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INNOVATION INFORMATION TECHNOLOGY

Spending Your Money Judiciously on Cloud

ANITA NAIRAMIT MUGRAIKRISHNAKUMAR BEVIN

Executive Summary

UST GLOBAL I SPENDING YOUR MONEY JUDICIOUSLY ON CLOUD – A UST GLOBAL WHITE PAPER I MARCH 2017 2

With the accelerated rate at which businesses are

adopting Public Cloud today, it has become

extremely important for businesses to adopt

methodologies to manage their Cloud finances

effectively. Companies today have a range of

options to cut their costs in Cloud. For instance,

they could take advantage of the state-of-the-art

Cloud architecture patterns, use effective report-

ing tools, introduce automation solutions for

inventory control and improve their Cloud Govern-

ance strategies.

This paper discusses the various approaches we

provide to our customers to stay cost-effective in

Public Cloud without compromising on the real

benefits reaped from Public Cloud adoption.

Cloud is now an integral part of every organiza-

tion’s digital transformation roadmap. The term

“zero CAPEX” has been frequently associated with

Public Cloud platforms. Public Cloud vendors are

globally expanding their footprint and exponen-

tially increasing platform capacity each day. The

true benefit of “economies of scale” is passed on

to customers – As a result of this, the costs of

Cloud services have been continuously decreas-

ing and the number of services are on the rise.

Cloud Computing offers cost advantages primarily

because as a user of Public Cloud, you are using

space in a third-party vendor’s data center. You

thereby save on real-estate, equipment, power,

backup and manpower, which are offered to you

as a service by your Cloud Provider. The immense

benefit of the pay-as-you-go pricing scheme also

makes Cloud financially attractive.

However, as a regular user of Cloud, a company

can experience a phenomenon we call “Cost

Explosion in Cloud”. This scenario can be com-

pared to that of a shopping experience in a super-

market. When you purchase services in Cloud,

you may end up buying items that you really do

not need. As time goes by, these items that you

over-purchased end-up fattening your Cloud bill.

“What does my bill look like? How do I itemize my

bill? How can I bring down my bill the next time I

shop?” These are the queries that intrigue most

businesses.

In this paper, we discuss various measures an

organization could adopt to control the spending

on Cloud. This paper is organized into four key

sections. In Section 2, we talk about the “What”

aspect – we make you aware of what is it that you

are spending on. Section 3 talks about the

“Where” aspect – we help you see where exactly

you are spending your money. In Section 4, we

cover the “How” aspect – here, we help you with

various solutions and techniques to lower your

Cloud expenditure. Section 5 covers a few Case

Studies with illustrations on how we helped our

customers solve their cost problems. This paper

has been written to be agnostic of any specific

Cloud platform. However, we have used exam-

ples from the environments of various leading

Cloud Providers, and the case studies use these

platforms as the basis. Scope of discussion in this

paper is restricted to Public Cloud.

Introduction

“26 percent of respondents to the Right

Scale 2016 State of the Cloud Survey iden-

tified cloud cost management as a signifi-

cant challenge, a steady increase each

year from 18 percent in 2013.

Cloud cost management provides a signif-

icant opportunity for savings, since few

companies are taking critical actions to

optimize cloud costs, such as shutting

down unused workloads or selecting

lower-cost cloud or regions.”

Getting Timely Insight into Cloud Expenditure


Table 1: Cloud Services and Pricing

According to Gartner research1, the Public Cloud

market is estimated to reach USD 383 billion in

year 2020. Every organization is investing signifi-

cant time and money in understanding, experi-

menting and utilizing Cloud services. The reliance

on Public Cloud service providers is only going to

increase in future.

Any organization with a Public Cloud presence

would want to know what Cloud services incurred

the majority of its cloud expenditure. It is a

common trend that only huge bills demand every-

one’s attention whereas the average bills are over-

looked in business.

It is therefore essential to know how much one is

spending on cloud services as well as the distri-

bution of charges. The table below lists the

various cloud services and their pricing trends,

which would help the company have a bird’s-eye

view of its Cloud expenditure.

“It is a common trend that only huge bills

demand everyone’s attention whereas the

average bills are overlooked in business.”

