Controlling Hybrid IT Spend BY DAVID S. LINTHICUM

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1 Controlling Hybrid IT Spend A WHITE PAPER BY DAVID S. LINTHICUM

2 Contents Executive Summary 3 The Rise of Hybrid IT 5 What is a Hybrid Cloud? 7 The Need for Consumption Tracking 7 The Need for Visibility 10 Management & Governance 12 Cloud Cruiser 4 13 Call to Action 14 About the Author 16 2

3 Executive Summary Cloud usage within enterprises went from the use of a single cloud solution to hybrid, and even to multi-cloud. These complex cloud architectures leverage best-of-breed cloud services, which allow enterprises to mix and match services for specific business purposes. However, they also require special consideration as to how these complex cloud architectures are monitored and governed, including the ability to gather and act upon cost data. An NTT European study completed in 2013 found that 56% of CIOs and Senior IT leaders see complexity of their own Information and Communications Technology (ICT) systems as the biggest barrier to their organizations enterprise-wide adoption of the cloud. The survey also concludes that cloud adoption continues to be tactical in nature, as a result of the inordinate complexity of existing and legacy ICT platforms. The fear of complexity is rooted in the problems of management. It s not building the complex hybrid- and multi-cloud architectures that scare enterprise IT; it s the ability to manage these deployments ongoing and in cost productive ways. As of now, most IT shops don t have approaches or technologies to deal with the complex use of resources. This includes the ability to monitor usage and costs of resources. Without cost monitoring and governance, enterprises have no assurance that they will return value on the investment, and business finds that unacceptable. According to a recent Gigaom survey, most enterprises are on their second or third cloud project, with many moving from the early adoption phase (1 to 3 projects completed) to the intermediate cloud user phase (4 to 10 projects completed). In other words, they are becoming more knowledgeable about the use of cloud-based technology and are beginning to draw very informed conclusions around the value that cloud computing can bring to the enterprise. While the cloud architectures and deployments have become more complex, most enterprises have not taken steps to manage the complexity, which include monitoring and governing costs. Many enterprises are near the tipping point, in terms of the number of cloud services under management, and their ability to manage and monitor those services. Beyond the tipping point is a multi- or hybrid cloud deployment that s uncontrolled. This situation will not meet the expectations of the business and will result in huge cost overruns, misdirection of expensive cloud resources, and will even devalue traditional system resources. Enterprises that lack visibility into ongoing costs and TCO (total cost of ownership) are unable to make adjustments to resource consumption to maximize value. Huge cloud bills appear, existing systems are not leveraged to take advantage of sunk costs, and cost overruns call into question the wisdom of moving to hybrid- and multi-cloud systems. 3

4 Executive Summary Moreover, enterprises do not have cost governance that spans traditional systems and public/ private clouds. While public cloud providers send you a monthly bill, private clouds and traditional systems are capital expenses, and still must be tracked as expenses. Thus, the cost governance systems should span private and public clouds, as well as traditional hardware and software systems, in order to have a complete financial picture. The purpose of this report is to look at the trends toward hybrid- and multi-cloud computing, including how managing and governing these complex systems is becoming a business imperative. What s more, we ll present solutions to this problem, including cloud financial management technology that can track the use and cost of these resources, despite the complexities and heterogeneous nature of the emerging architecture

