How Do You Optimize the Cost of Your Cloud Services?
Renowned companies like Netflix, Kroger, and Coca-cola have one common aspect. All these organizations leverage cloud storage to manage their information. Today, more than 60% of all corporate data is stored in the cloud.
However, with rising dependence on cloud storage, companies need to be aware of significant challenges like growing costs. This is because inadequate knowledge of cloud service features often leads to an increase in unnecessary investments.
So, companies need to implement IT cost optimization to reduce these finances. Techniques like evaluation, right-sizing, and balancing subscriptions are some ways to optimize cloud services.
This article explains cloud cost optimization and relevant techniques to help companies develop a sound storage strategy.
Cloud cost optimization: A pivotal part of cloud strategy
Companies need to evaluate their cloud management strategy constantly. For this purpose, IT cost optimization proves to be a thorough process that involves continuous configuration and assessment of a company’s cloud resources.
Given the significance of savings in cloud services has now become a paramount factor, businesses today must implement cost optimization.
To do so, there are many strategies that they can administer. Some of these include:
- Lock-in period for cloud solutions
- Embedding backup and recovery solutions
- Distributing cloud workload
- Using multi-cloud or hybrid cloud strategies
Furthermore, most businesses today already have a multi or hybrid-cloud strategy in place. Flexera reports that enterprises today have both multi (93%) and hybrid cloud strategies (87%), respectively.
But, before we delve deep into these strategies, it is essential to understand cloud adoption and its practical challenges. So, let’s begin by understanding the same.
Stages of cloud adoption
Ideally, businesses adopt cloud services by following these stages:
- Assessment: Companies analyze the apps, modules, and data for a potential migration to the cloud. Hence, there is more clarity on the expertise, type, and effort required for moving on to cloud resources.
- Preparation: In this stage, businesses rebuild their existing applications for cloud compatibility. As a result, the preparation phase provides a clear idea of the maintenance, adaptability, and scalability of existing resources.
- Management: This stage includes continuous verification of applications on the cloud network. The dedicated IT team displays performance data and takes appropriate action for fluent cloud service adoption.
- Improvement: Finally, organizations look to gain maximum returns on investment. Hence, the technical team reengineers relevant processes to leverage cloud resources.
Challenges in the cloud cost optimization journey
Cloud adoption and its cost optimization has several practical challenges which companies need to identify at their earliest.
Some of these challenges include:
1. Lack of visibility
Without a concise dashboard, monitoring and optimizing cloud activities becomes tough. Hence, organizations cannot analyze crucial metrics related to these digital platforms.
Consequently, these drawbacks have many cost implications, and the lack of visibility affects the cloud cost optimization process.
2. Improper provisioning
Cloud providers allocate resources to their clients. But in some cases, providers fail to manage the required amount of cloud resources.
This failure leads to incorrect provisioning, which in turn increases the costs to tackle such inefficiencies.
Mainly, these provisioning flaws can be categorized into two sets:
- Under-provisioning: Low performance leads to poor user experience.
- Over-provisioning: Most resources remain idle, which leads to unnecessary costs for unused features.
3. Ease of use and lack of governance model
The simple provisioning of cloud services can lead to cost overruns. Hence, the flexibility and scalability give rise to a resource sprawl.
At the same time, a lack of governance over these aspects hampers cost optimization. Not to forget, the lack of automation, too, goes on to pose challenges in this journey.
4. Siloed decision making
Some companies do not follow a holistic approach to choosing cloud applications. As a result, such businesses have siloed apps that lead to inefficiency.
This is another vital challenge that creates overhead for IT processes. Hence, cloud apps should work in conjunction to achieve organizational goals.
Why is cost optimization important?
The benefits of cloud adoption are immense in today’s world. Hence, most businesses follow the four ideal steps for migrating to cloud platforms.
However, amidst all the information, practical challenges lead to the issue of overspending. In simple words, most companies pay more than they require.
This can have many ramifications, such as:
- Underutilization of cloud computing resources
- Insufficient exploration of automation features
- And incompatible storage selection
Thus, it is crucial to perform IT cost optimization to avoid unnecessary expenditure.
The benefits of cloud cost optimization
Apart from reducing costs, the optimization process can provide other significant benefits. This includes:
1. Facilitates efficient cloud analysis
Cloud cost optimization improves the analysis of cloud services. The strategies used to optimize put the visibility of resources at the forefront. This equips the business adequately to analyze which features are underutilized.
