CFOs (Chief Financial Officer) are facing a new cloud challenge these days – reducing cloud cost waste. A recent McKinsey report states that around 80% of enterprises consider managing cloud spend as a challenge. Though unlimited scalability and reduced IT costs are bee-line factors for cloud adoption, organizations cannot reap complete cloud benefits unless they follow certain best practices of which Cloud cost optimization is one.
What is Cloud cost optimization?
The process of identifying and allocating the right resources to workloads or applications is known as cloud optimization. But infrastructure needs for applications and workloads differ and evolve on a need basis. So, a good practice is to match workloads against cloud resources by optimizing them using machine intelligence and identifying unused or disconnected resources and removing or rightsizing them periodically.
This process of minimizing the overall cloud expenditure by identifying mismanaged resources, right sizing compute services, reserving capacity for future use and reducing cloud resource waste is known as cloud cost optimization or cloud cost management.
How do businesses end up with wasted cloud spend?
With remote work emerging as the new norm, Cloud has become an integral part of business operations today. This surge in cloud adoption is mainly because of Cloud’s ability to scale high, be agile and potentially save big on IT spend.
“Money channeled to the cloud will represent 14.2% of the total IT spending by 2024, compared to 9.1% in 2020” – Gartner
Though cloud has taken the center-stage of business operations, most firms still struggle to gain the true benefits of cloud, and the reasons range from improper cloud resource management, incorrect estimate of cloud computing needs, failing to opt for the right billing plan, and so on.
Such weak cloud practices have caused many firms to continue spending on unused or redundant cloud resources, that keeps piling up throughout the year. To prevent cloud waste from the very beginning, ideal cloud cost management solutions should be adopted as a value-driven strategic move. In other words, cloud cost optimization must be a pivotal part of every cloud adoption strategy.
With different cloud costing models in practice, how exactly can businesses prevent this accumulating pile of wasted cloud spend? As a matter of fact, there are several cloud service expense management techniques to reduce unwanted cloud spending.
Let’s look at some industry best practices that not only help in saving millions of wasted dollars but also aid in streamlining cloud spend and optimizing cloud resources better.
1. Establish a strong automation foundation
Cloud cost optimization can be complex, especially in large enterprises where deep analysis and resource streamlining can be challenging if done manually. By integrating continuous cloud cost optimization within the DevOps strategy using AI (Artificial Intelligence) or automation software, organizations can continuously and periodically analyze cloud resource consumption and optimize resource allocation without breaking a sweat.
2. Setup effective governance
To maintain optimal cloud consumption, cloud cost optimization framework should include a repository of cost levers, associated architecture and feature trade-offs along with an effective cloud governance setup. Governance policies must include rules such as permission to create resources, adherence to budget, and limits on resource consumption levels, to name a few.
3. Initiate cross-functional cloud cost intelligence
Enable cross-functional teams like Finance, DevOps, and Business to monitor and manage cloud sourcing and consumption directly. Providing real-time data will allow these teams to visualize financial factors associated with each cloud resource consumption and enable them to make informed decisions and avoid unwanted cloud spend.
4. Identify, eliminate, and consolidate idle / unused resources
Idle computing instances might utilize less CPU, however service providers like AWS (Amazon Web Services) and Azure might still bill for 100% CPU usage charges. To avoid such cloud cost waste, identifying these instances and consolidating them into fewer instances can save big, especially with AWS cloud cost optimization and Azure cloud cost optimization.
Unused or forgotten resources that stay ‘on’ in the background are other popular enterprise cost-churners. Developers sometimes run temporary functions or store temporary data and forget to delete them after use. Such temporary files often show up in the bill in the form of extra digits. Periodically identifying and deleting these unused resources can slice the bill to a significant amount.
Periodically backing up your cloud data is one of the expert-recommended best practices to save cloud costs. If your firm uses Cassandra-based backup, this blog will provide helpful details on different methods to backup and restore your cloud data.
5. Leverage Heat Maps
Utilizing visual tools such as heat maps can help in identifying resource usage and understanding the surge in computing demand. This information can be used in controlling cloud resources based on usage or duration and to turn off idle resources during specific times.
6. Execute chargeback model
By adopting resource tagging such as department, usage, owner, cost center, etc., enterprises can trace back the associated cloud resources to the appropriate resource owner. This practice will hold consumers responsible for resource usage and will allow them to forecast usage and leverage optimization opportunities. This chargeback model will help in eliminating unwanted cloud resources that otherwise go unaccounted for.
7. Right size computing services
The process of analyzing and adjusting computing services based on certain usage criteria is known as right-sizing. Achieving peak performance for paid cloud resources is possible by right-sizing computing services and modifying them to the most efficient size to reduce costs. Such resource right-sizing can be done for servers, memory space, database, storage capacity, graphics, computing, throughput, etc.
8. Invest in Reserved Instances (RI)
For enterprises committed to long-term cloud usage, investing in Reserved Instances (RI) will be a smart move. Reserved Instances usually offer bigger discounts as they require upfront payment and longer commitment times, usually ranging from one to three years. Analyzing past usage can help in making informed investments into RI, and they can potentially save big through their deep discounts.
9. Use Spot Instances
Spot instances are different from Reserved Instances (RI) and are usually offered during auctions. Spot instances are ideal for enterprises that need to perform batch jobs or execute short-lived jobs. Spot instances are highly sought after by large enterprises, and often disappear quickly due to their cost-saving capacity. Use spot instances as part of your cloud cost optimization strategy to minimize cloud spend and maximize resource usage.
About SecureKloud’s Cloud Managed Service
With 400+ cloud projects in our portfolio, championed by 450+ cloud consultants, we have acquired significant knowledge providing end-to-end cloud managed services for different businesses, including highly regulated industries. Being a cloud-born company, SecureKloud has been providing Cloud Cost Optimization services as part of our Cloud Managed Services portfolio to global brands, including F500 companies, for more than a decade.
SecureKloud is a 3rd party Audited Next-Gen AWS MSP Partner, AWS Premier Partner, GCP (Google Cloud Platform) Premier Partner and an ISO 27001 certified cloud service provider.