level of
service is provisioned and that resources
are de-provisioned after use.
2
Capacity Planning Risks
Capacity Management Risks
• Giving more people the ability to self-provision resources gives
more people the ability to over-provision excess capacity at
excess cost and potentially fail to de-provision after it’s needed.
3
Cost Accountability Risks
• Holding users and business units accountable for costs requires
time, effort, accountability processes, and soft skills to follow up and
deal with disagreements and push-back.
Info-Tech Research Group
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Envision your consumption strategy next to an ideal scenario
In an Ideal Enterprise Cloud scenario:
(Set aside performance, security, compliance, and other concerns for now, for
the purpose of focusing on cost and consumption strategy.)
•
Capacity scales fluidly up and down according to demand, without
inefficiency caused by pre-provisioning or over-provisioning, or downtime
caused by under-provisioning.
•
New capacity is provisioned automatically or by the people who
need it, without taking IT managers’ time or creating project delays.
•
Metering and cost allocation hold users accountable for
consumption to ensure costs align with benefits (i.e. if the organization
benefits, the organization will pay; if a business unit benefits, the
business unit will pay).
Ideal
Enterprise
Cloud
Once [the team] has gotten there, the world is wonderful for us. The server guys
are saying ‘this is great stuff!’ because they’re able to very quickly meet demand
– increasing size, upgrading an app – whatever it is, they can meet those
demands a lot more efficiently.
Assistant Director of MIS
The Ideal Enterprise Cloud state is not yet within reach for most organizations. But clarity around
target or ideal state is a prerequisite for strategic planning – positioning your current state in relation to the
target, in order to deciding which steps you need to take toward it.
Info-Tech Research Group
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Position your current state in relation to the ideal state
Organizations fall into three different categories as they approach enterprise
cloud infrastructure:
 Traditional approach:
• Mid- to large-sized established enterprises with substantial
investments and dependencies in legacy technology, and
processes.
• Key challenge: clearly delineate between cloud resources
and traditional resources to keep flexible cloud practices
from undermining rigid traditional practices, and vice versa.
Ideal
Enterprise
Cloud
Traditional
Lean
 Ad hoc approach:
• Small to mid-sized organizations with some investments
and dependencies in legacy technology and processes.
Ad hoc
• Key challenge: develop skills and experience for planning,
governance, and process management.
 Lean approach:
• Small to mid-sized organizations with no legacy assets or
dependencies – a “green field” to adopt the Cloud by
default, to stay flexible and minimize capital expenditures.
• Key challenge: develop skills and experience for planning,
governance, and process management.
Use Info-Tech’s Consumption Strategy
Appropriateness Assessment tool to assess
where your organization is in this landscape.
Info-Tech Research Group
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Manage and plan for different resources appropriately
Different types of infrastructure resources in any organization require
different planning, management, and accountability practices.
Traditional
Model
Private
Cloud
Public
Cloud
Traditional
Private Cloud
Public Cloud
• Planning: Organizational capacity
planning happens far in advance
of expected need and requires a
complicated procurement process.
• Planning: As with traditional
infrastructure, organizational
capacity planning happens far in
advance of potential need.
• Planning: Organizational capacity
planning can be ad hoc, but there
are benefits to proactive planning.
• Management: Capacity must be
maintained by IT staff and
provisioned to internal customers
by dedicated IT staff.
• Management: Underlying physical
capacity is maintained by IT staff
but internal customers provision
virtual machines through selfservice interfaces.
• Accountability: Cost allocation
mainly occurs prior to capital
expenditures, which means
connections to actual benefits and
capabilities is largely obscure.
• Accountability: As with public cloud
infrastructure, metering of virtual
resource usage enables greater
visibility of consumption relative
to benefits.
• Management: IT staff doesn’t
maintain or control the underlying
infrastructure; both IT and
internal customers provision and
manage capacity through selfservice interfaces.
• Accountability: Metering of virtual
resource usage enables greater
visibility of consumption relative
to benefits.
Info-Tech Research Group
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Match strategic resolutions with the problems your
organization is facing
Different use cases have unique challenges that you need to be aware of.