Such an analysis helps the IT team to improve cloud service utilization.
2. Decrease in unnecessary cloud costs
A Flexera survey reveals that 59% of organizations feel the need to optimize existing cloud usage. This indicates that cost savings are the topmost initiative to implement cloud optimization strategies.
Through IT cost optimization, companies can relate costs to the output in a better manner. This way, businesses can reduce excess money spent on using incompatible features.
3. Boosts cloud utilization
However, companies do not use all of these services. So, buying the whole package can often lead to the underutilization of some tools.
Luckily, cloud cost optimization considers this aspect. Organizations can thus choose the bare minimum necessary products as per requirement. This leads to optimum utilization of the cloud.
4. Improvement in productivity of engineers
Consider cloud cost optimization as a means to streamline the storage. This way, the developer team has limited resources to analyze. This benefit enhances the engineering team’ which in turn helps in making accurate assessments.
Best strategies for cloud optimization
After understanding the benefits of cloud optimization, overcoming the challenges is vital.
These strategies can prove effective in improving cloud services.
1. Analyzing resources
The first step to optimizing cloud costs is evaluating all the available resources. This is important because consolidating idle or unattached resources saves extra costs for enterprises.
Hence, it is vital to identify such aspects and remove them to initiate cloud cost optimization.
2. Proactive right-sizing
Right-sizing involves analyzing performance to match the current usage requirements. This way, companies can turn off overprovisioned instances and reduce cloud costs.
However, right-sizing needs to be an ongoing strategy to optimize cloud services. But it is beneficial since committing to one or three-year contracts leads to long-term savings.
3. Choosing the required storage type
Organizations today can utilize one or more of the four cloud storage types:
- Public cloud storage: Common cloud service for file sharing, app development, and other non-critical tasks. It is suitable for small-scale companies.
- Community cloud: Cost-efficient cloud service that is suitable for multiple firms operating in the same community.
- Private cloud: Tailor-made storage for a specific company. It is appropriate for large companies with sensitive information.
- Hybrid cloud storage: This type merges private and public cloud storage. Sensitive data gets stored in a private cloud, whereas non-critical data is stored in the public cloud.
Companies must hence understand the suitability of a cloud storage type. To do so, they should analyze critical aspects such as space, maintenance, uptime, and server speed.
4. Make cloud-native applications
In simple terms, cloud-native applications are specifically developed to suit cloud scalability, services, and elasticity.
Google Maps is an excellent example of API, which allows other software to use its functionality. These apps optimize cost in several ways.
Due to the use of cloud services, such apps reduce development costs. In addition, this strategy saves operation costs as companies only have to pay for time cloud services. Lastly, implementing a cloud-native outlook speeds the development of compatible apps.
All of these together lead to effective cloud cost optimization.
5. Consider a single cloud server
Businesses relying on a single cloud server avail services of one provider. On the other hand, organizations dealing with more than one cloud provider use multi-cloud platforms.
So, which strategy is best?
Consider this hypothetical example:
Consider ABC Enterprises spending USD 20,000, USD 50,000, and USD 20,000 for three different cloud provider services. This decision eliminates any possibility of considerable vendor discounts. If the same company spends USD 90,000 to buy cloud services of a single provider, it is in for a massive overall discount.
In addition, companies can also end up saving on switching costs.
While migrating from one cloud to the other at a low price can seem lucrative, businesses can save up to 70% by leveraging reserve instances in a single cloud model.
6. Implementing automation and selecting pricing models
Autoscaling and IaC are some beneficial options to spin up resources. These techniques enable companies to shut resources after their utility. Hence, automation solutions have the potential to reduce costs.
In addition, a pay-as-you-go model is a profitable option for companies. Cloud providers offer such pricing structures to build their brand reputation. As a result, businesses can benefit from paying only for the cloud resources required at a particular instant.
7. Utilization of heat maps
Heat maps display parameters like peaks and valleys in computing.
Proper analysis of this data can help establish start and stop times. This method also enables developers to manage servers efficiently. In fact, smart IT professionals can also automate the server times using information from the heat map.
Additionally, they show vital data to help businesses make crucial decisions. This hence helps optimize cloud storage and reduce unnecessary costs.
