The concept of a managed service provider (MSP) helping customers to save money on cloud services is a tricky one. If customers purchase cloud services through the MSP, it may seem that reducing the amount the customers spends on cloud would reduce the MSP’s revenue. And is the idea of “saving money” really an outcome customers seek from their service providers?
We’ve been grappling with some of these questions lately. We spent our first year on-boarding customers directly to the ParkMyCloud platform. Recently, we turned our attention to potential partnerships with MSPs and Cloud Consulting firms. When we talk with them, we ask: what are your clients’ key priorities? How do you seek to deliver additional value?
Cost reduction as an element of total value
In our various conversations with MSPs, we pay attention to how they prioritize helping their customers save money. We heard that although cost reduction for clients was seen as important, it was often framed as a way for customers to get more bang for the buck – not as a reduction in total spend. MSPs reported that their clients typically have annual budgets that MSPs can spend on their behalf across all cloud or IT services. Therefore, staying within budget across all services was the primary goal, but any dollar saved on cloud compute services could then be put to work in other areas of the business. This keeps the end user satisfied by giving them more value per dollar, and the MSPs satisfied by providing more, and stickier, services to their customers.
In addition to cost savings, MSPs want to deliver productivity gains to clients. This can be done by directly implementing solutions on clients’ behalf. Increasingly, however, MSPs prefer to put tools in place that their clients can then use to optimize their own cloud infrastructure. Although many small businesses don’t have the technical expertise necessary to migrate their technology infrastructure to the cloud, once they are up and running, they are often able to self-manage parts of their own infrastructure.
As one MSP recently said to us, “we could probably write custom scripts for our customer to turn things on and off, but that really doesn’t scale. To be honest, I think they would prefer controlling their own environment”.
We know from our own experience that a number of our clients use ParkMyCloud as their go-to tool for scheduling, managing and reporting on their EC2 usage.
The Key to MSP Success in the Cloud
As the role of the traditional MSP continues to evolve, the most successful providers increasingly seem to understand that :
- helping customers optimize their cloud spend is important; and
- providing customers with self-service tools to better self-manage their own cloud environments is key to sticky customers.
Although there will be many goals against which MSPs and cloud consultants are measured, it seems clear that reducing/optimizing cloud spend and empowering customers with the right tools to manage cloud are two side of the same coin and key for MSPs to succeed.
Managed Services Face Uncertainty Over Cloud. http://blogs.wsj.com/cio/2016/06/30/managed-services-face-uncertainty-over-cloud-report/
You made the obvious move and migrated to Amazon Web Services (AWS). Months later, the attractive glow of the move from CapEx to OpEx spend has been dimmed by the reality of increasing monthly AWS bills. Your CFO wants to know what’s up.
This is a real challenge, according to the the head of infrastructure at a mid-sized software company we spoke with recently. Let’s call him Steve.
“I need to reduce my AWS costs as quickly as possible,” Steve told us. “My CFO saw that our AWS spend started at $20k per month when we migrated last year. Now it’s over $100k per month, which makes it one of our biggest line item expenses. We’re under a direct mandate: We have to bring it down.”
The problem is clear. But how did it get so bad, so quickly?
Your Infrastructure is Probably Exploding
“As we started to dive into it, we found that a large part of our spend is simply on waste,” Steve said. “With the rapid growth in our AWS use, we didn’t have visibility and policies in place. Our developers aren’t properly cleaning up after themselves, and resources aren’t being tracked, so it’s easy for them to be left running. It’s something we want to change, but it takes time and energy to do that.”
This is a familiar story for many small-to-medium sized businesses, whose agility allowed them to adopt the cloud early. But sometimes, the other side of the “agility” coin is a lack of defined processes, which leads to waste.
As Steve put it, “AWS built this awesome playground – everyone can play, but everything costs money.”
Amazon recently announced that AWS will likely be a 10 billion dollar per year business by the end of 2016. This is partly from their rapid gain in customers – and partly due to each of their customers spending more and more each year in their massive playground.
