Managed Service Providers (MSPs) face a rapidly evolving IT infrastructure landscape. Servers, storage, networking and software are no longer exclusively available in private data centres, but also in public clouds. Profitable pay-per-use consumption models offer MSPs new business opportunities to secure future success. Yet the cloud sometimes turns out to be less profitable than expected resulting in unanticipated, high costs. Here are four essential cost optimization principles for MSPs to align cloud expenses with business objectives.
Cheapest is not always best
In essence, cost optimization is about managing costs to maximize the value delivered. This starts when designing the first workloads for the cloud. Of course you need to stay within budget constraints, but the cheapest cloud solution may not always be the most effective for your business objectives. From the very beginning, MSPs are recommended to align cost optimization with current and future business criteria such as security, scalability, resilience and operability. What is most important to your business: lowest cost, no downtime, high throughput?
Size does matter
Sizing of resources in the cloud requires a different way of thinking than on premise. One of the unexpected cost drivers can be unrestricted VMs. In the MSP data centre, most VMs are always on, while they are only effectively in use 10% of the time. By moving VMs to the cloud in a lift-and-shift scenario, you would miss out on important cloud features for cost optimization and unnecessarily spend more money. Microsoft's Pricing Calculator is a helpful tool to right size VMs to the capacity you need and take advantage of the scalability of the cloud. That may quickly lead to 20-34% total Azure spend reduction, says Forrester.
Scale and automate to the max
Scaling – it was just touched on – is another important principle for optimizing costs. Many Managed Service Providers notice that prices are under pressure and (cloud-native) competition is increasing. The cloud offers MSPs a big step forward in staying agile and responding quickly to customer demands. But only if you adopt the third principle of cost optimization: smart auto-scaling in terms of careful consideration of dynamic scalability of resources and its automation. Bear in mind that scaling out is more cost effective than scaling up.
Put it on repeat
It seems obvious, but cost monitoring and optimization is not a one-off exercise, but an ongoing process. This fourth principle is crucial for MSPs to avoid unforeseen costs and build a future-proof business in the cloud. The cloud is super dynamic with new services launched almost every day. Therefore, do regular cost reviews, set budgets and alerts, assess costs in relation to your business goals and capacity needs, be alert for deviations. Based on your analyses, plan actions to optimize workload costs. MSPs can do that themselves for Azure workloads by using a tool like Advisor Score, or have us monitor that for you.
These are just a few examples of how we work with our partners to innovate and optimize their business in the cloud. At Insight, we have been working with MSPs like you across Europe for many years, providing valuable time, knowledge and support in many (hybrid) cloud scenarios.
Contact one of our cloud specialists to find out how we can support you in optimizing your cloud costs in line with your business goals, whether you are designing your first workloads in the cloud or entirely cloud-based.
Well-Architected Framework (WAF)
This article is part of a series of articles about Microsoft’s WAF (Well-Architected Framework), where you find much more helpful guidance. WAF improves the quality of workloads operating in the cloud by focusing on a set of common architecture principles, including cost optimization, operational excellence, performance efficiency, reliability and security.
New ways forward
As a multi-vendor software licensing, workload and platform specialist, we can guide you through all stages of your strategic cloud journey with a series of workshops, assessments, services and best practices. From the first exploration of cloud or hybrid opportunities and benefits to support and optimization after migration. No matter where you are in your journey, we help you to find new ways forward and accelerate your business.