1
Identify the
challenges
2
Understand the
problems
3
Match problems
Matchwith
problems
resolutions
with resolutions
Scenarios
Example Challenges
Likely Implications
Possible Resolutions
Web hosting
• Volatility of demand
creates uncertainty,
which might
discourage capacity
planning.
• Lack of capacity planning is risky
(causing a website outage
precisely at the most critical
moments, e.g. during a pivotal
marketing campaign).
• Improve customer and
stakeholder management to
forecast demand (e.g. Marketing
promotions, Finance and HR fiscal
administration).
Development
and testing
• Greater benefits
come from giving
more access rights to
the development
team, but that creates
greater risks.
• Users will occasionally forget to
de-provision virtual servers, and
could potentially provision excess
capacity (e.g. high-cost resources
for a low-value projects).
• Implement role-based access
rights; improve oversight and
accountability (not necessarily
permissions, but safeguards).
Storage
• Storage volume
keeps going up,
unlike compute
capacity, which can
go up and down.
• Unmanaged virtual resource
consumption tends to sprawl both
horizontally (quantity of data) and
vertically (quality and cost of
capacity used).
• Use consolidated service tiers
with defined provisioning policies
and retention periods (e.g.
automatically purge data after its
value elapses).
Info-Tech Research Group
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Use a mix of capacity planning, capacity management, and
cost accounting for the most effective consumption strategy
These will help maximize the value received from cloud services, however,
practices must be matched with an enterprise level of appropriateness.
Cloud Consumption Strategy Cycle
Use all information to re-assess and plan for changes as needed
for continuous cloud optimization
Plan Capacity
• Use proactive measures to
align planned capacity with
business needs
• Establish budgets for ongoing
operations
• Adopt services as required
• Ensure proper architecture and
integration
Manage Capacity
Account for Costs
• Allocate and monitor capacity
and response times
• Track and align costs with IT
capabilities, business needs,
and business value
• Control and monitor volume,
volatility, and criticality of usage
• Align across IT and business
stakeholders
• Use reactive measures
• Ensure the business is being
properly enabled by IT services
For more information on matching practices with your enterprise’s level of appropriateness
use Info-Tech’s consumption strategy appropriateness tool.
Info-Tech Research Group
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Plan for resource consumption
What’s in this Section:
•
•
•
•
•
Sections:
Start with a solid planning foundation
Understand costs and benefits
Define service tiers
Plan for resource
consumption
Update your capacity planning process
Leverage predictive forecasting
Manage cloud capacity
Account for cloud consumption
Consider third party management solutions
Info-Tech Research Group
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Build a cloud consumption strategy on a planning foundation
The obvious benefit of cloud scaling is that you only pay for the resources you use…
The downside of cloud scaling, however, is that it can become a crutch that lazy
system architects use to avoid capacity planning.
Plan
George Reese. CTO, enStratus
Cloud Application Architecture. O’Reilly, 2009.
Manage
Account
Risks and opportunities:
• Making it easy to manage infrastructure reactively makes it too easy to overlook critical capacity
planning and miss opportunities to decrease medium- and long-term costs.
• Analytic tools to help forecast demand and identify opportunities for efficiency are widely available,
due to commoditization enabling third party monitoring and management tools to flourish.
Info-Tech recommends:
1. Define Service Tiers
2. Reserve Capacity
3. Use Cloud Cost Analytics
Classify users, applications, and data
according to criticality and value to
ensure sufficient capacity is available
to meet critical demand.
Look at options available from
vendors for medium and long-term
savings.
Leverage tools available to help
monitor and forecast demand, and
identify opportunities for efficiency.
Info-Tech Research Group
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Define service tiers to increase efficiency and productivity
Benefits of service tiers:
Service tiers positively correlate with cost
savings and reliability in infrastructure…
1. Maintaining consistency in planning and
management by establishing a shared orientation
and vocabulary.
Consistent definitions ensure that truly critical
services are prioritized over less critical ones.
2. Creating partitions in processes to contain
creeping costs.
… and yet fewer than half of IT departments
use them.
Without these barriers, users will gradually
provision higher-cost resources than were originally
considered in cost-benefit analysis.
