by Sreeram Kombam, Principal - Infrastructure Automation
Six strategies for encouraging sound cloud cost management in federal contracts
Government agencies are increasingly adopting cloud technologies to enhance efficiency, scalability, and service delivery. However, managing cloud costs remains a challenge. Unchecked expenses can quickly spiral out of control, impacting budgets and project viability.
As agencies move from lift-and-shift to cloud-based and shared microservices platforms, the situation becomes even more complex. Too often, contractual structures fail to hold application teams responsible for the costs of hosting their systems. How can federal IT organizations hold application teams accountable for controlling cloud costs?
Both the government and its service providers benefit when contracts clearly articulate cost control expectations and assessment mechanisms. My recommendation: agencies should emphasize the importance of cloud cost control in contracts, encouraging a variety of methods to control costs.
1. Establish cloud cost objectives
Clearly define the objectives related to cloud cost management. At the contract level, these could include targets for cost savings, specific budget limits, or goals for reducing waste. When outlined in the contract, targets serve as benchmarks for assessing performance. Ideally, these objectives cascade from the objectives detailed in the Statement of Objectives or Performance Work Statement issued as part of the RFP.
2. Require transparency
Emphasize the need for transparency in contracts with cloud/platform service providers, resellers, and application teams/system integrators—all must understand that transparency into data such as utilization and costs is a requirement for doing business with your agency. For example, requiring reporting at a granular level—such as cloud cost per application/division—encourages transparency and creates a culture of ownership.
3. Integrate cost controls in SLAs
Service Level Agreements (SLAs) should explicitly mention cost controls and monitoring mechanisms. This includes setting thresholds for acceptable spending, penalties for exceeding budgets, and incentives for staying within limits. Detailed cost reports should be a standard deliverable.
4. Implement cost monitoring tools
Require use of advanced cost monitoring and management tools. These tools can provide real-time insights into cloud spending, identify potential areas of waste, and suggest optimization measures. Tools like AWS Cost Explorer, Google Cloud’s Cost Management, and Azure Cost Management can be highly effective.
5. Encourage cost-effective practices
Incorporate clauses that encourage vendors to adopt cost-effective cloud practices. This can include optimizing resource allocation, leveraging spot instances, and implementing auto-scaling. Additionally, promote the use of open-source and community-driven solutions to reduce licensing costs.
6. Amplify cloud cost control results
Highlight where your contractors have delivered cloud cost control success. If your program has a standard performance evaluation process in place, take that opportunity to commend your contractor for results achieved. In addition, share results with your federal colleagues through mechanisms such as CPARs.
Achieving cost control in a complex cloud environment
Agencies can significantly enhance financial accountability by incorporating cloud cost considerations into their contracts. The recommendations above position agencies to achieve cloud spend that is optimized, transparent, and aligned with organizational goals and budgets.
Ready to take control of your cloud costs? Reach out to our Unissant team of experts.
