Saving Costs with the CLOUD: Best practices for Banks and Financial Institutions
When organizations migrate to the cloud, they do so because the cloud promises agility, scalability, and above all cost optimization. Instead of paying upfront (Capex) for server costs and for software that is not in use, the cloud's flexible/Opex pricing model (pay-as-you-go) ensures that organizations only pay for the resources they consume.
But organizations are in for a rude awakening, when they find themselves mired in escalating costs. The reality of cloud transition is not all rosy. Not all cloud transitions translate into cost optimization. In real life experiences we have seen that it has proved to be a costly affair. There are three reasons why the costs escalate:
- The lack of visibility regarding resource utilization. Organizations often pay the cloud service provider for resources that they are not consuming.
- There are idle resources. Idle resources are an unnecessary burden and add to the costs.
- Though the cloud is ubiquitous with new and emerging technologies, it is a specialized domain requiring expert opinion and not everyone gets it right.
Hence, there is a need to plan out the roadmap and consult with the experts to optimize cloud costs. What can you do?
Step 1# Consult the experts
You need to consult the experts who have years of experience in the domain.With our Magic FinServ Cloud Team learn how to optimize costs (cloud cost optimization). It makes no sense to do it yourself, as it is time-consuming and takes up precious resources.
What is cloud optimization?
Cloud cost optimization is a process whereby organizations figure out how to reserve capacity to avail higher discounts and optimize costs by identifying all resources that are mismanaged, idle, or redundant (temporary spin-offs) by consolidating or terminating them as the need be instead.
Why do you need experts like us?
- Overall, the migration journey whether it be of enterprise infrastructure, applications, or workloads, they are complex processes. There are numerous regulations that must be adhered to, and privacy and data security are mandatory.
- With the FinTechs struggling to find a foothold and the banks and dealing with disruptive times and increased regulatory requirements, planning the journey on one's own is a handful.
- It takes an expert like Magic FinServ with years of experience in the financial domain and several successful cloud migrations to its credit to decode what is best for the business while ensuring quick ROI.
- While optimizing costs, our team also works continually towards reducing risk – another key variable to be kept in mind while planning the cloud journey.
- Lastly, why waste your resources on work that can be outsourced?
In this blog, our team have identified how banks and financial institutions can optimize their cloud costs, beginning with the setting up of a common agenda involving people and processes to eliminate waste and misuse, and how Magic FinServ helps accelerate the digital transformation project.
Step 2 # Assemble a "tiger" team
Now that the importance of getting the experts on board has been delineated, time to assemble the tiger team.
What is the tiger team?
In one of the blogs: Cloud cost optimization: principles for lasting success, Justin Lerma and Pathik Sharma, from Google Cloud, have talked about the importance of setting up a tiger team for brainstorming how to go about with cloud cost optimization. A tiger team is a high-profile team of experts with expertise in specialized and interlinked domains who come together for resolution of a specific problem.
Do you know about Magic FinServ's tiger team and cloud economics?
At the core of Magic FinServ's success stories are its team of experts (our tiger team comprising of myself Giten with my cloud team) and cloud economics.
- Cloud Center of Excellence (CCoE) propelling innovation and change: Magic FinServ has assembled the best professionals from the finance and technology domains to ensure excellent outcomes for the client's business every time. Whether it is structuring support teams or building processes from scratch, Magic FinServ's Cloud Center of Excellence (CCoE) is at the center of it all. Our team take clients through a structured process journey, often helping them become compliant with the various quality and security standards as well.
- Multidisciplinary team tuned in to client's unique need: The CCoE is a centralized team. It comprises stakeholders who take care of the financial, operational, and security and compliance aspects. The CCOE plays a key role in aligning the client’s business needs and vision with a well-defined strategy in tune with enterprise-wide standards and best practices. In the process, enabling clients to gain an edge. In order to optimize costs, our cloud team of experts access and evaluate the current pattern of usage and the feature set of applications that are most prominently used to find opportunities. Our compliance and cloud security managers ensure that all regulatory obligations are met.
- An extremely client-centric ethos: As Lerma and Sharma have reiterated in their article, all stakeholders involved in the journey must hold full accountability and ensure transparency and visibility for lasting success. For when it comes to designing the set of standards for "desired service-level profitability, reliability, and performance" there are several tools and techniques for ensuing cost optimization, but ultimately, it's the organization's ethos that makes a difference. With our client-centric ethos and our unwavering thrust towards innovation and security, our team ensures that your needs for accountability, transparency, and visibility are met.
