The True Costs of Cloud: You Cannot Manage What You Cannot Measure
Author: Ben McGahon
Date: January 23, 2023

The steady migration of business applications to the cloud continues to move service providers and the organizations they serve to what appears to be a more cost-efficient way to operate, but all too often, invoices are surpassing what has been budgeted, and those responsible for keeping technology budgets in check have no idea how to adapt.

Public cloud has proven to deliver significant business value across infrastructure, communications and collaboration applications, storage, cybersecurity, and DevOps, and in some organizations, new positions have been established as “FinOps,” with experts focused solely on figuring out how to reduce cloud spend.

Rising cloud expenses are hitting the Managed Service Provider (MSP) industry especially hard, with some trying to determine how to make sure their investment in moving multiple SMBs to the cloud isn’t turning out to be a “lose-lose” proposition. The task of analyzing the true ROI – by customer – and by cloud in an increasingly multi-cloud world can be difficult, if not impossible, unless MSPs have intelligent, automated tools that track consumption in real-time.

Building Cloud Confidence: Understanding The Levers

MSPs are in a position to negotiate better terms with the hyper scalers when they buy VMs and related services at wholesale, then sell at retail, making handsome gross margins overall. Too often, however, they lack the tools to allocate cloud spend, which is essential to understand precisely how much profit they are earning from each of their customers.

Cloud providers, including AWS, Microsoft Azure, and Google Cloud, charge for services provisioned, even if they’re not used. Every IT cloud professional knows that money is being left on the table when compute is overprovisioned, unused, and orphaned. They also understand that while “On-Demand” is naturally more flexible, costs for On-Demand are significantly higher than commitment-based discount rates.

That being said, until cloud optimization software evolved into a more intelligent, automated, and intuitive mode, understanding precisely where there were idle resources, inappropriately sized machines, and on-demand vs. committed consumption was a full-time job.

Kalibr8 Makes Optimization Easy for MSPs

Kalibr8’s platform has been designed specifically for two-tier distribution and specifically for the MSP to be able to manage and analyze multiple customers, multiple clouds, and large volumes of subscriptions and their resources, either collectively or individually. The vast majority of optimization solutions are designed for individual corporations’ cloud assets, creating challenges for MSPs who require a broader capability. Furthermore, the Kalibr8 commercial proposition has been created to allow MSPs to understand costs, savings, and gains in optimization strategies easily.

With our platform, which can be set up in a matter of hours, MSPs benefit from continual scanning for savings opportunities, including calculating how much can be saved, without wasting productive hours on manually researching, analyzing, and determining the best actions for immediate cost reductions and sustainable cost avoidance.

With market pricing data, which is constantly refreshed, the Kalibr8 platform can deliver accurate information and recommendations across all three of the world’s largest public clouds, given the commonality of how they charge:

On-Demand: Pay for capacity by the hour or the second, depending on each instance, with a pay-as-you-go approach and no long-term commitments or upfront payments.

Reserved Instances (RIs), Committed Use Discounts (CUDs), and Savings Plans (SPs): Flexible pricing models that offer discounts if you commit for a fixed period of time.

Spot Instances: AWS, for example, offers spare capacity for up to 90% off the On-Demand price, with the caveat that they can take the server back with a 2-minute notification.

The ability for MSPs to find the right blend of purchasing strategies can make the difference between a marginally profitable customer relationship and a highly profitable overall business.

Cloud Confidence is a Team Sport

Successful MSPs understand that running a more lucrative business is a shared responsibility, from sales and customer success to engineering, offer development, offer management, and service delivery.

Even the best teams cannot drive the best business outcomes without the right tools, especially tools proven to reduce cloud expenses without sacrificing quality. When teams within MSPs have access to accurate information and the advantage of notifications and alerts when cost anomalies arise, they can work better together, spend less time having to figure out problems that are brewing in the background, and can spend more time making customers happy.

Kalibr8 is changing the game by bringing the most advanced software to MSPs, who can now understand and manage cloud consumption with insights across Everything-as-a-Service (XaaS), licenses, hardware, and cloud configurations.

Contact us and we’ll show you how easy it is to take control.

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