More Clouds, More Costs?

Tackling the Complexities of Cloud Cost Management in a Multi-Cloud Landscape

In the rapidly evolving digital era, cloud computing has become paramount for businesses looking to harness the transformative power of technology. As organizations seek agility, scalability, and enhanced performance, some turn to multi-cloud environments, leveraging the strengths of various cloud providers to optimize their operations. However, amid the potential benefits lies a significant challenge: effectively managing cloud costs in a dynamic and complex landscape.

Join us as we unravel the struggles of managing cloud costs in a multi-cloud environment and discover practical approaches to optimize spending and achieve long-term financial sustainability.

In a multi-cloud setup, companies work with multiple cloud providers at once for numerous reasons. Sometimes it’s a strategic choice to be less tied to one vendor. Sometimes it’s a compliance-driven decision, a requirement-based preference, or an economic move to shop around for the cheapest solution. Finally, mergers & acquisitions, or a lack of a clear IT policy can also cause different teams to work with different services from different providers.

Cheaper by Definition

For those who think multi-cloud is cheaper by default, that is simply not the case.

"There are several reasons to stick with one cloud, and cost is certainly one of them. Time is money, and managing training, support, deployments, and contracts for multiple platforms is way more challenging.", says Michiel van Oudheusden, Cloud Consultant at Xebia | Xpirit.

Stefan Rapp, Cloud Solution Architect at Xebia | Xpirit, adds, "While a multi-cloud approach allows you to be flexible in the event of sudden changes in the price structure, functionality or performance of a cloud provider, remember that moving cloud-native services from one cloud to another incurs additional costs, adds complexity and introduces new risks, depending on the organizations’ requirements.".

Cost Optimization

So, while multi-cloud might come with benefits like increased resilience and flexibility, it also requires diligent management and a focus on challenges like security, data integration, governance, and – what we will be addressing today – cost optimization.

The more cloud providers are used within a company, the more complex and challenging managing the costs of the entire cross-platform landscape can become.
— Stefan Rapp, Cloud Solution Architect at Xebia | Xpirit.

The top 5 implications for cost management:

Lack of visibility: Obtaining a unified view of costs in a multi-cloud environment is challenging because each cloud provider offers its own billing models, reporting mechanisms, and interfaces. As a result, you might lack the visibility into spending patterns that can help prevent cost overruns and inefficiencies.
Multiple pricing models: Cloud providers have a variety of complex pricing structures, and understanding and comparing these models across different providers can be confusing, especially for organizations that lack expert knowledge. Companies often struggle to select the most cost-effective options and optimize resource allocation.
Optimizing and rightsizing resources: With multiple cloud platforms, it’s a challenge to identify underutilized or oversized resources and allocate them accordingly. Inefficient resource allocation increases costs and can affect performance, limiting the flexibility and scalability benefits of a multi-cloud environment.
Lack of cost governance: Maintaining cost governance across multiple providers poses a considerable challenge. If different teams purchase resources independently, organizations may struggle to put a centralized cost management policy in place. However, the decentralized alternative can lead to budgetary inconsistencies, redundancies, and overspending.
Cost allocation and reporting: Allocating costs to specific projects, departments, or customer accounts across multiple cloud providers calls for a well-defined cost allocation framework. Without this transparency, companies will struggle to accurately assess the financial impact of cloud investments and make data-driven decisions.

Start Managing the Costs of Multiple Clouds Effectively

To manage the costs of multiple clouds effectively, consider the following approaches:

Incorporate costs: Most clouds allow the inclusion of charges from other cloud providers. For instance, Azure can assimilate AWS charges, enabling centralized cost management.
Utilize multi-cloud tooling: Various tools facilitate seamless multi-cloud management by streamlining operations and offering unified visibility across different cloud platforms.
Cloud Management Platform (CMP): This standardized interface provides a clear overview of all cloud services used across different platforms within your organization.
Implement FinOps: FinOps helps manage multi-cloud costs effectively by optimizing spending, enhancing cost visibility, and fostering collaboration across multiple cloud platforms at a level that suits your maturity.
Seek expert assistance: Engage cloud experts who know how to navigate complex cloud environments. Their knowledge and experience ensure efficient cost management and optimal usage of the different services.

Achieve Financial Sustainability

Managing cloud costs in a multi-cloud configuration is a huge undertaking for companies. The challenges due to limited visibility, complex pricing structures, resource optimization, lack of cost management, and accurate cost allocation require proactive strategies and solutions. By leveraging cloud cost management tools, implementing centralized management frameworks, and investing in expertise and training, organizations can overcome these challenges, realize the full potential of multi-cloud architectures, and drive growth, innovation, and financial sustainability in the digital era.