NETWORK

Redundant internet, VPN, and direct links for accessing cloud platform; load balancing, content

delivery network, public IP addresses, domain registration, and DNS services

SECURITY

IAM, IPS, IDS, WAF, SIEM, and Auditing services

COMPUTE

Containers, virtual machines, and even physical servers on underlying shared / dedicated

cloud infrastructure in pay-as-you-go model or commitment model

STORAGE

Mostly discs for operating system, user data, applications, and log files as well as snapshots,

backup, and data archival

MANAGEMENT

Monitoring, management and service desk tools/services

PLATFORM SERVICES

Data Analytics, Data Warehouse, Internet of Things, Mobility

SUPPORT

Phone, email, and web based support

1 http://www.gartner.com/newsroom/id/3616417


Fig 1: Consolidated Bill Sample – Single Cloud Model

Typically, an organization uses multiple Cloud accounts from a single Cloud Provider to meet specific

requirements of various departments, local offices, or subsidiaries. The consolidated bill will include the

total spend on each AWS account. Below is a representation of a sample Cloud bill with percentage

spent on each of the accounts:

Eventually, an organization may adopt a multi-cloud strategy to avoid vendor lock-in, to utilize specific

Cloud services or to implement Disaster Recovery. The consolidated bill in this case will include the

incumbent costs for each Cloud Provider as shown below:

The bills educate the Corporate Finance department about the total expense on their Cloud Infrastruc-

ture. A review of the bill and charge-back are ensured in every organization. However, only a deeper

analysis of the bill would show where precisely the organization has been spending on, in Cloud. The

next section deals with the various aspects of itemizing and analyzing the bill and the tools that help in

the process.

AWS Cloud – Account-wise Spend

Corporate Account $888.88

Global Procurement $987.65

UK Subsidiary $222.22

USA Subsidiary $999.99

APAC Subsidiary $456.78

Corporate Account Global Procurement

APAC Procurement UK Subsidiary

USA Subsidiary

Fig 2: Consolidated Bill Sample – Multi-Cloud Model

Cloud Platform Specific Spend

AWS – Primary Site $2345.67

Azure – DR Site $3333.33

Google – Analytics $1111.11

AWS - Primary Site Azure - DR Sites Google - Analytics

56%

25%

28%13%

28%

6%

33%

11%

Cloud Finance Analysis

Level 1 View

Total = $100,000 Total = $20,000

Level 2 View Level 3 View


Fig 3: Cloud Reporting Cross-Sections

This section focusses on the different ways an organization can view fine-grained details about their

Cloud expenditure.

Certain businesses may find it important to identify the Cloud cost distribution across different depart-

ments and geographies, while other organizations may need to report the costs by different Cloud

resources and by the applications that run on Cloud. Companies that run their workload on multiple

Cloud platforms may find it relevant to view cloud costs based on Cloud service provider. A combination

of these cross-sections can also make a useful view. A daily, weekly, monthly or yearly trend can be

extrapolated to make projections of usage and costs into the future.

The various tools available in the industry for Cloud reporting can range from the gamut of reporting

possibilities exposed by the Cloud Provider themselves, to offerings from third-party vendors as shown

in the figure 4. As a business, it is important to evaluate which tools give you the reports that best suit

your portfolio.

Daily View

Costs

Usage

Payroll Departmentin Europe has spent$20k in storage onAzure

Monthly View

Costs

Usage

Monthly Projections

Costs

Usage

Yearly Projections

Costs

Usage

HRFinancePayrolletc..

VMStorageNetwork BWDNSetc..

Digital AppMobile APPetc..

USEUJapanetc..

AWSAzureetc.

Department

ResourceGeography

Application

CloudPlatform

Cloud Cost Control Measures


Fig 4: Tools for Reporting in Cloud

Fig 5: Remedial Measures for Cloud Cost Savings

Tuning the Architectureto save costs

Choosing the right CloudProvider and Services

Shut down unusedservices periodically

Tagging Servicesperiodically

Sizing theresources

Choosing a cost-effectivePricing Scheme

Having good CloudGovernance measures

Certain Cloud reports are very useful from the viewpoint of the CFO of a business who wants to make

sure that the Return on Investment (ROI) of the company’s Cloud Investments is in line with the projec-

tions. Third-party tools, such as CloudHealth and Cloudability, offer a great number of ways to pull out

many such reports.