Yet Fewer than Half of IT Departments
Use It
0.21
Capacity Management
0.15
Capacity Planning
0
Capacity Management
55%
Capacity Planning
57%
34%
Cost Accounting
0.09
Cost Accounting
47%
Service Tiers
0.36
Service Tiers
0.25
Correlation with savings and reliability
0.5
0%
50%
100%
% organizations using each method
(Source: Info-Tech Research Group, n=76)
Info-Tech Research Group
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Define service tiers to increase efficiency and productivity
Tailor service tiers to your organization’s needs.
Example service tier descriptions:
Gold /
Tier I
Silver /
Tier II
• Mission -critical, broad value
• Low tolerance for downtime or
latency
• Minimal provisioning rights
• Formal provisioning process
• Less-critical (higher tolerance for
downtime and latency)
• Value more at the unit/team level
• Distributed provisioning rights
Bronze / • Necessary but not frequently
accessed
Tier III
• Largely automated provisioning
(e.g. archives, backup, disaster
recovery)
Where to find service tiers:
Most organizations have some sort of tiers already.
For example, storage is typically tiered according to different
availability and durability requirements.
Information or data governance policies.
If your organization has any information or data governance
policies, there are likely some form of tiers based on required
retention periods, recovery time and point objectives, data
sensitivity, value, etc.
Use Info-Tech’s
Capacity Planning
Data Collection &
Tiering Workbook
to begin planning.
Info-Tech Research Group
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Classify users in order to prioritize needs
Quantifying the criticality and value of specific users’ needs is essential for
building IT’s capabilities as a service provider.
Including a user classification in your cloud capacity
planning process is essential.
Because the Cloud gives end users greater ability to
circumvent IT to provision what they want, IT needs to:
1. Attend quickly to the needs of critical users, or
users handling critical data, before they expose
critical data to potential security or compliance
breaches.
2. Give users of non-critical data more autonomy,
which alleviates some of IT’s administrative burden.
What to do:
1. Administer the Info-Tech User Classification Survey.
2. Input the results into the User Classification Tool to
assess the criticality, value, and response time
objectives of various user groups.
The tool will provide appropriate service tiers for your
user classes.
Info-Tech Research Group
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Reserve longer term capacity to reduce costs
Despite the appeal of capacity on demand, in many cases both IaaS vendors
and customers are better served by longer term contracts at lower prices.
Examples of reserved capacity offered by IaaS vendors:
Amazon Web Services
• Amazon offers Reserved Instances to customers
able to commit to one or three year terms.
• Reserved Instances represent 30-40% savings for 1year or up to 70% savings for three-year reserved
instances.
• Amazon also offers a Reserved Instance
Marketplace, where AWS customers can sell suboptimal Reserved Instances to other AWS customers
(minus a percentage fee to Amazon).
Other Vendors
• Public cloud vendors that are evolving from
managed hosting businesses continue to offer setterm contracts for dedicated resources.
• Contracts can be negotiated to procure relatively
stable capacity at lower costs, while continuing to
take advantage of scalability, and self-service
provisioning for less stable capacity.
• See Info-Tech’s Vendor Landscape: Cloud
Infrastructure as a Service to compare vendors that
offer a breadth of hybrid options.
Because of the complexity of options available, a niche market of third party tools is emerging to help
customers identify stable capacity that can be moved to lower cost options, based on projected
consumption and cost. Some of these tools are covered later in this section.
Info-Tech Research Group
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Evaluate longer-term costs of contracting stable capacity
Use Info-Tech’s Cloud Service TCO Comparison Tool to compare
long-term costs of different options.
Use a total cost of ownership (TCO)
calculator to evaluate potential cost savings
from contracting reserved capacity.
You can also use this tool to calculate
consolidated costs of operations, including:
• Integration & configuration costs
• Related costs
• Cost per user
Info-Tech Research Group
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Use technology to forecast demand and find savings
Cloud infrastructure creates an ecosystem of tools IT and Finance managers
can use to manage cloud costs.
1. Excel
Advantages:
• You’re already using it.
Limitations:
• Breaks easily and requires manual input and adjustment.
