Cloud cost optimization is the process to optimize your cloud cost to meet your business goals. You want to get as much as possible business value from your cloud spend. Reducing waste is one of the goals for cloud cost optimization.
Common causes of cloud waste include; overprovisioned resources, unused assets or instances paid for but not in use, data not stored in the most optimal place, lack of automation, and enterprises not taking advantage of discounts.
You are not alone in the struggle to optimize your cloud costs.
Some numbers
- Research shows that through 2024, 80% of companies will be unaware of their mistakes in their cloud adoption and will overspend by 20 to 50%.
- Flexera – 30 percent of cloud spend is wasted
- Flexera – 61 percent of organizations plan to optimize cloud costs in 2021, making it the top initiative for the fifth year in a row.
30 percent of cloud spend is wasted
Flexera
After reading this article about cloud cost optimization you will know:
- What cloud cost optimization is?
- The best practices for cloud cost optimization.
- What kind of cloud optimization tools are available?
- How do the best cloud cost optimization tools look?
The cloud cost optimization best practices
Many companies are struggling to maximize the business benefits of their cloud spend. Below you can read the best practices many companies use to achieve this:
- Create a cloud strategy across your entire organization
Align the why and what, including the costs, of cloud computing for your business, with your entire organization. Only by focusing on the whole company you can make sure your cloud strategy will support your business strategy.
- Make sure you choose the right cloud provider(s) for your business needs
Perform a complete assessment that examines technical feasibility, business value to determine which workloads need to land in which cloud. Type, price, quality of cloud services can differ per cloud provider but also per region within the same cloud provider.
- Set up a centralized Cloud Governance / Cloud Center of Excellence
Your cloud strategy has an impact on the entire organization. There are multiple departments involved like with FinOps. The centralized team often works with multiple cloud vendors with their own technical solutions, contracts, etc. This centralized team will select cloud providers, create policies, select (cost management) tools, determine best practices on cloud cost optimization and share the knowledge with the operations teams.
- Make software licensing spend in the cloud a separate topic
Having a good overview of your licensing spend in the cloud is hard. Make sure your teams have software licensing on their agenda to manage only what is needed to meet your business goals.
- Give your team’s responsibility to manage their own cloud spend.
Your organization can only be successful if your teams help in achieving your business goals. Build a culture of cost awareness and give your teams the responsibility to manage their own cloud spend. This helps in managing the risk of the ease to start new resources into the cloud. Responsibility means reporting as well. During a conversation about the report of their cloud spend you can give them compliments if possible.
- Share besides costs also top – and bottom line
Your teams will be more motivated to manage their cloud costs if they see the impact of their actions on the bottom line. Create a culture of cost optimization in relation to the business goals and not as an absolute action.
- Highlight unassigned costs
By highlighting the unassigned costs you see which resources are used but not assigned to a certain cost center. As mentioned earlier the cost centers themselves need to take the responsibility to manage their own cloud spend. By reducing the unassigned costs you make sure there aren’t costs nobody is taking ownership of.
- Pick the right size of resources in relation to the load
Make sure you are not overprovisioned. The size of your resources, including storage, depends on the load that you need. The load can be influenced by the load on the environment or the load that the application needs, so the code. Evaluating the used resources can give new insights that another, cheaper, size of workload is more than enough.
- Use reserved instances if possible
Reserved instances are reserved usage of resources for a longer period of time for a discounted price.
- Automate where you can
By implementing automation you can really use and pay for resources only when you need them. By using principles like infrastructure as code and auto-scaling you only start a resource if you need it and you stop it if you don’t need it anymore. If a resource is running and you will need more or less computing power, it will automatically scale up or down if a certain threshold is met.
- Support your teams with the right tools
One of the most challenging things in cloud cost optimization is the lack of transparency of the cloud costs. In a multi-cloud environment, this challenge is even bigger, because every cloud provider has its own language, tools, and reporting. There are tools on the market that solve this problem, see also below cloud cost management tools.
Type of cloud cost optimization tools
Because your cloud strategy is part of your business strategy and impacts your entire organization you want to make sure you will meet your goals. Optimize your cloud costs so you only pay for the cloud costs that maximize your business benefits. You don’t want to pay for oversized, unused resources, and make sure you are taking advantage of certain discounts per cloud provider.
Research shows that there is a shift of interest from broad general-purpose cloud management platforms to best-of-breed tools that have a focus on deeper functionality in a given area. There are also best-of-breed tools for your cloud cost optimization on the market.
Research shows that major cloud providers such as Amazon Web Services (AWS) and Microsoft Azure offer native tools to manage costs, but with basic functionality. Third-party tools continue to advance their cost management functionality with a multi-cloud approach.
Make sure you have the best tools available for your business needs.
The best cloud cost optimization tools
The best cloud optimization tools are tools in which:
- You can manage multi-cloud.
- See and allocate unassigned costs.
- Allocate costs from a business perspective.
- Share information and insights with all stakeholders.
Conclusion
Cloud cost optimization is the process to optimize your cloud cost to maximize your business benefits. Optimizing cloud costs is challenging for many companies and so they plan to optimize cloud costs, this year again, making it the top initiative for the fifth year in a row.
There are several best practices that you can use to optimize your cloud cost. Companies can take advantage by implementing these best practices.
There is a shift in interest from broad general-purpose cloud management platforms to best-of-breed tools that have a focus on deeper functionality in cloud cost optimization. Besides the native cloud provider tools, your teams need a best-of-breed cost optimization tool.
The best cloud cost optimization tools have a business perspective, can manage multi-cloud, give insights in unassigned costs and make information that can be shareable with stakeholders.
All the above best practices will only be successful if you organize them and facilitate your teams. Doing nothing or letting it loose will result in cloud waste and so a waste of money.
Good luck with optimizing your cloud cost!
Please feel free to request a demo or trial of the C-Facts cloud cost control center to get the best cloud cost optimization tool from a business perspective.
Sources
- Flexera 2021 State of the Cloud Report. The report explores what 750 global cloud decision-makers and users are thinking about the public, private and multi-cloud market. It shares its current and future cloud strategies, often showing year-over-year changes to help identify trends. License, Copyright, and disclaimer by Flexera.
- MS Azure – Optimize your Azure costs