Once we know where the wastage in Cloud resides through reporting and analysis, the next step is to

take remedial measures to bring down those costs, and that is the focus of the next section.

Knowing where the Cloud costs are spent is just a beginning of governing on Cloud. What ultimately has

to happen is to drive in remedial actions on the information gathered. In this section, we propose various

solutions to help stay money-wise on Cloud. Below are few key control measures:

RightScale CloudabilityCloud HealthAWS EC2

Utilization Report

AWS Cost Explorer AWS Trusted Advisor Azure Costs Cloudyn

COST

1

2

34

5

6

7


Fig 6: Cost-saving architectural guidelines

1. Tuning the Architecture to save costs

Architecting your infrastructure and applications in Cloud is an iterative process, wherein you apply a set

of principles and paradigms to your design that would make it flexible and conducive to expansion.

Apart from flexibility, cost is another factor that must be considered in your design.

Cloud users have a tendency to use as many resources as possible and to employ as much high-end

resources as available, for a given need. However, a mindset of planning the architecture ahead of time

and avoiding overprovisioning has to be followed instead. Employing auto-scaling is a great way to

avoid overprovisioning.

Use of services that allow the architecture to be loosely coupled (example, SQS service in AWS) and use

of dedicated services for certain use-cases (such as Glacier service in AWS for archival, AWS Direct

Connect to save on Data Transfer costs, etc.) should be encouraged. Being informed about cost cuts

offered by the Cloud Providers would help one redesign the architecture to be cost optimal.

The following list offers a few architectural insights towards saving on your Cloud costs:

1

2

3

5

4

Avoid over provisioning

Choose loosely coupled architecture so that components can scale independently

Keep a tab of newer andcheaper Cloud-nativeservices

Employ auto-scaling

Choose services designedfor lowering costs


Fig 7: Guidelines for choosing the Cloud Provider / Services

2. Choosing the right Cloud Provider and Services

It is essential that a detailed Requirement Analysis be performed before determining the right Cloud

vendor/partner. The key parameters captured during in-depth application assessment and infrastruc-

ture discovery can help in determining which particular target Cloud Platform is best suited, from cost,

compliance and technology point of view.

The following are some of the points that ensure cost-effectiveness in the choice of Cloud Provider/Ser-

vices:

3. Shut down unused services periodically

The majority of costs in Cloud are incurred by running instances or servers and their associated data

storage. Many a times, development teams spin up servers for testing and leave them running for a long

time. Same is the case with other expensive services that the team might have used for evaluation or

Proof of Concept projects. Hence, it is important to periodically monitor or audit the Cloud Inventory in

order to save money for the IT Department of a company.

Follow some of the points below to save on costs:

1

2

3

5

4

Use TCO Calculator to compare costs of services

Use advanced services offered as SaaS/PaaS by Cloud Providers.

Use Managed services for License Mobility.

Use a Multi-Cloud approach to reduce dependency on single Cloud Provider

Choose cost-effective regions.


Fig 8: Guidelines to save by minimizing use

4 Tagging Services Periodically

From the cost perspective, the relevance of tagging the services cannot be stressed enough. First, the

cost reports make more sense and add value when the resources are tagged, as one can enlist user-de-

fined tags (such as Application, Stack and Role Tags). With this information in place, one can know which

application is using which service and where exactly the costs were spent. Second, it would be easier to

determine which servers to downsize when we have more information handy.

Listed below are few relevant user-defined tags:

1

2

3

4

Shutdown machines during weekends and weeknights

Automate

Shut down services that are unused for a defined period of time

Avoid expensive DR approaches(where machines are always running) unless absolutely necessary.

Name Description Owner Application Stack Environment Role

Fig 9: User-Defined Tags

5. Sizing the resources

When a user has over-provisioned a deployment, it becomes necessary to detect low utilization and

adjust the machine sizes. The following set of guidelines are suggested to facilitate this process:


Fig 10: Guidelines for Adjusting Machine Size

Fig 11: Guidelines for Pricing Scheme Choice

6. Choosing a Cost-Effective Pricing Scheme

Most of the Cloud Providers offer a range of pricing

schemes to save on Cloud. One has to tap the right

pricing scheme depending on one’s usage and com-

mitment. Choosing the right pricing scheme, howev-

er, requires experience. Tools such as CloudHealth2,

AWS Trusted Advisor, Cloudability3, etc.

make recommendations to change the pricing

plan of existing resources based on usage

patterns.