• Difficult to maintain a single updated version of truth.
2. Cloud Cost Management tools:
• Extend pricing, usage monitoring, and cost allocation functions
of cloud IaaS providers to help cloud customers manage costs.
• Connect to your IaaS account (usually through cloud vendor
APIs) to generate reports, alerts, forecasts, and
recommendations based on your capacity, usage, and pricing.
• Offer free usage tiers with much greater usability, efficiency, and
value for this purpose than you get with Excel (but with less
flexibility, e.g. you can’t arbitrarily add a column of internal costs,
though some Cloud Cost Management tools allow data to be
exported to Excel and other tools).
Advantages:
• Very usable, aimed at executives and other
potentially non-technical users
• Clear, actionable recommendations, such
as when to purchase reserved capacity.
Limitations:
• Integration is limited to a small number of
vendors (typically focused on AWS)
• Read-only (can’t configure or provision
from the dashboard – though from a risk
perspective this is an advantage).
• Examples: Cloudyn, Cloudability, CloudVertical, Newvem,
uptimeCloud
Info-Tech Research Group
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(cont’d) more Cloud management tools
3. Cloud Management tools
• Robust solutions for monitoring, managing, and automating
multiple cloud services from a single dashboard.
• Integrate with point solutions such as application performance
monitoring, security monitoring, and cost monitoring.
• Examples: RightScale, enStratus
4. Performance Monitoring and Systems Management tools
• Help identify opportunities to improve performance, which
improves efficiency and can decrease costs and increase adoption.
• Legacy: Integrated Systems Management Examples: MS
System Center, IBM Tivoli, Compuware, BMC, VMware vFabric
Hyperic, Zenoss
• Lean: Application Performance Monitoring Examples: New
Relic, Boundary, CloudEgg
5. Proprietary tools
• Can be developed internally if your organization has the skills and
time to do so, and new or unique needs.
• For example, many of the leading third party tools (both
commercial and open-source) started as proprietary tools
developed by people or organizations with new or unique needs.
Advantages:
• Can provision and configure capacity
• Wider compatibility (for managing both
public and private Clouds)
Limitations:
• More costly than Cloud Cost
Management tools
Advantages:
• Monitor more than cost-related factors
(Info-Tech recommends performance
monitoring anyway)
Limitations:
• Require technical staff time to
implement and manage
• Require additional Excel or Cost
Management tools to generate cost
recommendations
Advantages:
• Customized to your needs
Limitations:
• Take time to develop
• Create unknown risks and related costs
to maintain and update internally
Info-Tech Research Group
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Speak to an analyst about cloud cost management tools
This Info-Tech Assisted Implementation will help you:
1.
Review your requirements.
2.
Evaluate the costs and benefits of cloud cost analytics tools.
3.
Understand the limitations and implications of these tools.
4.
Determine the appropriateness of cloud cost analytics tools.
5.
Identify the relative merits of various tools.
6.
Select tools to shortlist and start testing.
7.
Test a tool in your Cloud deployment.
This Info-Tech Assisted Implementation involves two one-hour phone calls with
an Info-Tech analyst:
First call: review, evaluate, understand, determine, identify, and select.
Second call: follow-up on testing, addressing any issues, concerns, questions, and
opportunities.
Book a call now by contacting your Info-Tech account representative.
Info-Tech Research Group
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Manage Cloud capacity to optimize costs
What’s in this Section:
• Capacity management follows capacity planning
• Empower administrators with autonomy and
•
•
•
•
Sections:
Understand costs and benefits
Forecast resource consumption
information to make the best decisions
Manage cloud capacity
Automate recurrent and concurrent processes
Account for cloud consumption
Leverage cloud management tools
React without under- and over-reacting
Define roles, policies, and controls for provisioning
Info-Tech Research Group
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Cloud management needs to be as responsive as the cloud
technology employed
When you can provision cloud resources in seconds, your
bottleneck shifts from the technology itself to the speed
with which your people and processes can manage it.
Plan
Manage
Account
Risks and opportunities:
• Elastic resource capacity can be provisioned and de-provisioned in minutes, driving efficiency,
and quality of service by diminishing gaps between supply and demand.
