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How to Manage and Reduce Your Service Budgets

As-A-Service solutions are becoming the norm. That’s why it’s important to understand their business model and to create a strategy to make the most out of their adoption.

Fernando Galano

By Fernando Galano

As Chief Strategy Officer, Fernando Galano designs continuous improvement plans and manages control procedures for more than 5,000 engineers.

10 min read

XaaS is a general term that refers to the delivery of IT solutions as a service. The “as-a-service” moniker points to the fact these services are delivered over the internet, or are accessible remotely, such as cloud-based services. 

From a management perspective “Everything As A Service” (or XaaS) models can be a strong cost-saving alternative expeditiously providing access to software and hardware resources. In the long term, XaaS helps businesses avoid overhead and provide a user-friendly pathway for scaling their operations.

XaaS products come in all shapes and forms. Some are very easy to use while others, like Amazon Web Services or Microsoft’s Azure, can be cryptic, to say the least. In those cases, lack of experience can lead to misuse and the increase of invisible costs.

Their complexity begs the question: are you sure you are using your XaaS to their fullest? Or can you find a way to get the same performance at a lower cost?

Understanding The Payment Models

Traditionally IT products can be categorized into 3 broad groups depending on their business model:

Perpetual Licence: Buy once, keep forever. This kind of model is the norm for traditional software, but it has become less common in the last decade. While a one-time investment might seem like the most accessible model, it can lead to overhead down the line. 

For example, major updates to software tend to be sold under new licenses, so you end up having to pay for revisions.

Subscription-based: This is by far one of the most common models in retail: paying to gain access to a service for a certain amount of time. Traditionally, the access comes with a few limitations, and some services allow for their clients to buy add-ons and/or upgrades if they reach their quota. 

Subscription-based models like Amazon’s Lightsail are perfect for small projects that have very specific requirements and that won’t scale in the middle-to-long term.

Pay-per-use: This is the business model that most major providers offer. Instead of paying a fee for time-based access, you pay for what you use. For example, with a Storage as a Service solution you usually pay depending on the amount of data you are storing. 

This is by far the most flexible model and it can be extremely cost-effective when used intelligently. Since this is the most common business model in the XaaS landscape, this is the one we will be focusing on today.

Hire The Right Kind of Expert

There is a reason why Amazon Web Services, Azure, Google Cloud, and every other major player in the XaaS market offer certifications. Their respective dashboards might be as consumer-friendly as possible (which isn’t a lot), but with the amount of customization, it’s easy to get lost in a tsunami of options. 

Look, even if you know nothing about AWS, I can promise you that with a blog post and a YouTube video, you can get an elastic server up and running in a matter of minutes. But, how can you be sure that you chose the right tier for your needs? That’s the kind of thing an expert can help you with. 

One of the core skills of cloud engineers is a deep understanding of cloud-based infrastructures. A specialist can help you build and manage a network of services specifically designed for your projects. 

Aside from dealing with the service, they can also run cost-return analysis, and adapt the infrastructure to meet budgetary constraints. Do you need a dedicated cloud engineer? It depends.

For very involved projects that require managing a lot of services at the same time, yes, you will want to have a full-time cloud engineer on your team. If you are working with a small-scale project, then, they can also be part of your IT department. 

Focus on Performance

The internet is filled with horror stories of startups that racked up astronomical debts with XaaS products because of a bug in their code or because their software was badly optimized. 

In a regular environment, you have a hard cap. This means that if your software consumes more memory than your server can handle, it will freeze or crash. Likewise, if your database is bigger than your disk drive then you’ll receive an error.

But with XaaS products, especially scaling services, there is no upper limit (unless you set it up beforehand). If you have a memory leak in your code, the system will just keep assigning more RAM to your account, and that can get very costly very fast.

Of course, these are extreme cases, but the point still stands. Badly optimized software can use more processing power or memory than necessary for your current needs, which ends up creating an overhead. 

Constant checking, debugging, and performance tests are all par for the course in the world of software development. But adding a few more tests down the pipeline and implementing a DevOps culture will help you save money in the long run. 

Follow Your Services Best Practices

Most services try to endorse a set of best practices to help their consumers. For example, almost every Cloud as a Service provider actively promotes that their users shut down their instances when they aren’t used. 

Some services, such as AWS and Azure, have dedicated dashboards to promote such practices. For example, the aforementioned services offer cost management dashboards and automation tools to help you spin up or disable instances under certain criteria. The tools are there, you just have to use them.

Can you use free tier services to get what you want? Many services, like Google Confab, offer free use low tier options that, while not as powerful as their counterparts, can be used as small-scale solutions. 

For example, if you want to train an AI, then Google has some pretty amazing free options. They even encourage potential users to engage with their free services to promote their ecosystem.

Opt for Proprietary Services

Databases can get quite expensive, but in the case of major service providers like Amazon or Azure, they often offer proprietary options that are much cheaper than your traditional relational database.

For example, Amazon Web Services has DynamoDB for NoSQL solutions and RDS for a relational solution. Azure, on the other hand, offers their excellent Azure SQL service.

While it may feel wrong to depend on proprietary technology, these solutions are designed from the ground up for compatibility with other traditional services, so you can import or export your RDS database and migrate it without much fuzz.

Services Fitted to Your Needs

Pay-as-you-use services are growing in popularity for one simple reason: it’s one of the fairest business models on the market, as you only have to pay for what you use. And with a bit of foresight, that can be one of your biggest cost-saving allies.

Fernando Galano

By Fernando Galano

As BairesDev's Chief Strategy Officer, Fernando Galano works to define company strategy by designing plans for continuous improvement and robust control procedures. Joint team efforts under his supervision account for over 5,000 engineers in 36 countries.

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