The single biggest single trend within enterprise IT the last few years has been the move to the Cloud. Enterprises from the Fortune 500 to SMEs are increasingly moving their applications - if not their entire businesses - to the cloud. What many IT departments may be missing, however, are two main considerations. First, how can IT departments track and manage their cloud costs? Second, and perhaps even more importantly, what is the connection between and enterprise's cloud costs and the ROI on their cloud investments. One interesting startup that assists IT departments with both of these considerations is Cloudability . Today, we are joined by Cloudability's CEO Mat Ellis. IT Specialist : Thank you for taking the time to answer some questions Mat. To start with, can you provide some brief background on Cloudability? Mat : We began as a simple email update for a couple of my friends who had their businesses on the cloud. One day, the system I used to send the email broke. And the urgent calls from executives that the list had been forwarded to — execs who relied on it to see how much they were spending on the cloud — started to pour in. That’s when I knew there was a need for a service like Cloudability. That simple email turned into what is today the market leader in cloud spend analytics. An email that has grown into a company with a team of 25 world serving more than 8,000 customers in over a hundred countries around the globe. And those customers have spent over $700 million on the cloud since we began. IT Specialist : At a high level, can you provide Cloudability's perspective on the overall state of the Cloud computing marketplace today? It seems like Amazon are the big boys on the block, but Microsoft and Google are clearly looking to take share as well? Mat : I’m sure everyone’s looking to take a bite out of Amazon, but the reality is that, today, they are simply tributaries in the larger flow of cloud revenue dominated by AWS. Will that change some day in the future? Sure. IBM’s moves with Softlayer seem to be paying off, though there’s debate about how much of that business is directly cloud. Microsoft appears to be making a strong go of it with Azure. Google’s product is, as you expect, very well engineered but they will need to demonstrate their commitment to this end of the market before they will be seen as a serious alternative to AWS. So, yes, I think we’ll start to see competition heat up sometime over the course of 2014. But, for now, the market remains strong for cloud services and Amazon will be in the driver’s seat for the foreseeable future. IT Specialist : As Cloudability focuses on containing Cloud costs, I was wondering what your perspective is on how much – if at all – enterprise IT departments can save by moving to the Cloud? Will a move to the Cloud automatically save money for IT, or is this something that is not guaranteed? Mat : Everyone seems to think that the cloud is about saving money. On many levels, I’m sure that’s true. However, in our experience, we’ve actually seen the opposite. When managed correctly, companies tend to spend *more* on the cloud. Having confidence that you’re getting a good return on your spending, and then using that insight to budget more strategically leads to doing more with the resources already in place. Often, that means more cloud in preference to more data centers and techops staff. At a fundamental level, the cloud has gone from “It’s coming. Are you ready?” to “It’s here. Are you on board?” And while there’s still some discussion to be had about things like maximizing security in some applications or uptime and performance in others, the conversation is now less about whether or not you should use the cloud and more about how to ‘do’ the cloud in your organization. IT Specialist : Turning now to Cloudability, it seems like you offer a simple but compelling value proposition to enterprise IT specialists – ‘we save you money on your Cloud costs’ – is that a fair summary? Mat : Our value actually goes a lot deeper than cost savings. Typical first month savings are about 20% to 25% of spend. Customers may initially come to us for that reason or to just to get their costs under control, but they soon discover that our platform gives them a lot more than that. When they realize they can now track costs at very granular levels across their entire IT supply chain, well, that’s a strategy shifter. With Cloudability companies are able to connect every dollar of cloud spend with something that drives sales or delivers on their strategy, right down to individual products and divisions. IT Specialist : Turning now to Cloudability’s technology can you provide a bit of a behind the scenes overview on how your solution works? As I gather, it is quite granular and tracks all Cloud spending on a daily basis – is it an API or another method that enables you to pull all of this data together? How does Cloudability handle security, which I would imagine many of your customers have concerns about? Mat : Our product is provided as an easy-to-use SaaS product. Cloud is as cloud does :) Adding cloud vendors to an account is as easy as going to our site, selecting the vendor you want to add to our system, and then entering a few values to give us access to your account — which is something we do differently than others in the industry, and which allows us to provide better, faster and more comprehensive access to your spend and usage data. Once the access credentials are verified, it’s off to the races monitoring and measuring your cloud costs. From there, the platform let’s you find stuff like cloud resources you’re paying for but not using, track your spending and usage, get a sense of trends over time, view spending broken down by things like product, feature, division, team, etc., and get recommendations on large purchases like AWS Reserved Instances. Regarding security, we have put an enormous amount of time and energy into robust security practices. Data is encrypted at every step of the way; we never receive or transmit unencrypted account information. We first encrypt it in the browser then re-encrypt with an even more secure algorithm once it reaches our servers. Only a specialized set of hardened servers — something we call “strongboxes” — are able