The following list shows the different usage

patterns and their corresponding pricing

schemes:

1

2

3

5

4

$

$

$

Use Pay-As-You-Go pricing scheme if you do not know your level of committment of using Cloud.

Use pre-paid schemes for long-term commitments.

Use cost-advantageous pricing schemes for autoscaled machines.

Use Pay-As-You-Go pricing scheme for short-term projects.

Use a tool or formulate a methodology to assess pricing scheme switch-over.

Use Cloud Metrics to detect utilization, read/writes, network traffic etc.

Recommend before adjusting.

Follow Cloud Provider's recommendation for machine sizes for the type of use-case.

Adjust size in stages.

Cross-check the recommendation with the user of the machine.

01

02

03

04

05

2https://www.cloudhealthtech.com/3https://www.cloudability.com/


7. Having good Cloud Governance measures

Case Study 1 – Cloud Reporting and Analysis to save on Cloud costs:

According to IDC Technology Spotlight4, more

mature cloud architectures depend on policy-based

automation and self-service to rapidly provision new

services and ensure compliance with corporate

standards and service-level agreements (SLAs).

The IT departments feel that because of automation

and self-service, the control is moving away from

their hands to those who are actually provisioning the

cloud services. This phenomena has led to a new

term called “Shadow IT”.

Provisioning of services in Public Cloud directly

impacts the total costs of services. The IT team

should be in loop when decisions are made for usage

of cloud resources and/or services. The Cloud

Governance framework should also define the maxi-

mum spend capacity for all departments to keep

costs under control. Furthermore, only legitimate

users should be allowed to provision services for

approved business cases.

After migrating their workload to AWS cloud, one of

our customers realized that it was a humongous

effort to manage their cloud costs over a period of

time. UST Global, being a Cloud technology consult-

ant, helped them get a hold of their expenses by

introducing them to the various tools for mining and

reporting of their Cloud spend for various time inter-

vals. Business insights derived from these reports

aided their stakeholders to take corrective actions.

The Cloud Governance framework should

provide an answer as to who is accountable for

safeguarding confidential or sensitive informa-

tion stored in Cloud. There should be a clearly

defined encryption and multi-factor authenti-

cation standards for all employees, contrac-

tors, and third party vendors when they are

accessing sensitive data in the Cloud. Appro-

priate trainings could be imparted to the users

who would be accessing sensitive information

in Cloud.

One distinct advantage of using Public Cloud is

that most of the cloud services often come

with advanced monitoring, management, and

tagging features. An effective Cloud Govern-

ance framework can be built by utilizing the

key features of cloud services and by adhering

to the published vendor guidelines.

An organization can also utilize third party CMP

tools which provide multi-cloud governance

modules. These modules can further be

utilized for automated Cloud Governance

across multiple cloud platforms. Detailed

information related to cloud discovery, cloud

utilization, cloud spend, cloud security, and

application resiliency can be obtained easily

for building the governance model.

AWS billing and cost management service

was configured to get the detailed billing

reports and cost allocation reports. AWS’s Cost

Explorer was utilized to filter Consolidated

Costs based on specific parameters. Also,

various utilization reports provided by AWS for

on-demand and reserved instances were

collected to get information on purchase

history and instance usage for the linked

accounts.

4http://www.bmc.com/blogs/cloud-governance-best-practices/

Case Studies

According to IDC Technology Spotlight, more

mature cloud architectures depend on

policy-based automation and self-service to

rapidly provision new services and ensure

compliance with corporate standards and

service-level agreements (SLAs).


Fig 12: Various Reports used for Finance Management

Case Study 2 – Using various cost control measures to save on Cloud costs:

Data mining from these reports and tools identified

the exact areas like services, applications, depart-

ments, etc. which were incurring huge cloud costs in

a recurring pattern. From these valuable insights,

corrective actions like shutting down the instances or

downsizing the instances were taken. Similarly,

A customer with large workloads on AWS Cloud

consulted UST for optimizing their operational costs.

