Managing public and private cloud costs each come with their own unique challenges, and the strategy you choose directly impacts the effectiveness of your cost-saving initiatives. Here are three common mistakes business leaders should avoid when attempting to reduce expenditures associated with their hybrid-cloud IT infrastructures.
Mistake 1: Relying Solely on Native Tools or Vendor Dashboards
It’s tempting to rely on cloud provider dashboards for cost insights; after all, they’re readily available and directly integrated. The FinOps Foundation reports 57% of FinOps practitioners rely on native tools alone. But native tools are limited by their single-solution, single-vendor viewpoints. Hybrid cloud environments require cross-cloud comparisons and cross-dashboard analytics. Native tools miss the bigger picture. Gartner cautions business leaders that native tools are often focused on what insights the vendor can show and what capabilities their software has — not necessarily best practices and what organizations need to optimize their environment comprehensively.
Why It Matters
On the other hand, studies show purpose-built FinOps software platforms from third parties provide a more comprehensive view with cross-provider analysis. Software and services are better suited for:
- Unified management to handle costs and usage across a wide range of cloud technologies like IaaS, private cloud, and SaaS.
- Integration optimizing costs across a variety of cloud services and providers – both public and private.
- Control emerging costs, including those generated by AI, Generative AI and Shadow IT.
- Increase FinOps maturity and confidence, making the organization more resilient and adaptable in managing cloud costs.
For IT, finance, and procurement leaders, investing in a dedicated FinOps tool offers greater flexibility, enabling more strategic cloud spending decisions.
Mistake 2: Assuming Cloud Repatriation Is the Answer
It’s a common belief: if public cloud costs get too high, just repatriate workloads back on-premises. But the reality isn’t that simple.
Research shows 80% of IT and finance leaders find private cloud costs more difficult to manage than public cloud. Private cloud dashboards often fail to represent the total cost of ownership (TCO) accurately, omitting hidden expenses tied to virtual machines, physical servers, and data centers – including charges for power, water, etc.
Private Cloud and the TCO Blind Spot
Repatriation can indeed cut costs, but only if decision-makers understand the fully loaded expenses of on-premise and private cloud environments. A well-informed FinOps strategy should consider all factors, helping leaders weigh the cost-effectiveness of public versus private cloud for different workloads.
Why It Matters
Financial management and scoping TCO for on-premise, private clouds can be a challenging task for several reasons:
- Complexity and Lack of Visibility: They involve multiple components with each contributing to the overall cost. Tracking and understanding the expenses can be intricate. The granular level of detail required to understand individual resource utilization and associated costs may not be readily available.
- Elasticity: Private cloud solutions offer scalability and elasticity, allowing resources to be dynamically allocated and released as needed. This flexibility makes it difficult to accurately predict and control costs, as usage can vary over time.
- Shared Resources: In a private cloud environment, multiple users or departments share resources such as servers and storage. This shared infrastructure complicates cost allocation, as it becomes challenging to attribute specific costs to individual users or projects accurately.
IT and finance leaders must account for all hidden costs of private cloud to make better-informed repatriation decisions. Additionally, improving visibility into resource usage through detailed dashboards and setting up cost allocation models for shared resources can help them control expenses more accurately.
Mistake 3: Using DIY Solutions like Home-Grown Software, Spreadsheets, and Manual Processes
Many organizations assume they can handle cloud cost management with do-it-yourself (DIY) tools—using spreadsheets, manual processes, or custom-built software. But data shows that organizations sticking to DIY methods save less than 10% while other approaches consistently save more. Third-party software for instance saves double that — 20% on average.
Learn the four advantages of a purpose-built FinOps solution has over DIY and native tools.
The Reality
Custom solutions might work for large enterprises with deep pockets (Forrester notes these organizations often have 15-45 engineers and $1M+ to invest in cloud cost management platforms). However, for most companies, these DIY solutions can be a time sink, introducing errors, limiting data normalization and unit costs, and hindering flexibility as cloud usage grows.
For most IT and procurement teams, DIY jeopardizes ROI. Off-the-shelf tools are better at leveraging AI to automate cloud cost management, creating scalable cloud governance while freeing up resources.
Read more on this: Faster Results at a Lower Cost: The True Value of IT Expense Management
Bonus Tip: Don’t Wait to Renew Private Cloud Contracts with VMware
Public cloud customers running VMware® on AWS® and Microsoft Azure® are facing big challenges as one of the leading private cloud providers shifts to subscription models triggering price increases of +100%. For example, AT&T was facing a proposed annual increase of 1,050% on its VMware bill. Cloud subscriptions typically incur higher cumulative costs compared to one-time purchases and necessitate a tighter, proactive approach to financial management and planning.
It’s never too early to look at your VMware contracts and renewals, but it can be too late.
Consider these next steps:
- Pull your contracts and audit your cloud infrastructure and licenses
- Know how you purchase VMware services and who your contact is – Channel partners have changed!
- Evaluate the impact of subscription changes on your business
- Shop around and consider cloud repatriation once your cost tipping points between public and private clouds have been defined
- Let new subscription changes be your impetus for implementing FinOps best practices across your entire cloud estate
Explore more guidance on the five tips above in this article.
Final Thoughts
IT environments are rarely a single uniform ecosystem. Instead, they are characterized by mixture of two or more parts blending multiple types of network architectures with different vendors and approaches to cloud computing. Successful cost management strategies must cover the entire multi-vendor, multi-dashboard environment.
Given these realities, it’s critical to achieve the proverbial single-pane-of-glass view for high-level clarity into multi-vendor hybrid clouds.
IT and procurement leaders who sidestep these common pitfalls—over-relying on native tools, DIY methods, and oversimplified assumptions—can unlock better cost efficiency, utilize cloud investments intelligently, and future-proof their organization against cloud cost creep. By adopting a comprehensive, data-driven and AI-powered FinOps approach, leaders can strategically steer their cloud strategy, keeping expenditures in check while empowering innovation.
Ready to talk about your hybrid cloud costs? Talk to Tangoe.