to read the encrypted blobs. The strongboxes accept no incoming connections of any kind so their instances must be killed and manually re-deployed using strict security procedures when any changes to code need to be deployed. Staff members do not have the ability to decrypt encrypted account data, and we use extensive best practices to keep our customers’ sensitive information secure. We built in this security because originally we needed your master user ID and password to get at the data. Those days are long gone now, but customers love this level of security and so we’ve continued to spend a lot of time focused in this area. IT Specialist : From the perspective of IT professionals – who constitute our primary readership – how easy is it for them to use and operate Cloudability’s solution? More specifically, what type of specific outputs – such as graphs, charts, e-mail updates etc. – will IT specialists actually receive that will allow them to track their organization’s cloud spending? Mat : It’s incredibly easy. We’ve always felt very strongly that design and interaction of a product is as important as the code it’s built on. Remember, the product started out as something that got passed along from engineering to executives, to keep them happy you weren’t over-spending. There’s a wide variation in how different people get to see the reports we generate. So, from the start, making Cloudability easy to spin up, use and share was an important part of our product design. That focus on design allows IT professionals to give their finance and management teams the visibility they need in a format they can make sense of, without having to constantly chase manually generated reports. Cloudability allows you to track daily changes in spending, with budget alerts when accounts are predicted to exceed limits, spending breakdowns to see which services and accounts are costing the most and daily email reports delivered right to their inbox. You can even optimize when they see the impact that a design decision has on the cost of a product by creating a “cost by product” Cost Allocation Report. We hear regularly from our customers that providing insight into these costs promotes engineer efficiency, by saving time (from constant enquiries and data gathering) and by reducing waste (by easily spotting redundant services and accidental over-spending). IT Specialist : As I gather, Cloudability has developed a close relationship with Amazon Web Services – can you provide some background on how that relationship developed and what are the benefits to AWS customers from your Amazon partnership, i.e. what specifically about their AWS service will they be able to track? Mat : To be completely honest, when we started the business we weren’t sure how vendors like AWS would receive our product. So we built it to be very resilient, in case they tried to shut us down. But it turns out that all the best services understand that unless customers get great value and know it, they will go elsewhere. Maybe this particular system is stuck on that particular cloud, but the next 50 projects will go elsewhere. From the beginning, AWS gave us a lot of support (and a ton of service credits) and access to the team that built their billing systems. Thanks to this, we were able to eliminate the security risks (that you had to give us your master user ID and password) and greatly increase the quality of the data we receive from them. For example, we know get over 7,000 times more data for the same customer spending the same amount than we did two years ago. The fruits of this relationship has allowed us to greatly improve the amount of detail in our reports, improve our estimates of future spending, give you much better insight into trends (thanks to tags and hourly resolution), and most recently, for us to build what we think is the best Reserved Instance Planner tool out there today. The whole issue with calculating Reserved Instances is that you have to know how often you're using your RIs and how much of them you’re using. Cloudability gives customers a three month histogram that tells you what percentage you’ve been using your RIs by hour. It’s a really clear, simple representation of your usage — a green line or a red line that tells you whether you need to buy more RIs. It doesn’t get more straightforward than that. And it would be impossible without hourly resolution data from AWS. It’s worth mentioning that the work we’ve done with AWS has set the standard for the cloud industry, and other large vendors are now working with us to get the same features for their customers. So even if you don’t use AWS or plan to move, you can thank them for helping to set expectations that if you want to play at scale you have to provide enough data to ensure you’re getting good value for money. IT Specialist : Is your solution limited to AWS, or can customers of other Cloud providers benefit from Cloudability’s technology as well? In addition, are you focused on IaaS, or do you work across the continuum with PaaS and SaaS as well? Mat : Cloudability is a service for companies that are making heavy use of the cloud, which today normally means things like infrastructure and Amazon Web Services, but we see as meaning any highly variable IT costs. We currently support AWS, Rackspace, Heroku, NewRelic, IBM/SoftLayer, Akamai, HP Cloud and a few other services. We’re committed to supporting whatever services are being used at scale in the industry, and our platform is ‘open’, i.e. it’s easy to interface with us, so expect a lot more integrations over the next year or two. Let’s just say that if you need to measure your cloud spending, we cover your *aas ;) IT Specialist : Can you provide an overview of Cloudability’s products? For example, do you have a single offering or is there a kind of tiered structure? Mat : We have three tiers: Free, Pro and Enterprise. Free is exactly what you’d think, and more. Track to your heart’s content and get a taste for the power of what we do. No credit card needed. We hope the Free version will help you quickly see the value of cloud cost analytics and graduate to the Pro edition, giving you much finer detailed usage and cost reports, plus access to things like tag based reporting and the RI planner. If you are using