“Trust dies but mistrust blossoms”
When you have responsibility for a significant expense it is important for you to manage that expense. If you do that poorly, you can lose the trust of your organization’s executive team. In this article, we look at what poor cloud cost management looks like, and we look at the problems it can lead to that hold your organization back.
Cloud cost management is an immature discipline. Success in this space looks different across organizations. There are no codified standards or practices, yet there are common principles that are emerging. These practices are frequently built as a response to a failure, only after an organization’s costs go off the rails. They’re built in order to regain trust.
Teams entrusted with managing cloud costs are commonly ill-equipped for the challenge. They either a) bring practices from the traditional on-prem data center or b) have never managed infrastructure costs at all. Neither sets an organization up for success. Neither facilitates frictionless innovation that cloud can bring.
These are signs of unhealthy cost management practices:
- Engineers don’t have immediate feedback on costs incurred as they build and operating systems.
- Costs are reviewed and reported only monthly, or quarterly.
- Costs continually increase, and the reason for that increase is unclear to key leaders. There is no informed forecasting and no clear business understanding of what is driving the increase.
- There are fire-drills to answer questions from the finance, product, or executive teams about expenses.
- Most costs are static, instead of based on customer growth, use, consumption.
- Justification is asked for costs from those who have little influence on those costs.
- Variable costs are not linked to business metrics such as revenue or customer/user/account.
Mismanaged costs can lead to a loss of trust. The trust we are most concerned about here is the trust and confidence of the Executive team. They must have confidence in their Technology, Product, Infrastructure, and Application teams. That lack of trust may lead to the following:
- There is a hesitancy to invest in innovation due to the risk of unknown cost.
- The autonomy of engineering teams is pulled back, with friction added by way of manual controls and approvals.
- There is a reluctance to make cost-saving commitments to resources and long-term contracts.
- There is a strong focus on multi-cloud or cloud portability. This limits use of platform-specific tools that may be helpful for a given problem.
- A lack of focus on a single platform deprives investment by engineering staff to going deep in its mastery. They fail to make the most optimal use of the platforms services.
- Executives and board members start prompting or entertaining consideration of a migration. They want to move to a different provider as a solution to the high or opaque cost.
All of these are signs of loss of trust in cloud platforms and their management. It is not an optimal situation; an organization is encumbered when it should otherwise be focused on growth and value production. This loss of trust can be avoided by investing in management practices. If you’re already seeing signals of lost trust, it can be repaired. Begin adopting management practices and driving the necessary changes across your organization.