8. Using backup and recovery solutions
One of the most important aspects of cloud cost optimization is establishing a sound cloud management strategy. This activity focuses on keeping a company’s data safe in the digital arena.
However, businesses should use auxiliary techniques like using backup and recovery solutions. This way, managers can access critical information at any stage from any location.
In simple words, the IT infrastructure of a business should be robust to make it easy to optimize cloud services and environments.
9. Distributing cloud workloads dynamically
Using modern application traffic steering systems, companies can enhance cloud operations efficiently. Generally, teams using this strategy distribute cloud workloads based on cost factors and performance.
However, clarity in the cloud resource utility is vital to perform this type of optimization. A specialized IT team is well-equipped for this purpose.
Based on this strategy, enterprises can reduce the need for additional cloud resources. As a result, there will be an improvement in cloud services and management.
10. Other tweaks for cloud cost optimization
There are many technical tweaks that IT experts can perform to optimize cloud services. Hence, apart from the prominent strategies, businesses can implement the following tasks:
- Complementing data management strategies
- Identifying and maximizing software license expenditure
- Migrating in stages
- Releasing idle IP addresses
- Automating cloud cost management
In short, the possibilities to save costs on cloud services are high. What companies must do is identify which tasks are practically feasible for their team.
Utilize the cloud adoption framework for building the perfect strategy
Cloud Adoption Framework (CAF) is a comprehensive guide that helps companies develop an apt optimization strategy.
Businesses should study the different stages of cloud adoption framework before migrating to cloud services. Here’s a brief look at the six stages:
- Strategy: First, companies need to identify the requirements, objectives, and existing resources of their business.
- Plan: At this stage, organizations should plan the adoption strategy. For this purpose, it is vital to inform, brainstorm, and discuss with the team.
- Finalization: Companies should thereafter implement and prepare the cloud environment for end utility.
- Adoption: This stage includes fluent migration of existing data and resources to the cloud. Also, the IT team can innovate as per cloud requirements.
- Govern: After adoption, it is time to monitor the activities to keep track of the benefits of cloud migration.
- Manage: This is the maintenance and management stage that includes continuous data assessment.
This is because they come with several benefits. Some of these include:
- These frameworks are reliable and secure
- The provider equips them with regular updates
- Cloud adoption frameworks aim at improving efficiency and performance
- They have new features to support hassle-free cloud adoption
So, following the guidance of the cloud adoption framework helps reduce the efforts for cost optimization, which allows companies to focus more on management and data analysis activities.
Also, businesses can concentrate on choosing effective cloud cost optimization tools that minimize the efforts to improve cloud service integration.
Cloud cost optimization tools
Technology allows different vendors to develop software for IT cost optimization. Here are some well-known tools that organizations can consider exploring.
This tool focuses on organizing cloud spending for businesses. CloudZero enables organizations to detect waste and cost anomalies and presents an in-depth analysis and breakdown of costs to understand cloud spending. Additionally, it also alerts organizations in case of cost spikes, thereby preventing high expenditures.
Not to forget, this tool is also customized for engineering, finance, and FinOps. So, companies can utilize this software for specific analytical use.
Densify is a cloud resource optimization tool. This tool analyzes patterns in business demand and generates analytics for sound evaluation. It hence allows businesses to study cost-saving opportunities on the platform.
Additionally, it also has a dynamic instance alert feature to manage resources optimally. Companies can as such reap benefits from controlled spending, high-performing applications, and recommendations.
Additionally, with Harness, organizations do not need manual tagging to analyze relevant information. In addition, the software also performs root cost analysis that correlates with deployment changes.
Moreover, businesses can benefit from the cost reporting features of this tool, such as cost anomaly detection, which proves extremely useful.
Cloud storage and services have become highly essential for modern businesses. The ease of use, quick synchronization, and security are crucial reasons for their importance. Companies hence must purchase cloud solutions to store data and manage their applications.
However, overlooking certain aspects can lead to unnecessary expenses. But by using the strategies listed above, they can optimize cloud costs and thereby reduce their overall expenditure.
Importantly, businesses must evaluate their organizational requirements. This prior assessment, too, can reduce many activities for cloud cost optimization.
Lastly, it is beneficial to use tailor-made tools to analyze crucial parameters, and CAF during cloud adoption for migrating your business data.