When examining their infrastructure, it was found

that there were several instances that were underuti-

lized.

other third-party tools were showcased, that

interfaced with the Cloud Provider’s API, for

collecting useful information about the

instance usage and trends. With this data, it

can calculate savings and also make recom-

mendations for changing pricing schemes.

A variety of automated reports were designed and

implemented, that were run as weekly scheduled

jobs using server-less Lambda functions. These

reports were mailed to the decision-makers so that

the customer could analyze their Cloud Inventory

that could be cleaned up at regular intervals.

Along with this, effective Cloud governance

policies were introduced and the process of

tagging services periodically was automated

so that their reports were more informative.

The following recommendations were

presented as the methodology used to tune

the EC2 instances to save money5.

AW

S In

vento

ry Report

Tagged/Untagg

ed

Services Rep

orts Longivity Report

EC2 Utilization Report

Lists all services running on all regions with detailed information about them

Lists Cloud Watch Metrics (CPU Utilization, Disk Read /Write Bytes/Count, Network In/Out) to give insight to usage.

Lists the amount of timeeach service has beenrunning from the date ofcreation.

Enlists tagged anduntagged services inall regions

5https://blog.cloudability.com/getting-scientific-about-over-provisioned-aws-instances/


Fig 13: Instance Tuning Recommendations

For example, C4 instance type was used for many of

their NAT servers and VPN servers. The requirement

was for enhanced networking capability instances

and not for high computational needs. Therefore, an

M4 instance type was a perfect fit, which reduced the

overall cost considerably. These recommendations

coupled with decisions to shut down servers after

consulting the users of the instances saved

35% of Cloud Costs per month, bringing in

great revenue to the business.

The customer had not planned well on select-

ing the right pricing schemes for their

business’s applications hosted on Cloud. After

analysis, we recommended many pricing

scheme switches for their applications which is

consolidated into the figure 14:

Use burstable General Purpose series for servers that need increased capacity for short durations (dev environments)

Switch to new generation instance types to boost performance without increase in cost

Look for General Purpose series when need is only for Network Optimized and EBS Optimized Instances

Look for Memory Optimized series when requirement is for higher RAM at less price.

Check the feasibility of General Purpose Instance type for VMs with Application server roles to save cost

If CPU utilisation is lower than 30-40% then scale up and if it's more than 70-80% then scale down

Decide on the appropriate instance type and size for a VM based on the role of the server

Check the feasibility of a provider managed service instead of a VM with software installed


The purchase plan switches helped them save more

than 40% of their running costs. Accounts which were

experimenting their workloads in Cloud or running

development environment were identified. AWS free

tier options for such accounts were suggested, which

they could avail by unlinking

those accounts from corporate consolidated

AWS billing account. We also defined a

process to revisit their cloud architecture

every 6 months to identify new workloads

which are feasible for moving to economic

pricing schemes.

Here is another case study where redesigning the

cloud architecture with enhanced cloud services

saved costs along with increase in application

robustness for a customer in AWS Cloud.

The customer’s monolithic web application was

unwieldy, expensive and rigid from the design

point-of-view. Their application had a time-consum-

ing backend workload. The Web and App tiers were

hosted on high capacity servers and since they had

spiky demands, multiple servers were maintained.

We suggested a decoupled architecture for

the application applying a scalable cloud

design pattern. The new provider managed

cloud services which are highly scalable and

robust were used to replace some application

tiers. The proposed architecture saved about

45% of their costs compared to the previous

monolithic architecture they were running on.

The figure 15 depicts the architecture we

designed for their system:

Fig 14: Pricing Scheme Switch Proposed

Purchase Plans Before Purchase Plans After

On-Demand Reserved Spot On-Demand Reserved Spot

95%

5% 0%

Case Study 3 – Tuning Architecture to save on Cloud costs:

53%

7%

40%


Fig 15: A High Level Architecture of the Proposed Solution

Web Tier

Application Tier

DB Tier

SQS task queue Queue listeners

RDS S3

Web Servers

Heavy-weight VMs werereplaced with smaller VMsin an autoscaling mode.

Heavy-weight VMs werereplaced with smaller VMsin an autoscaling mode.

Light weight VMs were used to process back-end jobs instead relying on heavy servers

AWS RDS served the purposeof a relational database insteadof a VM with oracle

SQS was usedto decouple theworkload.

