7 Tips for cloud cost optimisation

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One of the main benefits of cloud migration is the possibility of reducing costs whilst remaining competitive and accessible.The flexibility of a pay-as-you-go cloud computing environment allows companies to easily scale their resources up or down to meet demand and exercise a better control over their operational expenses. However, there is always room for financial efficiency in business. So, let’s talk tips for cloud cost optimisation.

What is cloud cost optimisation?

Cloud optimisation is a strategic approach that combines techniques, best practices, and tools to minimise your cloud costs whilst maximising its value. The goal is to find the most cost-effective way to utilise your cloud resources, by gaining a better understanding of their current performance. This way, it becomes easier to identify inefficiencies to eliminate waste and take advantage of the many possibilities cloud services offer.

Do you need cloud cost optimisation?

According to a study by Flexera, organisations wasted around one third of their cloud spend in 2022 (a 32% of their expenses), with many believing that assessing this issue is their biggest cloud computing challenge. However, the study also shows that in the past year, wasted spend has been reduced whilst cloud usage keeps increasing. This is, in fact, the result of business owners’ efforts to implement cloud cost optimisation techniques.

Cloud cost optimisation is more than just a once-a-year task intended to reduce overspending on cloud resources. It must become a company culture, an ongoing strategy that helps align your business goals with your costs to achieve bigger revenue and competitiveness. By being on top of your cloud operations cost and understanding their profitability, you can make data-driven adjustments to increase performance while potentially cutting down expenses.

The benefits of cloud cost optimisation

1. Enhancing visibility and predictability

One of the first steps in cloud cost optimisation is to learn where you’re spending unnecessarily. But this goes beyond knowing how much you spend on average on your cloud services, as it also involves analysing expenditure per client, team, product, service, software feature, or project. Gaining this knowledge is critical to align your technology and your business objectives and identify trends that can help you with the forecasting and strategic planning of your cloud usage.

2. Reducing expenditure

After establishing the factors influencing your cloud expenditure, you can now strategize to reduce it. You might choose to eliminate an expense (whether this is a product you offer or a cloud feature you are paying for) if it’s completely unprofitable; you could also rethink and improve that expense so it becomes useful once again.

Cloud cost optimisation also invites cost allocation improvement. The money you are spending in a certain area of your business might be better utilised in a different department or project.

3. Improving your gains

Cloud cost optimisation strategies put as much emphasis on discovering where you are losing money as it does on where and how you are making money, and it could also provide information on your competitors. These insights can help you find new sources of revenue you might not have been aware of, and help you refine your marketing campaigns.

4. Improving performance and productivity

Freeing up resources from underachieving or unpopular cloud services and projects means that you can now dedicate those funds to better-performing tasks, teams, and products, improving their performance.

7 Tips for cloud cost optimisation

Managing cloud costs effectively involves a range of actions and strategies that tackle the diverse issues associated with cloud computing. The following seven tips for cloud cost optimisation will give you an idea on how to start.

1. Right-size your services (nota: autoscaling services)

It is not uncommon for businesses on the cloud to end up paying for more resources than they actually need. Right-sizing is the practice of reviewing your computing services and modifying them to fit your unique, actual needs in terms of workload and applications. This should improve performance as well as expenses, but it’s not an easy task to carry out manually. You can right-size servers for memory, database, graphics, storage, and many other options, which results in an incredible number of combinations to consider.

Luckily, there exist many right-sizing tools that can give you an idea on how to choose the right combination. But before jumping on the right-sizing of your cloud services, consider the following tips:

  • Understand your workloads: assessing your workloads, requirements, and usage patterns is key when determining where to right-size. You might use heatmaps (a graphic representation of your company’s computing usage) to locate where to make adjustments.
  • Experiment with configurations: take your time to test different instance types and sizes to find the optimal configuration for your workloads.
  • Implement load balancing: load balancing distributes workloads evenly across a group of backend servers to avoid their overuse or underuse.

Keep in mind that right-sizing can go hand-in-hand with autoscaling (automatically adjusting the quantity of computer resources based on your needs). Even though autoscaling tools usually do a great job figuring out real-time needs, without constant monitoring they could get out of hand. If you are going for an autoscaling solution, do not forget to keep reviewing your usage periodically, in case you need to right-size again.

2. Identify unused resources

On occasion, it might happen that administrators and developers forget to de-provision a temporary server after finishing the task they performed with it. Underused or inefficiently used cloud resources result then in extra charges without really adding any value to the business. Identifying these unused resources to eliminate them is one of the most efficient processes in a cloud cost optimisation strategy.

Routinely monitoring your usage is the first step, and it is something that can be done automatically with cloud monitoring tools that alert you when a certain resource or application shows insignificant activity over a period of time. You can then decide whether to get rid of said underutilised resources, or improve their efficiency somehow.

3. Monitor cost anomalies

Unpredicted cloud cost events are known as “cost anomalies”. Detecting them in a timely manner is essential not only to avoid unexpectedly higher bills, but also because they could be the sign of some internal issue, from infrastructure problems to potential cyberattacks.