5 The Rise of Hybrid IT IT is changing. With the advent of cloud computing, many IT shops are becoming part traditional, and part public and private clouds, or Hybrid IT. Hybrid IT is really the next evolution of enterprise IT, and will likely be the norm for the next 10 to 20 years, perhaps beyond. The use of hybrid- and multi-cloud deployments will define the rise of Hybrid IT, and create some high value opportunities for the enterprise, but this will also result in some additional challenges that enterprise IT will need to address. Most enterprises need to get the hang of things, in terms of how these environments are to be managed, specifically how costs and IT resource consumption are to be monitored, managed, and governed. Understanding the Movement to Hybrid IT Hybrid cloud computing s popularity will continue. Most enterprises have very complex requirements for applications that may span more than a single platform. In the case of cloud computing, the use of either private clouds or traditional systems, when paired with public clouds, provides a few significant advantages: The ability to move workloads from owned hardware to public cloud services as the requirements of the workloads change. The ability to split or distribute workloads between on-premise and remote public cloud services, thus providing the ability to scale out, or, cloud burst as needed to accommodate changing workloads. The ability to mix and match best of breed cloud services, such as leveraging a cloud database service from a public cloud provider, with an application that may be on-premise. As with any complex approach to computing, there are tradeoffs to consider. In the case of hybrid cloud computing, tracking the consumption and utilization of resources becomes much more difficult. Indeed, unless managed by an automated tool using advanced data gathering services, it s difficult to impossible for enterprise IT to know how the cloud and non-cloud resources are being utilized. Enterprises move to hybrid- and multi-clouds for a variety of reasons: Single cloud solutions typically don t provide the breadth and depth of functionality that enterprises require for all of their cloud computing solutions, so they mix and match public and private options. 5

6 The Rise of Hybrid IT The rise of cloud management platforms (CMPs) gives enterprises a single interface to help provision, manage, and scale complex cloud environments. Usage-based accounting and cloud financial systems make it easier for enterprise IT to evaluate the cost of cloud computing, including showback and chargeback services, as well as the ongoing value that the cloud-based systems return. Companies that want to move applications into public clouds need a range of services, including different databases, middleware, development, and compute services, and this drives the use of multiple cloud computing platforms. The growing use of platforms, infrastructure, and software in the cloud results in multiple forms of clouds. The use of cloud financial management systems is a mandate when it comes to deploying hybridand multi-cloud architectures and monitoring how they work and play well with existing systems. They are able to track areas where costs are out-of-line with productivity and value, as well as allocate costs to cost centers using chargeback and showback. Examples of the value of this technology include the ability to spot and correct areas where resources are overprovisioned, such as overprovisioned VMs. Cloud financial management systems can bring these issues to the attention of the systems and cloud managers so adjustments can be made. The same technology is applied to the use of cloud and traditional storage, for example, storage leveraged for a big data analytics system. It even has the ability to compare prices of cloud resources and make sourcing recommendations based on which public cloud providers offer the best value. Enterprises must take steps to create and deploy a cloud management strategy as their cloud architectures and deployments become more complex and difficult to manage. The time is now to establish cost monitoring and governance approaches and select the right solution. Waiting too long means that you accept the risk of inefficiency and, given the cost, that is always unacceptable. When considering the use of hybrid- and multi-cloud architectures, a cost management solution is no longer an option; it s a mandate. 6

7 The Rise of Hybrid IT What is a Hybrid Cloud? The notion of a hybrid cloud has been around since NIST defined it in 2009: Hybrid cloud. The cloud infrastructure is a composition of two or more distinct cloud infrastructures (private, community, or public) that remain unique entities, but are bound together by standardized or proprietary technology that enables data and application portability (e.g., cloud bursting for load balancing between clouds). So, we can assume this to mean that hybrid clouds are two or more cloud-based platforms, such as IaaS, PaaS, or SaaS, and those platforms can be private or public. These platforms are paired together to provide the advantages of distribution or the ability to move workloads in and between cloud-based platforms to support the needs of the applications. Hybrid clouds are also a massive collection of network accessible services/apis. This means hybrid clouds are also collections of APIs or services to access cloud services. Hybrid clouds are typically managed through a single point of abstraction, such as a cloud management platform or cloud financial management system. Since hybrid- and multi-clouds are complex and heterogeneous, they should be managed with tools built specifically for the purpose. These tools can provision cloud services, monitor them during operational use (including performance and cost information), and de-provision the cloud services once their task(s) are complete. Hybrid clouds are the choice of larger enterprises that now leverage cloud-based platforms. The use of hybrid clouds is typically centered on supporting application workloads that must scale and provide a good level of resiliency. Most cloud implementations are hybrid- or multi-cloud. The Need for Consumption Tracking The lack of resource and cost consumption tracking plagues enterprises. Enterprises move to cloud-based platforms with little or no understanding of the data that should be gathered, tracked, and analyzed. Thus, the value that these platforms bring won t be understood. Many enterprises will underestimate or overestimate the true value and the true costs of new and existing IT sources. Enterprise managers realize they need this information. In a recent Gigaom survey (see Figure 1), when asked about key features businesses should look for in a hybrid cloud offering, monitoring and management was second only to security. This shows that many who are implementing cloud-based solutions, including multi- and hybrid-cloud, understand that monitoring the costs as well as technical operations is key to finding the true value of the technology. 2 Excerpt from: Peter Mell & Timothy Grance. NIST SP , The NIST Definition of Cloud Computing. ibooks. 7