• Network-based management consoles enable self-provisioning on demand, decreasing project
delays, and administrative overhead.
• Giving more people the ability to self-provision resources allows more people the ability to overprovision excess capacity at excess cost, and potentially fail to de-provision after it’s needed.
Info-Tech recommends:
1. Empower people
2. Define decision models
3. Leverage automation
Speed up processes and relieve highlevel managers from dealing with noncritical requests by giving users selfservice provisioning rights.
Prepare for unexpected changes in
demand by documenting and refining
decision-making models based on
proactive cost-benefit assessments.
Use proprietary or third party tools to
automate recurrent and concurrent
processes.
Info-Tech Research Group
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Empower administrators with autonomy and information they
need for making the best provisioning decisions
Info-Tech recommends taking these steps to be
responsive to cloud demand:
1.
Administrators in positions to deploy new resources on-demand
should have a decision-making responsibility to do so without a timeconsuming internal procurement process.
o
2.
Use oversight processes to ensure they’re accountable (see the next
section on accountability).
Information about performance and cost must be readily available,
accurate, and proactive.
o
Available: dashboard with actionable information must be accessible
enough that someone can always act on unexpected events within
minutes with the right process and checks built in.
o
Accurate: information must be timely and have integrity (if you deploy
5 new servers, monitoring should dynamically reflect that change).
o
Proactive: set alerts at performance and cost thresholds that require
attention; don’t rely exclusively on dashboards for monitoring critical
indicators.
Monitoring and
Management Tools
• Examples: Nagios, New
Relic, Zenoss, Hyperic.
• Benefits: provide robust,
deep monitoring and
reporting on not just
consumption but also
performance to help
troubleshoot and optimize
your technical architecture
and configurations.
• Cons: more expensive if
cost is your main concern,
depth of technical reporting
might exceed some
organizations’ means to
act on it.
Info-Tech Research Group
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Define roles, policies, and controls around account access and
provisioning
Take advantage of identity and access management to distribute
provisioning rights to different groups.
Custom access rights enable you to administrator
more procurement responsibility while maintaining
oversight and accountability.
Case Study: Netflix
Further, you can give developers and project
managers rights to provision their own
development and testing resources on demand,
without using administrators’ time or creating
project delays.
Netflix developed their proprietary cloud management tool
(called Asgard) largely to give them a greater degree of
access control and accountability than Amazon’s Identity
and Access Management (IAM) provided.
Advanced access controls can be set so certain
groups can only provision limited resources. For
example, some organizations might want to limit
developers to Tier II authorization to avoid
accidental provisioning of expensive Tier I
resources.
Providing an internal console allows us to grant Asgard
users access to our Amazon accounts without telling too
many employees the shared cloud passwords.
Who holds the keys?
Source: http://techblog.netflix.com/2012/06/asgard-web-based-cloudmanagement-and.html
Joe Sondow. Netflix
Info-Tech has not seen wide adoption of IaaS vendor-specific access controls such as Amazon’s Identity
and Access Management (IAM). Customers we see implementing advanced access controls do so with
either a proprietary layer of abstraction (like Netflix), or a cloud management solution such as RightScale
to maximize flexibility and minimize dependence.
Info-Tech Research Group
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React to changes on demand without under- or over-reacting
Public cloud infrastructure makes it easy to simply provision resources to
meet demand, but reactive management requires planning and discipline.
Factors to Consider:
Recommendations:
Capacity or current performance
• Conduct regular inventories of current capacity and resources deployed.
Demand or performance required
• Use monitoring tools to alert administrators when usage hits specific thresholds.
• Track usage patterns.
Cost to maintain or add capacity
• Know the cost or savings of changing capacity – as well as the relation of those
costs to budget thresholds – when deciding to change capacity.
Volatility or demand variation
• Assess when the current level of demand is likely to change again (either up or
down) to proactively prepare for the next change (e.g. provisioning processes or
auto scaling and configuration tools might need to be implemented or updated).
Growth trend
• Assess whether the change is part of a larger trend that affects planning.
Criticality to the organization
• Estimate the costs of each hour capacity is unavailable.
