Public Cloud Costs: Why AWS and Azure Management is Tricky

Cloud computing has become the backbone for countless organizations, but AWS and Azure Management can be complicated for enterprise teams to implement and stay within budget. Amazon Web Services (AWS) and Microsoft Azure both offer extensive capabilities that can scale from startups to large enterprises, however, while these platforms provide immense flexibility and power, managing costs within these environments often proves difficult for users for a number of reasons. In this blog post we explore some of the cost challenges that can cause public cloud management to be tricky. 

Dynamic Pricing Models Challenges

Complexity of Pricing

Both AWS and Azure employ dynamic pricing models that can fluctuate based on usage, region, time, and even the type of service. This complexity makes straightforward cost prediction difficult. AWS, for instance, offers On-Demand Instances, Reserved Instances, Savings Plans, and Spot Instances, each with its own pricing strategy. Azure similarly has its own set of pricing options like Pay-As-You-Go, Reserved VM Instances, and Spot VMs. The variety, while beneficial for optimization, necessitates a deep understanding to utilize effectively.

Hidden Costs

Sometimes, costs can be buried in data transfer fees, API requests, or additional services like monitoring tools (AWS CloudWatch, Azure Monitor) which might not be immediately apparent to newcomers. These can significantly inflate bills if not monitored closely.

Resource Management and Overprovisioning Challenges

Overprovisioning

Many organizations, in an attempt to ensure they never run out of resources, tend to overprovision. This means paying for capacity that isn’t fully utilized. The ease of scaling up in the cloud can lead to inadvertently scaling too much without scaling back down, leading to unnecessary expenses.

Idle Resources

Resources that are provisioned but not used, like idle virtual machines or unused storage, can accumulate costs stealthily. AWS and Azure have tools like AWS Trusted Advisor and Azure Advisor to help identify such resources, but they require proactive management.

Lack of Cost Visibility Challenges

Tagging and Allocation

Without proper resource tagging, tracking which costs are associated with which projects or departments can be challenging. AWS and Azure allow for cost allocation tags, but the implementation must be strategic. Poor tagging strategies lead to a lack of clarity on where money is being spent.

Multi-Cloud Complexity

For companies leveraging both AWS and Azure, managing costs across different platforms adds another layer of complexity. Particularly when factored in with on-prem, colocated equipment, private cloud solutions, and cloud security and business continuity services. While both public cloud services provide some level of cross-cloud cost analysis, integration and comparison still require significant effort, and ensuring the entire IT ecosystem delivers workloads where, when, and how you need is complex. Cloud spawl and budget overruns can be difficult to catch and remediate.

Rapid Evolution of Services Challenges

Both AWS and Azure are continuously expanding their service offerings. New services or features might offer better solutions but could also change cost structures or require re-architecting, which can lead to unexpected expenses if not planned for.

Technical Debt and Legacy Systems Challenges

Legacy system migration can cause contribute to higher-than-expected costs. Moving from on-premises to cloud or from one cloud to another can introduce technical debt in the form of suboptimal code or architecture. If not done with cost optimization and IT ecosystem dependencies and idiosyncrasies in mind, legacy system migration can lead to inefficient cloud usage patterns that are costly over time. For instance, applications might be overprovisioned or underutilized, leading to unnecessary expenses on compute, storage, or bandwidth.

Cultural and Organizational Challenges

Cross-Departmental Silos

In larger organizations, IT might not always communicate effectively with finance or management teams. This can result in a lack of cost control or understanding of cloud economics, leading to budget overruns.

Lack of Cloud-Savvy Staff

The skills required to manage cloud costs effectively are specialized. Without a team that understands both the technology and the financial implications, cost management can suffer.

Strategies for Better Cost Management

Embrace Tools and Practices

• Use AWS Cost Explorer or Azure Cost Management for detailed analysis.
•  Implement automation for scaling resources up or down based on demand.
•  Regularly review and optimize Reserved Instances or Savings Plans.

Educate and Involve Teams

•  Understand your unique workload requirements and team skills matrix
• Know your IT ecosystem, including dependencies and idiosyncrasies
•  Train staff on cloud cost management.
•  Encourage a culture where cost efficiency is part of the development lifecycle.

Set Budgets and Alerts

•  Utilize AWS Budgets or Azure Budgets to set financial thresholds and alerts.

Optimize Architecture

•  Design with cost in mind, using serverless architectures where appropriate to minimize idle resources.
•  Embrace continuous optimization and right-sized architecture solutions

Review Regularly

•  Monthly or quarterly reviews of cloud spend can help catch inefficiencies early.

Conclusion

While AWS and Azure provide robust platforms for cloud computing, the challenge of cost management stems from their very nature of flexibility and scalability. It requires a blend of technological understanding, strategic planning, and organizational culture focused on cost awareness. By addressing these challenges head-on with the right tools, processes, and mindset, organizations can harness the full potential of the cloud without losing financial control.