Beat Your CFO to It
There’s no need to wait for your CFO to come knocking on your door to take a swing at controlling AWS costs.
- Visibility – start with taking a look at your existing environments. If your environment is large, a single dashboard view that shows multiple accounts and AWS regions can be helpful.
- Communication – talk with your team and set clear guidelines around provisioning appropriately sized instances, managing existing instances, and stopping non-production instances when they are not needed.
- Control – start taking action on these guidelines to optimize your AWS costs. Here are a few recommendations:
- Use Reserved Instances in most production environments.
- Use Spot Instances for high-volume, risk-tolerant use cases, such as data batch jobs for production, and scalability/load testing in non-production.
- Use Auto Scaling Groups in production in conjunction with On Demand instances that match Reserved Instances you’ve bought.
- For non-production, use EC2 instances with scheduled on/off times so you only pay for the hours you need.
As a seasoned IT Ops professional, Mr. Bobvious spends his weekdays—and sadly, some of his weekends—going back and forth between his iPhone and his desktop management tools. Get text on iPhone from marketing director about web site load times. Go to desktop web site performance analytics software. Back to iPhone to read email from CIO about MTTR. Then back to desktop to look at logs.
After enough back and forths between mobile to desktop to mobile to desktop, Mr. Bobvious began to resent his desktop. Not his desktop exactly, but the software running on it. “Why,” he asked himself, “can’t software or SaaS tools be as easy and intuitive to use as mobile apps?”
He thought about all of the challenges with traditional, “big” software:
- It always needs to be customized and integrated, regardless of what the vendor said during the sales process. This takes a lot of internal resources and lengthens the ROI cycle.
- It always requires training, no matter what the vendor said during the sales process.
- It is always more complicated to use, no matter what the vendor said during the sales process.
- It always has more features than we need and not all the features we absolutely need…no matter what the vendor said during the sales process.
“Ugh. This is exactly the problem with most cloud management platforms (CMPs),” Mr. Bobvious thought. “They’re a mile wide and an inch deep. There’s no killer app. And even if there was one great feature, the ROI takes months or years to realize.”
All of this helped Mr. Bobvious really appreciate ParkMyCloud, the automated EC2 start/stop scheduler he subscribed to last year. Dead simple to start up and use, no integration, gorgeous UI. And the speed and ease of implementation drops the payback period from months or years to literally days.
As the IT Ops guy responsible for his company’s approximately 4,000 AWS instances, Mr. Bobvious was eager to read the report from Gartner Research titled, “Market Guide for Cloud Management Platforms: Large, Emerging and Open-Source Software Vendors.”
He settled in with his morning cup of Folgers drip and opened the PDF, wondering if he’d see ParkMyCloud on the list of cloud management platform vendors. Mr. Bobvious scrolled down the list of CMP write-ups:
- CloudBolt Software
- GigaSpaces Technologies
- Hewlett Packard Enterprise
- Red Hat (ManageIQ)
Mr. Bobvious checked again between numbers 8 and 9 to make sure he hadn’t missed ParkMyCloud. Nope. Not there. He then went back and read the report. “OK,” he said to himself. “I get it.”
What did Mr. Bobvious “get”? That ParkMyCloud is not a cloud management platform, which Gartner defines thusly:
A cloud management platform (CMP) provides three major tiers of service that sit architecturally above the virtualization and cloud-enabled hardware layer.
“ParkMyCloud doesn’t try to solve a lot of cloud management problems,” thought Mr. Bobvious. “They just solve one problem very well: cost optimization. Most companies leave AWS EC2 instances running even when they don’t need them, and then end up writing their own homegrown solutions. So they waste a lot of money and time every month paying for and managing idle instances.”
“I don’t need or want a cloud management platform to do that,” said Mr. Bobvious to himself. “A CMP has a zillion features I don’t need and requires a lot of overhead to onboard, integrate and run. Even if I were willing to risk the investment, I’m not convinced we’d reduce cloud spending – which is the problem I had in the first place. And above all, how much savings would it take to recoup the high cost of the acquiring and maintaining the software?”
