Steve Blanche, Ergo

Why optimising cloud value is integral to Ergo managed services

Optimising and managing costs is an essential part of being a cloud service provider, says Ergo CTO Steve Blanche
Steve Blanche, CTO, Ergo

24 November 2021

In association with Ergo

We have seen examples of organisations reevaluating the value proposition of their cloud strategy up to the point of actually reverting workloads back on premises because consumption costs were high or higher than expected. Microsoft recognises this and has responded by trying to make cloud costs more predictable and transparent, working with partners like us as well as directly with customers to make forecasting easier and avoiding ‘bill shock’. However, while the cloud-concept of ‘only pay for what you consume’ sounds exactly what we want, the reality of realising that is not as simple as it sounds.

So from our perspective and our customers’, there is still a big piece of work to be done around optimising and managing cloud costs. Customers have reported poor experiences with other service providers and found themselves paying too much either because of inept forecasting or underestimated consumption or because their cloud migrations had been executed badly and weren’t utilising the best cost-optimised platform for the workload – enter containers and serverless computing, for example.




When we partner with companies as a cloud services provider (CSP), providing predictability and transparency, are essential to customers for their development and value realisation of cloud services.

The migrations we carry out for clients deliver true business benefits, not just in terms of function and performance but more critically, around value. It’s vital to continuously monitor workload activity and ensure expenditure is aligned to budgets agreed from the outset or you’ll soon have your chief financial officer and leadership team questioning your cloud strategy.

At the start of every engagement we do a lot of work to make the cloud journey predictable, which is why our customers stick with the cloud – and stick with us. We deliver what we said we would with no nasty surprises.

Set policies for cost control

Integral to getting cloud financials right, is establishing governance polices (guard rails) at the outset. You will need to ensure for example, that services are ‘right-sized’ to take advantage of the different cost models for the various cloud resource types.

Restricting access to costly workload types is another important control in managing costs. Not to bash development teams, but it’s often easier to spin up high performance workloads with all the bells-and-whistles, multiple CPUs and copious amounts of memory etc, albeit with the intention of reducing them to standard resource levels for production usage at go-live. What we often see is this ‘ungoverned’ expenditure simply moving from development into production with costs then very quickly spiralling out of control.

In our role as CSP, we provide constant resource monitoring and proactive adjustments, to help customers ensure they remain inside the guardrails we put in place.

Knowing where the value lies

As a leading Microsoft CSP, we make it our business to understand cost complexities, so our clients don’t have to. We know when and when not to use reserved instances, for example, or how to leverage local, regional, and other accelerators (ie, rebates) as these can change in line with annual incentives and technology focus from Microsoft.

Micromail, a licensing specialist and part of the Ergo group, brings an immense wealth of experience and expertise in helping us find the best licensing and subscription model for our customers. Microsoft’s licensing and subscription plans can be complex. Working together with our licensing specialist partner has proven to deliver significant cost savings for customers – Azure Hybrid Benefit for example, helps you significantly reduce the costs of running workloads in the cloud by letting you use your on-premise Software Assurance-enabled Windows Server and SQL Server licenses on Azure.

Savings of 80% on virtual machines

As an example, we dealt with a customer whose position was to estimate their cost of Azure VMs. Multiplying a single VM by 36 to give him a three-year cost worked out more expensive than buying a server, but by reserving the Azure base compute and bringing the customer’s own license for the operating system, it enabled us to reduce the VM cost by 80%.

There’s always value to be found if you know where to look. And properly planning cloud consumption from the outset helps avoid the cost penalties of getting it wrong.

You do also need to develop a cloud mindset to gain the most value from your cloud strategy and understand that applications can be modernised in the cloud and made more efficient. A lot of unnecessary cost is incurred because companies simply ‘lift and shift’ what they had on premise and move it to the cloud.

A successful auctions-based customer had developed a very effective but monolithic application which certainly delivered benefits during early stages of development. As the business (and their customer base) grew, however, the platform became problematic. Converting to a service-based architecture provided the ability to decouple components (UI, rules engine, workflow, data integration, reporting etc.) from the monolith so they could be developed/scaled/tested/released independently.

Dividing the workload challenges, also delivered instant scalability to meet new user demands as the business grew. They were able to significantly increase security protocols from the very mature security features with cloud services as well as enabling the business to quickly replicate its model in new markets without having to find new data centres, racks, hardware and invest in new architectures.

Creating more transparency

If your cloud journey is properly executed and managed, horror stories about soaring bills become a thing of the past. Get it right and new IT delivery models will improve your financial operations. We have multinational clients using cloud services to get better oversight into the various cost bases within the business. It means they can assign chargeback, where costs are attributed to the parts of the organisation responsible for generating them.

One manufacturing business we work with operates plants all over the world, each one subscribing to the same cloud services but all of them having very different consumption levels. In the old on-premises world, it would have been difficult to carry out cost comparisons because each plant would have been using some shared data centre resources, as well as its own IT stack investment and various other sources. Now, in the cloud, visibility and cost assignment [tagging] of services allows the finance department to chargeback to plants, in a way that is proportional to their consumption requirements.

The cloud can empower finance departments with transparency and clarity, or it can rattle their plans with ‘bill shock’ from unplanned or accidental overspends. To walk the line and get it right you need a CSP you can rely on, someone who can unlock value in lots of different ways.

To learn more about cloud managed services and contact Ergo to speak to a subject matter expert and discuss your unique requirement.

Steve Blanche is chief technical officer with Ergo

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