A cost management console to set budgets and forecast costs can help you detect and identify spending anomalies. Only after determining the root of the anomaly will you be able to address the issue and prevent the unexpected costs associated with them. Fortunately, your cost management console can usually pinpoint the anomalies on its own and notify you should they encounter any.

4. Choose the correct storage option

Choosing the right storage type and size for your business needs is crucial to enhance performance, not only to avoid overpaying for unused services. But to pick the correct storage, you need to know that cloud service providers usually offer two main storage options:

  • Object storage: ideal for infrequently accessed, unstructured data, such as backup or archival data. It’s a good choice for industries with great volumes of data, media, or email archives, acting almost as a historical online data library, as they are highly scalable.
  • Block storage: best option for enterprise applications and databases. It’s defined by its speed, reliability, and performance, which makes it ideal for structured data that requires regular updates.

This should give you a better idea of what storage type to opt for depending on your data’s performance and access requirements. This is probably the starting point for any cloud cost optimisation strategy related to cloud storage. But even this data can be dynamic: what was once kept as block storage might at some point become obsolete, and could therefore be moved to a lower-cost storage tier. Lastly, as always, it’s important to review and clear your cloud storage from outdated data periodically.

5. Leverage real time monitoring

Utilising real-time analytics will give you the insights to identify cost-saving opportunities and expense anomalies in a timely manner. And once they have been detected, you can solve inefficiencies and reduce unnecessary expenditure. Some of the metrics you should be monitoring are:

  • Memory utilisation: review your memory usage periodically to ensure your instances are still right-sized for your workloads;
  • CPU utilisation: discover over- or underutilised instances by monitoring CPU usage.
  • Storage usage: tracking your storage and regularly cleaning up outdated data will help you make sure you are not paying for unnecessary storage space.
  • Instance uptime: underutilised instances can be turned off when you are not using them; tracking uptime can help you identify them.
  • Network traffic: monitoring network traffic can help you manage the data transfer expenses associated to high network usage.
  • Error rates: high error rates might be the first sign of more expensive problems. Analysing the root of the errors to solve quickly will save you money on the long run.

6. Consider using single vs. multi-cloud strategies

A multi-cloud strategy presents many advantages. When it comes to cloud cost optimisation, the main one is the possibility to capitalise on the strengths of services from different providers. Since each vendor has their own rates for specific services, a multi-cloud strategy means cherry-picking the best, more cost-effective solutions to suit you, whilst increasing flexibility and preventing vendor lock-in.

Nevertheless, constantly switching between cloud platforms can become a hassle and require extra training and IT assistance, besides potential integration issues. Not to mention that you will not be able to enjoy large-volume purchase discounts as you might when you buy all your services from the same vendor.

Both single-cloud and multi-cloud strategies have their advantages and disadvantages. We suggest you explore both possibilities to see how they could adapt to your business goals and, essentially, help you optimise your cloud costs.

7. Optimise cloud costs at any stage

Optimising costs should be a continuous effort and part of your business culture. When it comes to optimising cloud costs, this should be integrated throughout the software development lifecycle (SDLC). In other words, you should review and optimise your expenditure at every stage of development to maximise cloud ROI. This is how to do it, stage by stage:

  • Planning: identify the cloud resources you’ll need, as well as historical data to predict usage patterns, to compare the most cost-effective options for development projects.
  • Development: development should be undertaken with cost-efficiency in mind. Focus on creating lightweight, scalable applications.
  • Testing: consider using spot instances for minor testing environments or use automated testing to accelerate the process. Always remove the temporary resources when they are no longer useful.
  • Deployment: automating deployment processes can help you reduce errors and resource usage time.
  • Monitoring: set up real-time monitoring alerts to pinpoint and address unusual resource usage promptly. Use autoscaling to adapt your resources to your demands effectively.
  • Maintenance: schedule regular reviews of your applications and resources, even when no significative events are taking place, and eliminate anything that is no longer needed.
  • Updates: test new software updates on smaller instances before installing them to avoid the cost of errors on larger production instances.

Simplifying cloud migration

Out of the many benefits of moving to the cloud, the possibility to stay in control of your expenses whilst automating monitoring and scalability actions is probably one of the most relevant today. With the Internet of Things being a staple in our society, successful businesses must be accessible for their customers at all times, whilst providing a secure environment for their transactions and data.

Ensuring this constant, safe availability is an integral part of the cloud. But it’s you and your team who must ensure that you hire the correct features and services for your business, and that you use them efficiently to maximise your cloud ROI. Now, we can’t tell you how to use your cloud services, but we sure can give you a hand to make the right decision when looking for the more cost-efficient cloud provider for your business.

At YourShortlist we simplify the cloud migration process so that you don’t waste time or money on it. After listening to your unique requirements, we provide guidance on how to choose the most adequate cloud solution for your business. We will also compile a list of our recognised IT partners that match your musts, so you don’t have to spend days or weeks comparing providers on your own.

If your business is not on the cloud yet, or you are looking to change providers, there is no better time to start the process than today. Contact us and discover how easy your cloud implementation process can be with the right team of experts by your side.