• If the capacity is not critical, the cost and risk of not increasing capacity to meet
demand might be lower than the cost of scaling up.
Value to the organization
• Estimate the benefits of each hour capacity is being used, e.g. revenue being
generated by end users.
Info-Tech Research Group
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Define decision models to respond to increased demand
Here’s a sample process diagram, with key factors to consider when dealing
with increased demand:
What caused the increase?
Temporary
Cause
Trend-Related
Cause
• Assess
duration &
criticality of
current
volatility
• Assess rate &
value of
current growth
How critical is the capacity?
High Cost,
High Risk
Avg Cost,
Avg Risk
Low Cost,
Low Risk
• Assess capacity
cost vs. downtime
cost + downtime
risk + uptime
benefits
• Refer to Capacity Planning
growth estimates
• Find ways to mitigate cost
increases by evaluating longerterm capacity options
How valuable is the capacity?
• Update Capacity Planning
volatility estimates
• Evaluate longer-term capacity,
monitoring, and automation
requirements
High Cost,
High Value
Avg Cost,
Avg Value
• Assess capacity
costs vs. capacity
benefits
Low Cost,
Low Value
Info-Tech Research Group
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Define decision models to respond to decreased demand
Here’s a sample process diagram, with key factors to consider when dealing
with decreased demand:
What caused the decrease?
Temporary
Cause
Trend-Related
Cause
• Assess
duration &
criticality of
current
volatility
• Assess rate &
value of
negative
growth
How critical is the capacity?
High Cost,
High Risk
Avg Cost,
Avg Risk
Low Cost,
Low Risk
• Assess efficiency
benefits vs.
downtime risk
• Assess ability to
meet demand
when it returns to
normal
• Refer to Capacity Planning
growth estimates
• Find ways to decrease costs by
evaluating longer-term capacity
options
How valuable is the capacity?
• Update Capacity Planning
volatility estimates
• Evaluate longer-term capacity,
monitoring, and automation
options
High Cost,
High Value
Avg Cost,
Avg Value
• Assess capacity
costs vs. capacity
benefits
Low Cost,
Low Value
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Automate recurrent or concurrent processes to streamline
cloud capacity management
A mix of traditional and cloud-focused tools are available to help automate
cloud management and configuration. Here are the main categories:
1. Cloud Management
•
•
•
2.
Traditional Systems Management
•
•
•
3.
Examples: RightScale, enStratus
Advantages: very robust solutions for not only monitoring consumption and performance, but also managing
reconfigurations, and auto scaling.
Limitations: expensive, best suited for more complex deployments; will require substantial integration, and
additional tools to manage private Cloud deployments.
Examples: MS System Center, IBM Tivoli, BMC
Advantages: large enterprises may already have system management tools deployed; designed for operations
dominated by traditional deployments.
Limitations: not designed for the degree of flexibility that may be involved in managing cloud infrastructure.
Configuration Management
•
•
•
Examples: Chef, Puppet, CFEngine
Advantages: designed for very lean, agile IT or web engineering operations to enable concurrent launch,
configuration, and continuous reconfiguration of multiple instances.
Limitations: require a relatively focused and innovative culture, with a shift in skills and mindset combining
operations with development.
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Establish cloud management processes
IT processes and people need to become more responsive to keep up with
cloud infrastructure.
Example:
Situation
Mistake
Results
Organization adopts cloud
infrastructure in order to rapidly
provision web application servers
to accommodate temporary usage
spikes.
Because the IaaS vendor enables
servers to be provisioned within
minutes, the biggest constraints on
response time are now:
Organization’s IT infrastructure
team took these steps:
• Time for an administrator to
become aware of increased
demand, and act on it.
• Time to configure the new servers
(e.g. deploying monitoring and
security agents).
• Empowered administrators with
more autonomy to deploy
resources with fewer sign-offs.
• Developed oversight processes.
• Adopted configuration
management tools to automate
much of the configuration and
cloud deployment process.