8 The Rise of Hybrid IT What key features should businesses look for in a managed hybrid cloud offering? Multi-cloud governance Monitoring and management Security Data management None of the above Percentage of respondents citing feature Figure 1: In a recent Gigaom survey, when asked about key features businesses should look for in a hybrid cloud offering, monitoring and management was second only to security. Complexity is the true problem. Architectures are becoming more complex and difficult to manage with the use of hybrid clouds. Many different types of IT resources are at play, and those managing the resources must learn how to deal with each traditional, public cloud, and private cloud component. Data is gathered differently from each device, cloud, server, and database, and thus the amount of heterogeneity and complexity for the average IT shop is daunting. What s more, enterprises lack visibility into ongoing costs, and TCO. There is no unified effort or technology put in place to track these data points. The true TCO remains an unknown, and therefore the value is misunderstood. This can lead to disastrous consequences as costs spin out of control and risk increases. Enterprises do not have cost governance that spans traditional systems and public/private clouds, and this is something that s a requirement as you move toward more complex architectures that leverage cloud. As you can see in Figure 2, a cloud financial management system can track the usage on public and private clouds, along with traditional systems. This allows those in enterprise IT to get a complete picture as to what resources are being consumed, and how much they cost. This also considers system dependencies, such as a local storage systems that support a pubic-cloud deployed application, as well as what cloud servers were provisioned, how much they cost to run as they exist, and analytical data, such as growth trends that are helpful in planning and understanding what value will be realized by the business. 8

9 The Rise of Hybrid IT Public Clouds Private Clouds On-Premise Legacy Apps & Databases my servers my storage my storage my servers Figure 2: Cloud financial management systems are able to track the usage of public and private clouds, along with traditional systems. This allows those in enterprise IT to get a complete picture as to what resources are being consumed and how much they cost. The lack of consumption tracking leads to the inefficient use of cloud and non-cloud technology. If these issues are not quickly addressed, they will likely get worse as enterprises move headlong into the cloud. Enterprises need to create a consumption tracking strategy now, as well as select toolsets to gather and understand the right pieces of information that will allow them to see where they have been, where they are going, and what the future holds. There are a few problems that need to be considered when looking at hybrid IT, consumption tracking, and cost management: First, complex services are difficult to measure in terms of resource usage and costs. However, they are an integral part of hybrid- and multi-cloud solutions. What makes these services complex are their granularity and how they interact with and are dependent upon other services. Enterprises need to understand who s consuming the services, as well as how those costs track to the resources that are bound to the services. For example, an application may invoke a few APIs for storage services that actually involve aspects of the AWS, Microsoft, and private cloud resources. You need to understand how all of these things interact in order to understand the true cost metrics. Second, the tipping point to manually manage resources is in the past. This means the number of services the enterprise manages reached a point where use-based accounting using manual processes no longer worked. The days of monitoring cloud and non-cloud resources using Excel are long behind us. 9

