Red Hat Hybrid Cloud Management Gets Financial with Cloud Cost Management

Key Stakeholders: CIO, CFO, Accounting Directors and Managers, Procurement Directors and Managers, Telecom Expense Personnel, IT Asset Management Personnel, Cloud Service Managers, Enterprise Architects

Why It Matters: As enterprise cloud infrastructure continues to grown 30-40% per year and containerization becomes a top enterprise concern, IT must have tools and a strategy for managing the cost of storage and compute associated with both hybrid cloud and container spend. With Cloud Cost Management, Red Hat provides an option for its considerable customer base.

Key Takeaways: Red Hat OpenShift customers seeking to managing the computing costs associated with hybrid cloud and containers should starting trialing Cloud Cost Management when it becomes available in 2019. Effective cost management strategies and tools should be considered table stakes for all enterprise-grade technologies.

Amalgam Insights is a top analyst firm in the analysis of IT subscription cost management, as can be seen in our:

In this context, Red Hat’s intended development of multi-cloud cost management integrated with CloudForms is an exciting announcement for the cloud market. This product, scheduled to come out in early 2019, will allow enterprises supporting multiple cloud vendors to support workload-specific cost management, which Amalgam Insights considers to be a significant advancement in the cloud cost management market.

And this product comes at a time when cloud infrastructure cost management has seen significant investment including VMware’s $500 million purchase of Boston-based CloudHealth Technologies, the 2017 $50 million “Series A” investment in CloudCheckr, investments in this area by leading Telecom and Technology Expense Management vendors such as Tangoe and Calero, and recent acquisitions and launches in this area from the likes of Apptio, BMC, Microsoft, HPE, and Nutanix.

However, the vast majority of these tools are currently lacking in the granular management of cloud workloads that can be tracked at a service level and then appropriately cross-charged to a project, department, or location. This capability will be increasingly important as application workloads become increasingly nuanced and revenue-driven accounting of IT becomes increasingly important. Amalgam Insights believes that, despite the significant activity in cloud cost management, that this market is just starting to reach a basic level of maturity as enterprises continue to increase their cloud infrastructure spend by 40% per year or more and start using multiple cloud vendors to deal with a variety of storage, computing, machine learning, application, service, integration, and hybrid infrastructure needs.

Red Hat Screenshot of Hybrid Cloud Cost Management

As can be seen from the screenshot, Red Hat’s intended Hybrid Cloud Cost Management offering reflects both modern design and support for both cloud spend and container spend. Given the enterprise demand for third-party and hybrid cloud cost management solutions, it makes sense to have an OpenShift-focused cost management solution.

Amalgam Insights has constantly promoted the importance of formalized technology cost management initiatives and their ability in reducing IT cost categories by 30% or more. We believe that Red Hat’s foray into Hybrid Cloud Cost Management has an opportunity to compete with a crowded field of competitors in managing multi-cloud and hybrid cloud spend. Despite the competitive landscape already in play, Red Hat’s focus on the OpenShift platform as a starting point for cost management will be valuable for understanding cloud spend at container, workload, and microservices levels that are currently poorly understood by IT executives.

My colleague Tom Petrocelli has noted that “I would expect to see more and more development shift to open source until it is the dominant way to develop large scale infrastructure software.” As this shift takes place, the need to manage the financial and operational accounting of these large-scale projects will become a significant IT challenge. Red Hat is demonstrating its awareness of this challenge and has created a solution that should be considered by enterprises that are embracing both Open Source and the cloud as the foundations for their future IT development.

Recommendations

Companies already using OpenShift should look forward to trialling Cloud Cost Management when it comes out in early 2019. This product provides an opportunity to effectively track the storage and compute costs of OpenShift workloads across all relevant infrastructure. As hybrid and multi-cloud management becomes increasingly common, IT organizations will need a centralized capability to track their increasingly complex usage associated with the OpenShift Container Platform.

Cloud Service Management and Technology Expense Management solutions focused on tracking Infrastructure as a Service spend should consider integration with Red Hat’s Cloud Cost Management solution. Rather than rebuild the wheel, these vendors can take advantage of the work already done by RedHat to track container spend.

And for Red Hat, Amalgam Insights provides the suggestion that Cloud Cost Management become more integrated with CloudForms over time. The most effective expense management practices for complex IT spend categories always include a combination of contracts, inventory, invoices, usage, service orders, service commitments, vendor comparisons, and technology category comparisons. To gain this holistic view that optmizes infrastructure expenses, cloud procurement and expense specialists will increasingly demand this complete view across the entire lifecycle of services.

Although this Cloud Cost Management capability has room to grow, Amalgam Insights expects this tool to quickly become a mainstay, either as a standalone tool or as integrated inputs within an enterprise’s technology expense or cloud service management solution. As with all things Red Hat, Amalgam Insights expects rapid initial adoption within the Red Hat community in 2019-2020 which will drive down enterprise infrastructure total cost of ownership and increase visibility for enterprise architects, financial controllers, and accounting managers responsible for responsible IT cost management.

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