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Account for cloud consumption
What’s in this Section:
• Incorporate cloud cost allocation practices
• Identify IT responsibility-holders and business
stakeholders
• Integrate cloud accounting into reporting and billing
processes
Sections:
Understand costs and benefits
Forecast resource consumption
Manage cloud capacity
Account for cloud
consumption
• Use cloud cost analytics to increase visibility into
consumption
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Incorporate cloud cost allocation practices to align costs with
capabilities and benefits
My fear is that as people start moving into the Cloud, they will build separate
silos that exist in the Cloud, and there will be no holistic way to bring it (these
silos) into a common architecture or common set of services - which are the
things that are going to provide the benefits.
Plan
Manage
David Linthicum, CTO and founder of Blue Mountain Labs
Account
Risks and opportunities:
• Granular metering enables IT to track costs to specific projects, business units, and users for
greater visibility into spend in relation to capabilities and benefits.
• Holding users and business units accountable for costs requires time, effort, accountability
processes, and soft skills to follow up and deal with disagreements and push-back.
Info-Tech recommends:
1. Define IT service roles
Clearly designate IT managers
responsible for managing customer
and stakeholder relationships.
2. Establish accountability
processes
3. Use cloud cost management
technology
Continue to improve service tiers,
capacity reservation, and decision
models to improve cost visibility and
alignment with benefits.
Use third-party or proprietary tools to
create dashboards, alerts, reports,
and possibly chargebacks or bills.
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Take advantage of cloud metering to drive visibility, allocation,
and forecasting
1. Increased cost visibility
• Costs of individual projects of business units to be viewed
and related back to processes for ongoing cost/benefit
analysis.
• Track and align costs across multiple deployments with IT
capabilities and business value.
2. Effective cost allocation
• This allows for costs to be billed to the appropriate
budgets or accounts.
“Most successful users of the Cloud
focus on a couple of key metrics.
People like Netflix are focused on
how much it costs per stream, and
are doing everything they can to
study their data to bring that cost
down. They can try different
theories because they are
measuring the right things.”
Mat Ellis, CEO and founder of Cloudability
• Increases accountability of services between various
stakeholders to minimize overconsumption of IT services.
Info-Tech Insight
3. Accurate forecasting and budgeting
• Allows for future costs to be estimated and to stop spending
overages before they happen. The more accurate the
forecasts are, the more responsive the company can be.
• Using this in conjunction with planning and management will
yield less variability in costs and more accurate budgeting.
With traditional deployments, the upfront
costs are known before purchase.
However, due to uncertainty of customer
usage, the benefits are unknown. This is
reversed with the Cloud: the benefits are
understood, however spend is difficult to
estimate without the proper cost
management processes.
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Define IT service roles to enable alignment and accountability
The CIO, IT Managers, and Business Unit Leads all have a role to play in
consumption optimization.
Key Positions
Responsibilities
Chief Information Officer
• Accountable to corporate leadership and other internal customers for capacity
planning, managing, and cost allocation practices.
• Ensure policies and tools in place either align, or enable alignment of IT costs to
business value.
IT Managers
• Oversee capacity planning, monitoring, and cost allocation practices.
• Manage internal assets, and optimize quality of service delivery.
• Elicit requirements from internal customers.
Business Unit Managers
• Communicate needs and requirements to IT.
• Budget for division-specific external IT services.
Finance
• Work with IT to ensure costs are aligned with business value.
• Implement appropriate accountability practices (e.g. chargebacks or showbacks, if
applicable).
Many organizations are adopting specialized roles for cloud planning and accountability. For example, a
“Cloud Architect” who leads capacity planning. In some cases there may be a role (or responsibilities
added to a role) under the CFO or COO dedicated to managing cloud costs alongside utility costs.
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Consider the opportunities and challenges of chargebacks
The “Chargeback” Model – The Ideal
The “Showback” Model – A Pragmatic Approach
A chargeback system holds business units or projects
accountable for cloud costs. Costs are “charged back”
to units or projects responsible for consumption.
Info-Tech recommends a showback system where
individual business units or projects are shown how
much is being spent on cloud services.
