Deep Dive on The Forrester Wave™: Cloud Cost Management and Optimization, Q4 2020

Last month, Forrester published The Forrester Wave™: Cloud Cost Management and Optimization, Q4 2020 report. Read this article for a deep dive into the report and an analysis of key findings.

Last month, Forrester published The Forrester Wave™: Cloud Cost Management and Optimization, Q4 2020 report. If you didn’t read our key takeaways blog, start there for an excellent overview of the report. I’m going to dive a bit deeper into the methodology, the report, and analyze some of the findings.

For those of you who aren’t familiar, The Forrester Wave™ is a rigorous vendor evaluation conducted over several months by the Forrester Research team. The analyst conducts initial research, fields an in-depth questionnaire to vendors, talks with customer references, receives strategy briefings and demos, and then builds all of this into a Wave scoring model.

It’s a huge undertaking that’s meant to help enterprises put together a shortlist of vendors for them to evaluate. This is the second time Forrester has published this report, which gives us an opportunity to see how the market is evolving over time.

The players

Since the first report was published, there’s been significant market movement. CloudHealth Technologies was acquired by VMware, Cloudability was acquired by Apptio and Rightscale was acquired by Flexera. There are also some new entrants, in addition to some vendors who weren’t included this time. Because of this market consolidation, the speed of innovation and enhancements in the market, and some changes to the criteria, the Wave graphic looks quite different between 2018 and 2020.

Analyst guidance

Before diving into the evaluation itself, the report offers some additional overarching guidance that provides key context for the detailed vendor information. The analyst writes that customers should prioritize solutions that support all of their clouds—AWS, Azure, GCP, Oracle, VMware—and be able to “discover both metadata and cloud bills to provide accurate billing inclusive of discounts, reserved instances (RIs), AWS Savings Plans usage, native tags, performance insights, and even marketplace purchases.”

In addition, the Forrester report recommends looking for solutions that can go deeper than common VM resources and optimize compute, storage, and database, as well as connect to third-party vendors. Solutions should also help democratize and enable cloud financial management throughout the organization. The report states that many leading tools “are also designed to foster communication and collaboration among operations, development, and finance teams.”

The criteria

Let’s dive into the criteria that Forrester deems important for your vendor selection process. They break criteria into three sections: current offering, strategy, and market presence. Current offering and strategy make up the X and Y axis that plot a vendor’s place on the Wave.

One thing I really appreciate about the Wave is the rigorous methodology behind it that allows you to see exactly why vendors are ranked and placed where they are. Forrester clients can even download a Wave scorecard and change the weightings to customize their own vendor shortlist.

Current offering

Evaluation criteria under the current offering category include:

Access and permissions: What authentication protocols are used for establishing permission to access existing public cloud accounts and the solution? How is a role hierarchy available with multiple levels of admin or other roles, and how granular are the permissions?
Resource discovery and cloud platform support: What is the vendor’s ability to do resource discovery and support multiple different cloud platforms? And to what depth can they support the specific services within each cloud platform?
Billing: How does this solution provide simplification or explanation around cloud costs to enable business users to leverage reports? How does the solution combine bills from multiple cloud platforms? How does the solution enable showback/chargeback across cloud platforms?
Cloud visibility: From what data sources can reports be generated? Can the dashboard display historical, current, and forecasted utilization? What formats and delivery mechanisms are available? What information on cost can be monitored? Where does this solution get this data? Can tags be used to filter displays for monitoring dashboards?
Cost optimization: What activities will this platform recommend (e.g., identifying anomalies, automatically flagging unused or rarely used instances, flagging overprovisioned instances, providing instance type or resizing suggestions, recommending reserved instance types and/or volumes, monitoring spot instances, etc.)? How does the solution provide optimization recommendations for spot instances, AWS Savings Plans, or terms of commitment beyond reserved instances? Is remediation completed entirely in this solutions interface? How does the solution provide workload placement recommendations at the time of provisioning? How are policies applied to roles, projects, and teams? What policies are available to incentivize efficient usage?
Cloud forecasting: How is cost planning or forecasting supported? How can the dashboard display historical, current, and forecasted utilization?
Experience: What default views and dashboards are provided for an administrator? How are user, service, and monitoring information accessed? What customer support mechanisms does this tool provide to customers? At what stage does it provide support within the customer lifecycle? What standard SLAs are offered for this service? What third-party or other external solution integrations are supported? What APIs are available, and in what form?

Strategy

Evaluation criteria under the strategy category include:

Product vision: What are the tool’s planned enhancements over the next 12 months to improve or extend cloud cost monitoring and optimization capabilities? How does the product vision support top-line revenue and growth targets?
Market approach: What is the vendor’s go-to-market approach for its product? What sales and channel resources are associated with this product?
Partner ecosystem: What is the breadth of third-party solutions that extend, complete, or deepen the functionality of the cost monitoring and optimization solution? Does the vendor have a defined partner program? What competencies or certifications has the vendor obtained either from the cloud platform provider or third-party accreditation organizations?
Commercial model: What pricing models are available for this product? What pricing units are used to determine cost? Is pricing flat rate, usage-based, tiered, per user, per active user, per feature, services-based, client revenue, cloud spend, or optimization gains from product use?
Execution roadmap: What investments has the vendor made in the past 12 months? Are there any plans for acquisitions to bolster the current product portfolio or market stance?
Performance: How does the company’s performance indicate that it’s pursuing a strong strategy? How does the strategy support the company’s future direction?

Market presence

Evaluation criteria under market presence include:

Number of customers: How many customers actively use the solution? How many of them are enterprise customers?
Product revenue: What was the total revenue for the cloud cost monitoring and optimization solution over the past four quarters (January 2019 to December 2019)?
Market share: What is the platform’s total technology spend under management (as of December 2019)?