CSPs can get value from existing public cloud deployments
Almost half of telcos recently surveyed by TM Forum have a public cloud-first IT procurement policy, which has meant bolstering their financial operations.
CSPs can get value from existing public cloud deployments
In a survey for TM Forum’s new report, Public-private partnerships: managing the economics of hybrid cloud, about half of respondents said their organizations have a public cloud-first policy instructing IT and technology teams to prioritize procurement of solutions that are hosted in public clouds. Initially, public-cloud strategies were designed to reduce costs by transitioning away from expensive on-premises infrastructure. However, it became evident that the cloud can be expensive without robust cost management.
In our survey, 42% of participants said that building up their skill sets made them feel very confident in being able to manage costs, with other techniques such as use of FinOps also helping to raise confidence (see graphic). Short for financial operations, FinOps is a discipline that focuses on optimizing the financial management of cloud resources by aligning spending with business goals and improving cost efficiency in cloud computing environments.
Cloud skills are wide-ranging and start with the people responsible for cloud deployments being able to counter popular C-level perceptions that “all cloud is good, especially public cloud”. Such views need to be replaced by a mature cloud-economics perspective: “All public cloud is good – except where it makes poor financial, technical or business sense in comparison to other options.”
Vendor negotiation skills will remain very important, given the limited number of public cloud vendors in the market. CSPs will need to negotiate with hyperscalers to set clear opex targets with robust modelling of how these can be achieved – and they should demand hard evidence of results that the hyperscaler has achieved with other telcos.
Critical KPIs
Related to this modelling is the development of the right key performance indicators (KPIs). There are many options here, but some useful measurements for CSPs with a moderately mature cloud strategy include:
- The real cost of cloud – this includes the cost of duplication (when both cloud and legacy systems are still being used)
- The success of “tactical” cloud economics – is the company meeting its expected costs each month? Are processes agile enough to be taking full advantage of activities such as reserved instances (billing discounts)?
- The transparent attribution of IT costs to individual workload owners – this gives owners an opportunity to optimize their resources and reduce costs.
The cloud operations team should be responsible for delivering against these KPIs, by managing the economics at a macro level including the ability to oversee all workloads going into the public cloud. This enables top-level decisions to be made – for example, where are there spare compute cycles which could be allocated more efficiently?
In the future, the economics of public cloud usage will be impacted by the development of hybrid clouds, and the ability to manage costs will be impacted by broader issues such as CSPs’ success in designing applications to be cloud independent and the use of new AI and machine learning technology in the process of managing costs. However, basic issues of good cloud management will still be important: clean and up-to-date data sets and the availability of accurate FinOps providing up-to-date visibility that allows intelligent decision-making on allocation, benchmarking, budgeting and forecasting.