An Ideal Chargeback/Showback Cycle:
1. Increase transparency of costs and usage
6. Associate costs with actual benefits
2. Increase accountability within business units
3. Promote cost-conscious consumption
5. Improve business/IT alignment
6. Reduce IT services costs
Because there is an external cashflow going out, there needs to be a chargeback. When doing a cloud
project, Finance need to be involved because the payment models are not the same as internal
projects.
Martin Hargreaves, Technical Architecture Manager, Vocalink
The above benefits will be more pronounced with a chargeback system. Chargebacks are an ideal state as
implementation in only straightforward with specific public Clouds. They get more complex with shared
public resources and more so with internal IT. Use showbacks when chargebacks are not feasible, and put
the appropriate measures in place to increase accountability within your cloud environment.
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Establish accountability processes
Here are some ways to overcome the challenges of instituting and managing
chargeback and showback processes:
Opportunities to successfully implement chargebacks:
Key considerations:
1.
• Who should be accountable for cloud
expenses?
Organization-wide initiatives to reduce costs.
For example, due to unusual economic or competitive pressure,
especially when downsizing is involved and IT efficiency is a welcome
alternative to workforce reductions.
Leverage top-down executive pressure to lend authority, and urgency
to IT chargebacks, and showbacks.
2.
Healthy inter-departmental competition.
Managers can further their individual careers by showing how
effectively they find efficiency within their units.
Show business unit and project leaders where they have
opportunities for efficiency, but give them room to take credit for the
decision.
Support managers’ success by providing reports they can use to
demonstrate their personal and team effectiveness.
It is amazing what you can accomplish if you do
not care who gets the credit.
• Enterprise wide IT services should
be funded from a pooled resource
from IT or other accounts (e.g.
internal/private clouds, and widely
used external deployments such as
AWS, Azure).
• How is this being governed?
• Regardless of how advanced your
cloud deployments are, business and
IT must work together to ensure that
accounting policies being pursued
reflect the needs of all stakeholders.
• Governance processes need to be
defined and followed to maintain
integrity and security of the services.
Harry Truman
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Leverage technology for cloud cost allocation
Tagging tools allow for content to be organized by department, line of
business, or application.
Tagging costs to the required business case is a great
technique to deal with this. It will:
• Increase granularity of costing reports and enables cost
allocation to be treated like a phone bill.
• Summary reports generate high level cost trends over time,
and cost spikes can be pinpointed to the appropriate
context.
• Generate predictive costing based on usage to identify if
you will be going over budget.
• Enable the appropriate planning and management
responses to further optimize consumption.
Options: Some IaaS vendors such as Amazon offer cost
allocation functions directly, but Info-Tech recommends using
third-party cloud management, and cost management tools to
improve usability, consistency, and cross-vendor consolidation.
Source: uptimeCloud website
Tagging tools are a recent innovation in the market. They can be very effective at allocation costs for
showbacks or chargebacks, but can be difficult to use in practice, especially without ways to ensure
accuracy and consistency (e.g. access controls differentiate between users, and users apply the
appropriate tags). Use third party or proprietary solutions to improve usability, consistency, and integration.
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Summary
1
Plan for Capacity
1. Define Service Tiers
2. Reserve Capacity
3. Use Cloud Cost Analytics
Classify users, applications, and data
according to criticality and value to
ensure sufficient capacity is available
to meet critical demand.
Look at options available from
vendors for medium and long-term
savings.
Leverage tools available to help
monitor and forecast demand, and
identify opportunities for efficiency.
1. Empower people
2. Define decision models
3. Leverage automation
Speed up processes and relieve highlevel managers from dealing with noncritical requests by giving users selfservice provisioning rights.
Prepare for unexpected changes in
demand by documenting and refining
decision-making models based on
proactive cost-benefit assessments.
Use proprietary or third party tools to
automate recurrent and concurrent
processes.
2. Establish accountability
processes
3. Use cloud cost management
technology
Continue to improve service tiers,
capacity reservation, and decision
models to improve cost visibility and
alignment with benefits.
Use third-party or proprietary tools to
create dashboards, alerts, reports,
and possibly chargebacks or bills.
2
3
Manage Capacity
Account for Costs
1. Define IT service roles
Clearly designate IT managers
responsible for managing customer
and stakeholder relationships.
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