How you can manage cloud infrastructure costs

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Author: Simon Kilchmann

Category: Business / IT infrastructure / Cloud

December 8, 2021

The cost aspect of the cloud: In this blog post, Xelon CEO and Swiss cloud pioneer Michael Dudli shows how IT service providers can plan, control and charge on the costs of cloud infrastructures. 

"Actually it’s cool: A cloud infrastructure helps IT service providers to pay only for what they effectively use. Plus, there's no initial investment and another advantage is that it's easy to scale," explains Xelon CEO and Swiss cloud pioneer Michael Dudli. Unlike hardware, which must be paid for whether you use it or not, with cloud infrastructure you really only pay for what you have effectively allocated. During the pandemic, it became apparent that the cloud plays an important role not only in upscaling, but also in downscaling. This means that the IT infrastructure can be easily adjusted when demand or traffic drops. According to a senior Gartner researcher, the cloud "kept all its promises" during the COVID crisis. 

Are you still unsure whether you should move your infrastructure to the cloud? Click here for an overview of the benefits of cloud infrastructure for IT service providers. 


Control, reporting, accounting - that's why costs are a hot topic 

In this blog post, IT service providers learn how to manage costs in the cloud. "One topic that probably the whole world is talking about when it comes to cloud infrastructure is the cost aspect. In my opinion, there are three reasons why the cost of cloud infrastructure is such a big issue," says Michael Dudli. He has summarized these reasons for us: 


  • Control: Essentially, as a system administrator - whether with a hyperscaler like Azure or an on-premises provider like Xelon - you can set up a server in the portal. In comparison, with on-prem infrastructure, there was the process of hardware procurement. Now, most IT service providers want the system administrator to be able to do it themselves. To a certain extent, this leads to a loss of control, because who now controls and approves how many servers are created at which customer? 
  • Reporting: Who controls this at the end of the month, who releases the invoice and who ultimately takes the main responsibility? 
  • Billing: If someone creates a server in a customer system or adds more CPU, more hard disks to a server in a customer tenant - who ensures that this is charged on to the customer? How can it be guaranteed that the process is really correct internally so that the correct invoice is triggered to the customer at the end of the month? 


Xelon CEO Michael also has tips on how IT service providers can overcome the challenges associated with cloud infrastructure costs. Here you can find out which points should be considered. 


Costs of cloud infrastructures: These 3 points IT service providers must consider 

Point 1 revolves around costing: "In the cloud, you need to know how much CPU, RAM and hard disks you need in order to do the costing for an entire project," explains Michael Dudli. "It's not that demanding either, but it's a shift in thinking from the past, when you simply ordered hardware - usually way too much anyway - and allocated as much to the VM as was needed at the time. That's changing now because it also saves you money. With every gigabyte of RAM, with every CPU core that is less, you end up paying less money," the Xelon CEO continues. 


Point 2 concerns access rights and access flow: "If you don't want an employee to create a server, then you don't have to or shouldn't give him this right. An approval flow can also be useful. That is, if an employee creates a server, then that server should not be created directly, but an email should be triggered to the department head who can approve it, and then the server is created. Or a notification is triggered so that at least accounting, department management or the head of operations knows that someone has created a server and could check whether that is right or wrong," says Michael Dudli, highlighting ways to control cloud infrastructure costs. Access rights and access flow, then, are important points to consider in a cloud migration. The larger the team, the more difficult it becomes to maintain control unless access rights and responsibilities are regulated accordingly. 


Point 3 is billing: "If a server is created for a customer or more CPU, more RAM is added, then it must also be ensured that this is charged on so that you are not left sitting on these costs," says Michael Dudli. That can be a manual process or an automated report. But it can also be an API integration that pulls the costs out directly. "In practice, you see all kinds of variations. With the small IT service providers, it's often still a manual task, they get reports that they then divide up among the customers and charge them on. With the larger companies, it's usually solved with an API integration that completely automates the process, eliminating possible sources of error," says the Xelon CEO. 


In our free e-book "The little cloud 101 for IT service providers" (The little cloud basics for IT service providers) there is more content about the costs of cloud infrastructures. Download now! 


Simon Kilchmann

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