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VMware finds its way in cloud cost management tools market

VMware is one of the numerous companies providing tools that help organizations manage cloud costs. Though the demand is real, the market and the tools require more maturity.

VMware is filling a growing need for cloud cost management tools with VMware Cost Insight, but the market needs...

to grow before such tools can become significant money-makers.

The growing popularity of the public cloud has convinced many companies to look past the initial assumption that public cloud services are cheaper than private cloud services. The process of comparing the two has been challenging because the public cloud has morphed into a complex set of services.

In reaction, vendors such as VMware have developed management products to provide customers with better cost visibility. Despite the apparent need, current cloud cost management tools seem destined for only narrow acceptance.

As a result, interest in public cloud cost management tools has grown as enterprises have deployed more cloud services.

"A number of companies have been surprised by their public cloud bills," said Stephen Elliot, program vice president of management software and DevOps at IDC.

Signing up for public cloud services requires only a few clicks, but determining their cost requires more time and effort.

In August 2017, VMware introduced VMware Cost Insight, a cost monitoring and optimization service for public and private clouds. The service produces reports that outline expenses based on predefined categories, such as usage, region and type of service.

The tool has potential. Many organizations struggle to determine if it makes economic sense to move an application to the public cloud. This service enables companies to evaluate their options before a move.

VMware Cost Insight also enables IT to better determine which groups use cloud services. IT can then more accurately assign infrastructure expenses to applications and lines of business to develop chargeback models so the departments that use the public cloud pay for it.

Evaluate the shortcomings of cloud cost management tools

Cloud cost management tools have limitations. The primary challenge they face is the growing complexity of public cloud services.

Amazon Web Services, for instance, has more than 92,000 pricing combinations, according to Lauren E. Nelson, principal analyst at Forrester Research.

To differentiate themselves, vendors are offering customers more choices, such as different buying models, system configurations, volumes of data and types of storage, as well as dedicated or non-dedicated services.

The combinations constantly shift. Tools such as VMware Cost Insight only outline a subset of the possible combinations. This outline then has to catch up after the debut of every service so the third party can support the new option.

Another problem is that third parties might not have access to cloud providers' billing information. Until recently, suppliers had closed APIs, so third parties couldn't access their pricing information. Public cloud vendors have since opened up their interfaces, but some information is still unavailable, and a delay remains between announcement and support.

Additionally, the features of the cloud cost management tools are limited.

"The cost monitoring systems are good at telling a company how much they spend on compute, network and storage, but they do not offer much insight in areas like performance and security," said Torsten Volk, managing research director at Enterprise Management Associates.

Companies struggle to justify cost of tools

Cloud cost management tools demand that IT spend time, effort and manpower deploying and tuning system metrics. The IT team has to capture configuration and usage information, enter it into the management system, produce reports that illustrate cost trends, and create system usage inferences.

Despite the amount of work necessary, there's no guarantee of new insights that lead to significant savings.

Justifying such investments is challenging for many businesses. Despite the amount of work necessary, there's no guarantee of new insights that lead to significant savings. Compounding the problem, many IT organizations lack the skills and business processes needed to effectively use these systems, according to Elliot.

Consequently, many organizations aren't interested in such services. According to Nelson, only 52% of companies monitor cloud spending.

In general, the larger the organization, the more likely it will be to use these services. VMware has done well with large organizations because many already rely on its other tools.

VMware Cost Insight still remains behind other vendors that focus on cloud costs, but with its acquisition of CloudHealth -- a market-leading startup focused on cloud cost monitoring -- VMware might be able to catch up by integrating the technologies into a more robust cloud management suite.

In the long term, VMware may also bundle cloud monitoring functions into other management suites instead of selling it as a stand-alone service.

According to Volk, these cloud cost management tools will eventually add more functions. Rather than it being a simple private or public cloud decision, these products will help organizations determine whether to run a new application on bare metal, in a hosted environment or on a cloud database management system.

Organizations have been struggling to get a better understanding of their public cloud costs. Vendors, such as VMware, have responded to that need with software that, so far, offers rudimentary insights into cloud spending. These cloud cost management tools will eventually offer more granularity as the market matures.

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