Web 1 Web 2 Web 3 Web 4

App 1 App 2


UST Global has established a track record of

fostering an innovation culture and providing that

as added value and paid service for our clients,

which has been validated by industry analysts from

Forrester and Gartner. We achieve this by Centers

of Excellence. We are committed to helping clients

achieve business objectives by leveraging the

latest in technology and innovation. We enable our

associates to be proactive, responsive and flexible

in our approach to business. This nurtures the spirit

of innovation in each and every associate. Our

Centers-of-Excellence (CoEs) are made up of

experienced industry experts that support our

major verticals in a consulting model. CoEs are

established for discovering and applying indus-

try-leading knowledge and competency to

improve the quality and efficiency of our service

delivery. Our Digital Transformation and Cloud

Services CoE provides consultation for several

cloud projects within and outside UST.

We currently have design and deployment

expertise in public, private, and hybrid cloud

models for various business verticals.

UST Global's business philosophy of "fewer

CLIENTS, more ATTENTION" is a distinguishing

factor enabling us to provide unsurpassed

business value to our client, by way of a highly

tailored and customized solution. Our focus is on

client mindshare, not market share, and clients

continually rate us ahead of our competitors in

attributes such as speed of response, flexibility,

innovation, and 'Commitment-beyond-Contract'.

Customers will experience this first hand in every

interaction with the UST Global team. UST Global

follows a client-centric engagement model

wherein we endeavor to develop partnership with

clients through focused senior executive over-

sight and management.

Why UST Global?

UST Global is a partner with AWS, Azure, Google Cloud, and VMWare.

UST has experience helping customers migrate large workloads to

Cloud, application assessment, infrastructure discovery, cloud security,

and cloud governance. Our proprietary CMP tool FogPanel is a single

pane of glass management solution for a multi-cloud environment.

For more information, please visit http://www.ust-global.com/


Anita Nair is a member of the Cloud Practice team of UST Global. She brings in sever-

al years of experience Architecting, Designing, Developing and Testing Embedded

Applications in the C/C++ domain. She is passionate about keeping up with the

uptrends of the latest technologies in the world of Computing. Her current projects

have been on Cloud Computing with AWS, with special focus on Cloud Finance,

Cloud Governance, Cloud Security and Cloud DevOps.

Amit Mugrai is member of the Cloud Practice team in UST Global. A seasoned

solutions architect, he brings in several years of experience in assessment, design,

implementation, orchestration, and management of hybrid IT services and solutions

for healthcare, telecommunications, manufacturing, and retail verticals. His areas of

interest are cloud computing, green datacenter, hyper convergence, and cyberse-

curity.

Krishnakumar Bevin is a member of the Cloud Practice team of UST Global. Before

moving to the Cloud Computing technology domain, he was a Java / J2EE Software

Architect responsible for architecting and designing web-facing applications for

multiple clients in healthcare, finance, automobile and retail verticals. His current

areas of expertise include Cloud Finance and Governance, Cloud Migration Assess-

ment and re-architecting applications for Cloud Migration.

We would like to express our gratitude towards Dr. Raghu Pushpakath for his direction, constant encour-

agement, reviews and for sharing pearls of wisdom with us during the course of this paper. We also like

to thank Krishnakumar Gopinathan for his technical insights and feedback.

About the Authors

Acknowledgements

UST Global is a digital technology services company that provides next generation digital solutions for

Global 1000 companies. Our mission is to ‘Transform Lives’ using the power of digital technologies and

the focus is on digital services and solutions. With a business model of ‘fewer CLIENTS, more ATTEN-

TION’, UST Global strives for excellence in providing our clients with the best service and commitment

to long-term client success.

Headquartered in Aliso Viejo, California, UST Global has over 17,000 associates operating in 21 countries

across four continents. For more information please visit www.ust-global.com

ABOUT UST GLOBAL

Corporate Office UST Global ®5 Polaris Way, Second Floor, Aliso Viejo, CA 92656

Tel: (949) 716-8757 Fax: (949) 716-8396www.ust-global.com

For further information contact: [email protected]

/USTGlobal /USTGlobal /ustglobalweb /company/ust-global

USTGlobal ®

INNOVATION INFORMATION TECHNOLOGY

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