So while Mr. Bobvious concluded that ParkMyCloud shouldn’t be compared to cloud management platforms, he smiled when he read one of Gartner’s concluding statements.
However, whether CMPs will ultimately “win” versus other alternative approaches (such as point cloud management tools…) is an open question we will continue to analyze.
Do You REALLY Need a Cloud Management Platform for Cost Optimization?
Gartner defines cloud management platforms as “integrated products that provide for the management of public, private and hybrid cloud environments. The minimum requirements to be included in this category are products that incorporate self-service interfaces, provision system images, enable metering and billing, and provide for some degree of workload optimization through established policies.”
Would these features help you save costs? Probably, but they may not be your best choice when looking to optimize costs. As Mr. Bobvious concurred, many platforms overcomplicate cloud management by providing functions most businesses find unnecessary. These additional functions are factored into the cost of the platform, eating into the financial benefits of cloud management and failing to optimize costs.
However, although ParkMyCloud doesn’t try to solve a lot of cloud management problems, it does have some useful functions that cloud administrators can take advantage of to simplify the management of EC2 instances deployed on AWS and Azure and make indirect cost savings in addition to the financial benefits of assigning parking schedules to non-production instances.
For example, ParkMyCloud provides a single dashboard view of all a business´s EC2 instances and Azure VMs. This can help identify unused resources that can be reassigned, placed into a cheaper pricing plan or retired. The ability to assign instances to development teams increases accountability (and often leads to increased productivity), while the reporting functions can help with future project, capacity and budget planning.
So, although ParkMyCloud is not a Cloud Management Platform for cost optimization, and therefore not on Gartner´s list of software vendors, it is a solution for cost optimization with cloud management features – which are, in fact, better positioned to help you achieve rapid ROI and cost optimization than expensive cloud management platforms. Want to find out more? Try ParkMyCloud now for free, or contact us with any questions you have about not using a cloud management platform for cost optimization.
Our hero, Mr. Bobvious, the IT Ops guy who automatically turns off idle AWS instances using ParkMyCloud, was texting with his teenage son not long ago. Afterwards he realized that the challenge of getting his company’s developers to remember to turn off their AWS instances was the same as…well read on and you’ll see:
Mr. Bobvious: Jake? Are you home?
Mr. Bobvious: What’s sup?
Teen: Not much, howboutchoo?
Mr. Bobvious: No I mean what does sup mean?
Teen: What’s up?
Mr. Bobvious: Can you just give me a straight answer pls?
Teen: sup means what is up
Mr. Bobvious: Oh, sorry. Are you home?
Mr. Bobvious: Just make sure you turn the lights off in your room, the bathroom and the hall before you leave.
Mr. Bobvious: And the kitchen, mudroom and any other room you were in today
Teen: Oh. I’m not home. Sorry.
Mr. Bobvious: Did you turn any lights off before you left?
Mr. Bobvious: How many times do we have to discuss this? Electricity is not free.
Mr. Bobvious: What if I left your iPad on all day and the battery was drained when you got home?
Teen: I’d plug it in. I guess.
Mr. Bobvious: Anyway.
Teen: Dad, I’m just a teen. Teens aren’t wired to turn stuff off.
Mr. Bobvious: You know our software developers leave our computer servers on all night.
Mr. Bobvious: Do you know what my boss would do to me if I let that happen?
Teen: Fire you?
Mr. Bobvious: No, no. He’d just be mad that I’m wasting electricity and money.
Teen: So what’d ya do about the computers?
Mr. Bobvious: I bought software that turns off the computers automatically. We’re saving a fortune.
Mr. Bobvious: Thanks!
Teen: Are you on the way home?
Mr. Bobvious: Why?
Teen: Just thinkin about how good some Chipotle would taste right about now.