IT and Business Insights for SMB Solution Providers

Secrets to Managing Cloud Costs to Boost Customer Satisfaction and Your Profit Margin

With the right strategy, tools, and information, channel pros can help SMBs optimize cloud usage and minimize expenses. By Samuel Greengard
Reader ROI: 
CLOUD SPENDING can easily spiral by overprovisioning compute power, storage, and other resources.
CUSTOMERS often have unrealistic expectations about the cloud, migrate without a strategy, and allow LOBs to buy services.
MSPs can help SMBs optimize cloud spending by implementing governance policies and providing visibility into usage and billing.

NETWORK MANAGEMENT is to a great extent about maximizing performance. Cloud management is to a nearly equal extent about minimizing costs. “Without the proper oversight and controls [cloud] environments can lead to hundreds or even thousands of dollars a month in unnecessary expenses,” says Chris Ploessel, president of RedNight Consulting.

Among the key areas that organizations struggle with: leaving cloud instances running past the point when they are needed; overprovisioning compute power, storage, and other resources; executing migrations and related application modernization efforts; and reducing overall complexity.

For channel pros, managing cloud costs represents an opportunity to help customers save money. To do so, MSPs will need to adopt a governance framework along with specific tools that allow you to monitor a cloud environment, says Tracy Woo, senior analyst at Forrester. “Real-time visibility into usage and billing is essential.”

Clouds = Complexity

One challenge as businesses shift to the cloud is they “face a lot of unknowns,” says Deepak Thadani, CEO of cloud solution provider SCO Cloud. As a result, they may overbuy resources. “Questions arise about bandwidth, ingress and egress, and what machines need to operate—and how they should be provisioned. In many cases, people have insecurities and fears that affect the decision-making process.”

Chris Ploessel

Cloud migrations are a transition point because they require rethinking IT models and modernizing applications and cybersecurity. “In many cases, business leaders have unrealistic expectations about the cloud,” Ploessel explains. “They migrate without a clear strategy, and wind up devoting more time and resources to the task then they had envisioned.” Making matters worse, “They don’t recognize that it’s possible to dial up and down utilization in a more dynamic way. So, they wind up overprovisioning resources.”

Optimizing clouds—and cloud costs—is especially tough as different departments and groups, including marketing, finance, human resources, and others, can spin up and manage their own clouds. “It’s super easy to go to a portal or website and start a service up with a credit card,” Woo notes.

However, autonomy doesn’t always lead to the best outcome. For instance, the person switching on the cloud service may not have a sufficient level of technical expertise to choose the right service level or provision things correctly. This includes critical settings such as auto-scaling features. This person might also not fully understand licensing structures for a SaaS application or add-on software.

It’s no small problem. “Without the right organizational guardrails and governance model, you can wind up spending a ton of money for resources that aren’t needed,” Woo explains. “Especially early on in a cloud migration, there can be ‘oops’ moments because people are accustomed to on-premises systems that can take weeks or months to set up and are configured very differently.”

An accumulation of cloud services from different SaaS, IaaS, and PaaS providers can also take a toll, making utilization and cost visibility difficult. Without sufficient planning and a strategic framework, the resulting collection of products, services, protocols, and security requirements can run up costs. “The business winds up with an environment that is overly complex and costly to manage,” Ploessel says.

About the Author

Samuel Greengard's picture

Samuel Greengard, a business and technology writer in West Linn, Ore., is the author of The Internet of Things (MIT Press, 2015) and Virtual Reality (MIT Press, 2019).



Submitted by SteveKazan on
Very interesting article, but what about... MSP's can get better volume pricing by shopping thru distributors or cloud aggregators. Most can also provide multi-cloud sourcing, which is key to getting the best value. Lastly, the public cloud provider tools are just a starting point. 3rd party tools with workflows (like Corent's ComPaaS) with automatic adjustments capabilities, can save up to 30%-50% monthly costs, which might be enough to fund a new project or even a headcount or two.
ChannelPro SMB Magazine

Get an edge on the competition

With each issue packed full of powerful news, reviews, analysis, and advice targeting IT channel professionals, ChannelPro-SMB will help you cultivate your SMB customers and run your business more profitably.