Step 3 # Choose the right service provider for your requirement
It is the lure of paying-as-you-go, the OpEx model of pricing that is considered as one of the reasons why the transition to cloud is supposed to be cheaper as opposed to having deal with servers on-prem. And indeed, cloud service providers like Amazon Web Services and Microsoft Azure have a pay-as-you-go pricing model for the hundreds of cloud services being offered by them. Choosing the right service provider is another key element to be taken care of while transitioning to the cloud. With Magic Finserv experienced team, you can be sure of which service provider is best for you.
Step 4 # Identify mismanaged resources and eliminate idle resources
There are several reasons that organizations get it all wrong and end up with inflated bills.
- This could be due to oversight or lack of visibility. For example, instances can be rendered idle or unused when a temporary server is created by the developer for a specific task, who then forgets to switch it off. As a result, organizations are still paying a hefty amount even if they are no longer using the resource. One common operational challenge is when SIT/UAT projects are over, but resources are not released. It can be easily tackled through our cloud team by remembering to turn off SIT, UAT, DR environments when not in use.
- Let's take another scenario where the business unintentionally pays for services that are free. Had they been aware, organizations could have easily optimized costs by using the free services provided by the cloud service provider.
- Yet another way to optimize costs is by consolidating resources that are not gainfully utilized. Take for an instance, if a bank or financial institution is only using a CPU utilization level of 5%, it makes no sense to pay for cent percent for that computing instance usage. Our team can minimize costs with proper tagging of resources, by monitoring them and raising alerts when these are not properly utilized.
- Another way to optimize costs by terminating idle resources is heat maps. Heat map is a data visualization technique that predicts when there is maximum or minimum computing demand. Heat maps eliminate waste significantly, as businesses can switch off servers when they are idle. Our cloud experts at Magic FinServ can guide you with regards to cost savings and also help in deciding the tools for maximum cost-efficiency.
How Magic FinServ reduced cloud costs for a client with robust governance practices and discipline
For one of our prominent clients, we have helped the customer reduce the cloud cost by establishing robust governance and discipline across the services.
- Resource tagging and monitoring: With resource tagging, monitoring of resource utilization, and sending proper alerts when the resources are not tagged properly, our team helped the client to achieve the controls over cost.
- Reacting quickly to misuse: Magic FinServ has established a monthly review of cost & utilization reports and a weekly resource utilization review to react quickly to any misuse.
- Detecting unused/underutilized resources: The weekly review helped the customer to detect unused or underutilized resources and changed instance classes accordingly. This is a common operational challenge the client team used to face when System Integration Testing (SIT)/ User Acceptance Testing (UAT) projects are over, but resources are not released.
- Switching off: Turn off SIT, UAT, DR environments when not in use.
- Deleting unused DR databases: Deleted the unused DR databases. Reduced the instance class cost and storage cost on the DR account. (New database is created from snapshot every time DR is triggered.
- 40% cost savings achieved. Elastic Compute Cloud (EC2) and Relational Database Service (RDS) are the most expensive services. The best instances with higher configurations are provisioned during go-live or high load activities. However, our team brought them to a lower configuration during the steady-state which helped to achieve ~40% cost savings on the total cost.
Gain competitive advantage, drive efficiency, and expedite time to market with Magic FinServ
The potential of the cloud to innovate is immense. But at the same time, organizations need to optimize cloud spending without compromising performance. It makes no sense if the budget spirals out of control. Though the cloud servicing model is clear and precise, the existence of "tens of thousands of SKUs and if you don't know who is buying what services and why, then it becomes difficult to understand the total cost of ownership (TCO) for the application(s) or service(s) deployed in the cloud." Magic FinServ team helps banks and Financial Institutions manage and allocate costs optimally.
Our team prioritize the identification of idle resources and ensure that businesses will save precious dollars. We have helped clients gain an edge with a proven track record of:
- More than 40% cost savings
- More than 25% reduction in malicious activity
- More than 25% increase in uptime
- More than 75% of effort saving during release & recovery process by DevOps implementation
- Reduction in response time from 5 seconds to 3 seconds
- Improved uptime and delivered savings of 50% by moving some of the workloads to cloud native
- 60% savings on storage costs
With Magic FinServ at the helm, organizations are assured of both cost optimization and efficiency. We know from experience how things could unravel in the future. Therefore, we can address the common challenges and pitfalls more accurately and precisely than the in-house teams. This leaves the CloudOps and the DevOps teams with more time for growth-oriented activities. So, is that reason enough for you to take advantage of our services and embark on a cloud journey? If yes, then do write to us at firstname.lastname@example.org.
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