A demanding year full of unexpected challenges is coming to an end. So it is no wonder that some people want to treat themselves to some (online) shopping at the end of the year. But not just individuals, many companies as well are making some last-minute investments before the turn of the year or planning their IT budget for next year – so it is worthwhile to take a closer look at cloud expenses.
The idea may not be as silly as it sounds, given Microsoft’s own slogan: “My other computer is an Azure Data Center”. While it is not a suitable solution for individuals, companies may certainly find the cloud to be an interesting and attractive “replacement” for purchasing their own server hardware. Cloud services are available as a free trial for a limited time period – but what happens after that? And above all: how can I make sure that this gift does not turn in to a Trojan horse (as in the case of “NASA Earthdata”) and costs will not become higher than expected? In today’s blog I deal with these very questions.
Like every other product and service, the cloud contains pitfalls that can generate astronomical costs – not an unusual problem, therefore. If you have ever exceeded the mileage limit on a rental car or did not fill up the tank before returning it, you know how easily an inexpensive offer can turn into a costly affair. The same advice as for any offer thus applies: always read the small print. Why should things be any different for cloud services?
To avoid the unpleasant situation of having to optimize accrued costs, you should consider how to prevent these costs from arising in the first place. Those who come up with the idea of simply transferring things to the cloud while dusting off their data center’s rack during the year’s end cleaning, will be in for quite a surprise next year. Before migrating to the cloud, you must first assess the “cloud readiness” of the application and servers in question. Not only feasibility but also the usefulness of the migration is at issue, since not every workload is suitable for the cloud.
The following questions have proven useful in such an assessment:
Thinking about these simple questions can help you avoid costs in advance that would yield no added value for your company and could even lead to higher expenses. But what if you have considered all the sources of potential and want to reduce costs further?
Even if your systems are already running in the cloud, you still have various ways to reduce costs. Microsoft is continually expanding these possibilities, regarding both actual costs and cost management. Direct cost optimization focuses mainly on the well-known possibility of a “reserved instance,” available nowadays not only for virtual machines but for various storage types as well. Another option, often neglected, is activation of a “hybrid benefit” – “recycling” existing Windows or SQL and, more recently, Linux licenses. Of course, you have to make sure that the existing licenses are eligible for use in the cloud; in the case of Windows and SQL, active Software Assurance is required, for example.
In addition, some forms of assistance are being continually expanded in support of cost control, or cost management. Deserving mention is “Azure Advisor,” which not only identifies technological opportunities as well as risks, but also addresses commercial issues. This includes not only assessing whether a reserved instance would be a worthwhile option, but also analyzing utilization or traffic. Recommendations are added for improving the workload technologically and/or commercially. Furthermore, the new service, Azure Cost Management, has proven its merit as a central dashboard not only offering precise analyses of costs with various filters, but also assigning budget periods to various levels, such as subscriptions.
“So come on and let me know.” (I apologize if now you cannot get this 1980s punk rock song out of you head.) Please do not get me wrong: I am convinced that in the future every company will and MUST at least partly procure cloud services in order to position itself well on the market. Apart from the cost factor, the added value generated by cloud services for your company plays a role too: scalability, flexibility, opening up new business opportunities and, above all, speeding up processes. The list is endless, but in the end all these possibilities are just features of the same general marketing tool. The benefits for your companies will be specific, and at least in some points differ from the benefits for other companies. Nor is the situation so clear-cut regarding costs, for in the end the whole package must add up – namely in terms of added value versus involved costs.
What is the moral of the story? Well, more expensive is not always better, and buying cheap often means buying twice.
So take your time to think about your cloud journey – but do it after the holidays.
In the meantime, have a peaceful time this holiday season and a good start into the New Year.
Your contact person
Martin RosahlExpert SAP S/4HANA Transformation, Service & Support
© 2023 Scheer GmbH
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