The five pillars of sound and cost-effective cloud governance
Is it difficult to provide services with outdated applications, outdated operating systems and expensive infrastructure resources? "The cloud" will solve all problems. At least that's what many would like you to think...

Obviously, the cloud has significant advantages and therefore today it is almost no longer a question of "if" to migrate to the cloud, but rather "how" and "when". The bundled benefits and opportunities that cloud platforms can unleash are significant for companies in some areas and, if implemented well, can give them a competitive advantage in the market. The problem is that many companies see cloud migration as a technical migration, but not for what it is: a necessary technology development, which also requires an adaptation of the organization.

In the first instance, it looks as simple as launching a web browser and clicking a few buttons to deploy networks, infrastructure and applications in the cloud. However, this simplicity brings new challenges and concepts with these cloud solutions, which can only be managed efficiently if the company takes a holistic view.

Typically, existing IT staff responsible for 'traditional' IT environments are asked to move things to the cloud without having time to understand the new ways of working that need to be established. However, this has a significant impact on an organization's ability to truly reap the benefits of cloud solutions.

Both Microsoft Azure and AWS, the major players in the cloud, suggest considering the 'Five Pillars', a well-structured best practice framework. I find it particularly important to take a proactive approach from the outset, as this prevents the creation of a "cloud monster" that quickly gets out of control!

1. Cost optimization
2. Operational excellence
3. Performance
4. Reliability
5. Security

In this blog, we focus on the cost management pillar.
In addition to the technical and organizational changes, the IT migration from the classic "on-prem data center" to the cloud also brings with it an often underestimated change in IT cost management. IT infrastructure costs, which used to be budgeted together with the finance department (often in an annual budget rhythm) and procured via purchasing, are now ordered and delivered "within minutes". These cloud costs, in turn, are now billed monthly within the company (usually OPEX, i.e. operating costs), sometimes with unpredictable fluctuations in the invoices.

The coordination between IT, CFO and purchasing described above is no longer absolutely necessary, but it makes cost management (forecasting, budgeting, cost allocation...) considerably more difficult. In order to manage this pillar well right from the start, you need to start with a good tagging strategy. Tags offer the best opportunity to allocate costs transparently within the company.

However, this is where the first challenge begins:
The engineer who makes these systems available in the cloud does not always have all the information that is later needed to manage, track and analyze cloud costs. Therefore, the "tagging" of these systems is very often postponed until later. Experience has shown that this leads to a "proliferation" of systems that can no longer be assigned because they have not been properly labeled. However, this could be solved very easily from a technical perspective if systems that cannot be labeled/assigned are automatically deleted from the cloud after a predefined period of time.

But who takes responsibility for this process?
Close cooperation with certain key groups (finance, IT, business) in the company is already required here. There are already tools such as Finops (The FinOps Foundation) that promote cross-company collaboration in order to set something like this up properly. FinOps also increases the transparency of cloud costs and enables better (data based) decisions to be made, among other things. This in turn helps the company to make the right decisions quickly in a competitive environment. As this example shows, such points should be recognized at the beginning of the "cloud journey" and implemented accordingly.

Conclusion on cost management as part of cloud governance
In summary, it can be said that cloud governance is a powerful tool for making optimum use of new cloud technologies. This gives every company the same opportunities to bring products to the global market quickly and without high initial investments (hardware purchases). At the same time, cost control is becoming more important than ever, because with the newfound agility, companies can gain a competitive advantage through good cloud cost management. However, in this complex environment, a company can just as quickly suffer significant losses if cloud spend is not managed or is poorly managed. Therefore, the professional integration of sound cloud governance with appropriate cost control is a fundamental part of a successful business in any company that uses cloud technologies.

If you have any questions or are interested, we offer possible answers in cooperation with cloud governance and FinOps specialists.