10 The Rise of Hybrid IT Third, there are too many consumers of the resources to manually track. Just as we hit the tipping point for services, we also hit the tipping point for service consumers. There are just too many users and organizations that leverage cloud services to track them manually, which needs to be done for both trackback and show-back cost allocations. Finally, the lack of usage tracking means little visibility into past usage of resources, cost information, and future trends that should be proactively addressed. The enterprise cloud manager has no deep understanding as to where the resources are consumed or by whom, and how much it costs the enterprise. The Need for Visibility So, now we know that the lack of consumption tracking can cause some real problems within enterprises that are moving to hybrid- and multi-cloud. It s also important to understand what kinds of visibility enterprises require. Back to our survey, when asked about the value of gathering operational data over a long duration of time, the ability to plan and budget, as well as the ability to avoid operational problems were the most popular responses (see Figure 3). What do you consider the value of gathering operational data over a long duration of time? The ability to spot long-term trends, such as performance degradation or increasing outages The ability to spot cost overruns as related to system usage The ability to determine when organizations or users are leveraging more resources than they should The ability to gather data for planning operations including capacity planning and budgeting None of the above Percentage of respondents in each category Figure 3: When asked about the value of operational data over time, the ability to plan and budget as well as the ability to avoid operational problems top the list. 10

11 The Rise of Hybrid IT Having the proper visibility into system consumption solves a lot of different problems, including: Mapping consumption data to consumers. Mapping consumption data to resources. Understanding complex relationships, such as applications that use many different cloud and traditional resources. Visualizing trends, such as degrading performance figures, or excessive cost consumption by specific resources. Visualizing trends around outages, and behavior that leads up to outages. The best way to illustrate these points is to walk through a specific use case. As you can see in Figure 4, an enterprise gathered consumption data from a variety of public clouds, private clouds, and traditional systems, including Windows Azure, Amazon Web Services, VMware, and Cisco. The data was then mapped to different business entities, including geographical locations, business functions, data centers, and even product and/or service offerings. From this consumption tracking and data sorting information, enterprise IT can provide chargebacks to specific business units that consumed the resources. Also, they were able to spot resources that where over-provisioned, such as an application that allocated too many virtual machines (VMs). Thus, IT could re-allocate resources, such as storage, to leverage the resources more efficiently. Through the use of this technology, the enterprise was able to save 7% in costs for annual IT spending that reached $90M. Figure 4: In this use case, leveraging consumption tracking allowed a business to map data gathered by location, function, products, etc. and then identify areas where corrections or improvements could be made. In all, they were able to save 7% of their $90M annual IT spend. 11

12 The Rise of Hybrid IT Management & Governance The governance aspects of consumption tracking are important as well. This means that we set up pre-defined policies to control aspects of IT resource consumption. For example, policies may include limiting IT resource consumption for specific applications when the threshold of allocated resources has been exceeded, automatically reporting trends that indicate that cost overruns are forthcoming, or sending alerts to users when they consume excessive cloud and non-cloud resources. As you can see in Figure 5, use-based accounting or consumption tracking exists along with other governance systems and subsystems, including performance monitoring, service catalogs, security, etc. The idea is to provide a comprehensive set of services that can monitor, manage, and govern both cloud-based and traditional systems. Indeed, a governance strategy should be created that includes the management of all aspects of these systems, and the appropriate technology needs to be selected and implemented. Figure 5: Management and governance means that we place cost controls and cost governance as a core part of the overall system governance strategy, including security, service management, performance, etc. The key here is the concept of automation. It s not just the ability to monitor consumption, but the ability to create automatic processes to deal with issues without forcing humans to intervene. Examples include automatically sending an to system owners when trends indicate that they are going to go over budget for system usage this month, or automatically de-provisioning cloud-based servers based upon hitting a cost threshold, or spinning up cloud-based virtual servers when more cost effective. Automation is no longer a nice to have but rather, a must have for today s hybrid IT computing environments. 12