the cloud across more than one or two teams, our Enterprise level helps you herd the cats, manage things like consolidated billing (and access to those awesome tier discounts) and showback/chargeback reporting. IT Specialist : What type of reception has Cloudability received in the enterprise market to date, and are there any customers and/or case studies you might want to highlight? Mat : Until last year most of our users were technology companies: you know, software, mobile, gaming, web scale apps and media companies. Over the past year we’re seeing more and more of everyone else, especially public companies. And they’re coming on the cloud in a really different way. The technology companies, they really get the whole technology vision of the cloud, so spending can get a little bit out of control and they need to get the genie back in the bottle, so to speak. Public companies, on the other hand, say things like “we’re not even looking at this cloud thing until we know we have it under control.” And so they’re taking a completely different approach, top down, almost like they are deploying cloud like an application. And they’re very happy to see that they can actually get some control and insight with our service. We work with a number of large companies, but one of the most visible uses of our platform was by the Obama For America team, who used our technology to stay ahead of their cloud spending during the last U.S. presidential election. You can hear the OFA team talk about it here: http://blog.cloudability.com/obamas-team-rock-stars-of-aws-reinvent/ IT Specialist : Turning now to Cloudability at the corporate level, have you raised any capital to date, and who are your primary investors? Mat : Our $8.7M in funding comes from the who’s who of the venture capital industry: Foundry Group, Techstars, Trinity Ventures, 500 Startups and a consortium of angel investors. IT Specialist : On a company level, I read that Cloudability actually was listed recently as one of the Top 15 startups in the US to work for – what do you think enabled you to make that list in terms of your team or culture, and why might IT professionals and software engineers want to work for Cloudability? Mat : We’re mostly based in Portland, Oregon, with about 20% of our staff working remotely. The Portland startup environment is like nothing I’ve ever seen before. (I spent most the 2000’s working for startups in the Bay Area.) The region’s core values are about teamwork, humility and connectedness, which is why my co-founders and I decided to start up here instead of the Bay. Personally, I prefer this kind of working environment. You know, when great ideas flow but nobody’s really sure who came up with the original thought? Our team is very close: we hold company off-sites twice a year, and you don’t have to have a reason to fly here for a few days or a few weeks if you are a remote worker, we’re just glad to see you in the office for a bit. We also have a lot of kids between us, and that makes for fun family events outside of work, as well as a place where children-driven randomness is accepted as an inevitable fact of life. Our vision is also a big driver of what it’s like to work here. We think the cloud is going to have some very profound impact on the planet, as it makes hugely scalable and reliable infrastructure available to everyone, and on the best economic terms. Once you believe this to be true you get a strong urge to share it with as many people as possible, and as quickly as possible. So, when we looked at the problem of cloud adoption, we saw that one of the big headwinds slowing it wasn’t really the maturity of the technology (you could already do lots even a few years ago), but something much more basic: quite simply, fear. I mean, if you think cloud is hard or impossible to control, why on earth would you inflict it on your organization? That would be a bit crazy. By helping folks understand what they are doing with vendors like AWS, Microsoft and Google, we are reducing that fear, and increasing confidence, which in turn is accelerating the spread of this amazing invention called the cloud. Something we’re very proud to be playing a part in. And we think faster cloud adoption is a very good thing for humanity: less damage to the environment, more efficient use of all the millions of computers installed around the globe, coders spending more time on data and algorithms, and all the marvelous inventions that come with that. Plus the tremendous value it will create as compute becomes ever more pervasive in our daily lives. Some of the things we see the cloud enabling doing are pretty cool. 10 years ago it would be hard to imagine having Netflix on an iPad Air running in over 50 countries, but even that pales in comparison to things like consumer DNA testing or DNA driven custom medication programs, both things that are only economical when you don’t have to own all the computers necessary to do the heavy lifting required. I think our team feels the same way, and the result is a close knit and highly motivated team who get a lot done while growing and having fun at the same time. And don’t forget also, helping to change the way the world does compute. Our staff enjoy all the benefits you’d expect from a fast-growing company to offer: a competitive salary in an area with very low cost of living compared to the cloud; generous stock options (over half our stock is owned by current employees); 100% paid health care for employees and their families; no formal vacation policy (take what you need when you need it); free parking and gym membership; and company events that include regular happy hours, off-site retreats and sponsored participation in local events. But let us not forget the people. Everything we do comes down to them, and we’re very proud of the amazing family we’ve created here at Cloudability. IT Specialist : Finally, for IT specialists who might want to consider working with Cloudability, what is the best way for them to contact or interface with you? Mat : They can visit our jobs page or contact me directly. If you’re based locally we hold an open office ‘happy hour’ every month, check out our twitter feed for details. IT Specialist : Thank you for joining us today Mat, and best of luck going forward.