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Enter last month's cloud bill and how fast it is growing. You get a twelve-month projection, the month the budget runs out, and the same projection with a cost optimisation effort applied.
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Share on XShare on LinkedInCloud bills grow by compounding, and compounding is easy to underestimate. Four percent a month sounds modest. Over a year it is sixty percent: an $85,000 bill becomes $136,000, and the year costs about $1.3 million rather than the $1 million a flat projection suggests. Most budget overruns are this arithmetic, noticed in month nine.
The forecast is most useful for timing. A fifteen percent saving that starts in month three is worth far more than the same saving in month nine, because it applies to every later, larger bill. Putting the two lines side by side turns cost work from a clean-up task into a decision with a date on it. The projection assumes a constant growth rate, which real bills do not follow, so update it monthly and treat a widening gap between forecast and actual as the signal to look at what changed.
Project the next twelve months of cloud spend from today's bill and its growth rate, compare it with the budget, and see what a cost optimisation effort would change.
Average month-on-month change over the last six months.
Right-sizing, commitments, and removing idle resources.
1 to 12.
| Month | Bill | Running total | Optimised bill | Optimised total |
|---|---|---|---|---|
| 1 | $88,400 | $88,400 | $88,400 | $88,400 |
| 2 | $91,936 | $180,336 | $91,936 | $180,336 |
| 3 | $95,613 | $275,949 | $81,271 | $261,607 |
| 4 | $99,438 | $375,387 | $84,522 | $346,130 |
| 5 | $103,415 | $478,803 | $87,903 | $434,033 |
| 6 | $107,552 | $586,355 | $91,419 | $525,452 |
| 7 | $111,854 | $698,209 | $95,076 | $620,528 |
| 8 | $116,328 | $814,538 | $98,879 | $719,407 |
| 9 | $120,982 | $935,519 | $102,834 | $822,242 |
| 10 | $125,821 | $1,061,340 | $106,948 | $929,189 |
| 11 | $130,854 | $1,192,193 | $111,226 | $1,040,415 |
| 12 | $136,088 | $1,328,281 | $115,675 | $1,156,089 |
Growth is compounded monthly at a constant rate, starting from last month's bill. Real spend moves in steps with launches and migrations, so re-run this each month with the latest bill.