13 Cloud Cruiser 4 A Solution Built for Hybrid IT Financial management solutions for enterprise hybrid IT must address the unique challenges of consumption tracking, management, and governance across diverse computing platforms and organizational structures. One such solution offering is Cloud Cruiser 4, which provides deep insights into IT resource usage and associated costs across traditional, virtualized, public and private cloud platforms. Offering a real-time single pane-of-glass view into consumption and costs, IT professionals are able to efficiently and cost effectively balance their hybrid IT service delivery with the demands of the business. Built on a strong foundation of IT financial intelligence, Cloud Cruiser s decision insights give you the clarity and control to match IT service supply and demand, compare and optimize costs, and forecast future requirements (Table 6). Figure 6: Good consumption tracking and financial analytics tools should provide a single pane of glass view of all IT services, and provide information as to their usage and costs. 13

14 Call to Action The movement to cloud computing, including the use of hybrid- and multi-cloud architectures, is a foregone conclusion for most enterprises. However, most in enterprise IT don t know how to approach the cost management and governance aspect of the movement to cloud-based systems. This leads to a huge gap in understanding the value that this new technology brings, as well as increases the risk of adoption of cloud technology in general. Enterprises must make a call to action, in terms of what will be done to address this problem. This includes creating a comprehensive cost management, governance, and analysis strategy that can deal with the cost tracking requirements for the next several years. We suggest that you following a process that looks like this: Understand existing requirements, including to be architecture, inclusive of hybrid- and multicloud deployments. List and define the source systems, including storage, compute, applications, etc. Note that some will reside within public and private clouds, but many traditional systems will remain. Make sure to plan accordingly. Define the cost data and cost metrics that need to be gathered. This includes raw operational data, such as cost usage per hour, as well as calculated points, such as value metrics, and overall efficiency of the cloud or traditional system services. Define the increments in which the data is to be gathered, and how the data will be mapped in the target cost data repository. Define policies and other governance items, which will establish and automate sets of alerts and processes that will be kicked off upon certain events. For example, these policies may trigger alerts when allocated monthly cost limits have been reached or automatically de-provision services that have not been used for a certain period of time. Define the reports and analytics that would be most valuable to the IT planning process, or even operational effectiveness. This means looking at longer term trends, such as costs decreasing or increasing around public cloud price changes, or the overall cost effectiveness of cloud and noncloud systems, allowing you to perhaps allocate resources where they can do the most good. Select the right consumption tracking technology. Make sure to consider all of the requirements listed here, as well as items that are specific to your enterprise or problem domain. Implement and test, noting the overall effectiveness of the solution. The focus should be on long- term operational value. 14

15 While there is no magic bullet here, the use of this technology is foundational to any hybrid- or multi-cloud enterprise deployment. Clearly, we ve gone beyond the tipping point. The complexity and heterogeneity which is a part of leveraging public and private cloud solutions, along with traditional IT systems, means that manual systems that monitor costs are no longer effective. Indeed, manual systems can add a great deal of risk and cost. Consumption tracking, in terms of costs and resources, is and will become the focus of future hybrid- and multi-cloud deployments. As Hybrid IT rises, mechanisms and approaches need to be in place that improve on cost efficiencies, and the overall value delivered back to the business. 15

16 About the Author: David Linthicum Leading technology publications frequently name David S. Linthicum among the top 10 enterprise technologists in the world. He is a true thought leader in the industry, and an expert in complex distributed systems, including cloud computing, data integration, service oriented architecture (SOA), and big data systems. As the author of over 13 books on computing with over 3,000 published articles, as well as radio and TV appearances as a computing expert, he is often quoted in major business and technology publications. In addition, David is a frequent keynote presenter at industry conferences, with over 500 presentations given in the last 20 years. David s industry experience includes tenures as CTO and CEO of several successful public and private software companies, and upper-level management positions in Fortune 100 companies. Dave has delivered over $2 billion dollars in value by transforming companies from traditional to innovative technologies, and moving them to lucrative exits that benefitted investors, employees, and customers. 16