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The term “cloud expense management” has been co-opted by many parties, from those selling employee expense management software hosted in the cloud, to telecom expense management software (TEM), to IT expense management software, to cloud cost management software which focuses on SaaS, IaaS, and/or PaaS services. For the purpose of today’s blog, we will slant towards cloud management software and specifically key in on infrastructure, IaaS, and PaaS offered as public cloud services.

One of the greatest benefits of cloud computing is supposed to be cost efficiency, but there is a flip side to the agility gained by using public cloud computing. Costs can easily get out of control if your cloud services are not effectively provisioned or properly governed and managed. Most organizations have not yet fully migrated all their applications to the cloud. Because of this hybrid cloud structure, public cloud services can become an added cost to their overall budget, making understanding, planning, and managing these cloud services extremely important. That is where cloud expense management software comes into play; it really needs to be part of your overall cloud management strategy from day one.

Cloud Computing Services

Before we discuss further how to manage cloud expenses, let’s take a look at the different cloud service types in more detail to get a picture of the expenses there are to manage. Remember, there are literally hundreds of IaaS and PaaS services offered in the public cloud — as of this blog writing, AWS alone has 190-plus cloud services.

Infrastructure-as-a-Service (IaaS) is a category that offers traditional IT services like compute, database, storage, network, load balancers, firewalls, etc. on demand and off-premise — vendors like AWS, Azure, and Google dominate this market.

Platform-as-a-Service (PaaS) is a category of cloud computing services that provides a platform allowing customers to develop, run, and manage applications without the complexity of building and maintaining the infrastructure typically associated with developing and launching an app — AWS, Azure, and Google offer PaaS along with IBM, Oracle, and RedHat, to name a few.

Software-as-a-Service (SaaS) is a software licensing and delivery model in which software is licensed on a subscription basis and is centrally hosted. It is sometimes referred to as “on-demand software” — vendors who dominate this space include Salesforce, ServiceNow, Microsoft, SAP, and ParkMyCloud, to name a few.

Enterprise expenses in these categories are skyrocketing, as outlined in our cloud waste blog, along with the difficulties of administering an effective cloud expense management for a single cloud, let alone a multi-cloud or hybrid cloud environment, in order to protect a company’s bottom line. Companies now require visibility and insights into their cloud-based services and automated controls and actions to remediate and manage those cloud service expenses.

Where Does Cloud Expense Management Fit?

As mentioned, cloud expense management should be a key element in your overall cloud management strategy. Enterprises need a clear strategy here, and generally, tools fit into the following categories — please note functionality can be both natively provided by the cloud service provider or via a third-party:

• Provisioning and Orchestration: Create, modify, and delete resources as well as orchestrate workflows and management of workloads
• Automation: Enable cloud consumption and deployment of app services via infrastructure-as-code and other DevOps concepts
• Security and Compliance: Manage role-based access of cloud services and enforce security configurations
• Service Request: Collect and fulfill requests from users to access and deploy cloud resources
• Monitoring and Logging: Collect performance and availability metrics as well as automate incident management and log aggregation
• Inventory and Classification: Discover and maintain pre-existing brownfield cloud resources plus monitor and manage changes
• Cost Management and Optimization: Track and right-size cloud spend and align capacity and performance to actual demand
• Migration, Backup, and DR: Enable data protection, disaster recovery, and data mobility via snapshots and/or data replication

We believe cloud expense management is a subcategory of cloud cost management and optimization. Tools in this category generally help enterprises with:

• Cost visibility, reporting, budgeting, and chargeback
• Buy and manage Reserved Instances (RI’s) and Savings Plans
• Leverage usage data in real-time to make recommendations and take actions on idle, under or overprovisioned, or orphaned cloud resources
• Create an action plan to optimize future cloud costs and avoid budget surprises

Why Is Cloud Expense Management Important?

Simply put, the cloud is a utility, and it needs to be managed as such — cloud costs need to be reported and allocated, cloud services need to be optimized, and, in order to reap the benefits of the cloud, these cost control actions needed to be automated. Whether cloud expense management is your full-time or “when-you-have-time” responsibility, it is important to build it into your cloud management strategy from day one. It will take time, but what you get in return is increased optimization and validation of your cloud services and costs, ensuring you maximize your ROI.