How to Optimize Your Cloud Infrastructure for Cost-Efficiency
The cloud provides access to computing resources per your requirements, allowing you to scale up or down as needed. It offers the flexibility to pay solely for the resources utilized, ensuring cost efficiency. After all, Gartner reports that “by 2025, 51% of IT spending will have shifted from traditional solutions to the public cloud, compared to 41% in 2022.” However, if you have been using cloud services for a while, you may know that achieving relevant simplicity is often a complex endeavor.
For instance, neglecting to monitor aggressive product features and cloud engineering sessions or testing projects can rapidly result in the significant financial waste within a few days, counting to thousands or even millions of dollars. So, how to avoid that? The solution is embracing cloud cost optimization best practices to leverage cloud advantages while avoiding substantial expenses fully. Let’s explore them in detail!
What is Cloud Cost Optimization?
Cloud cost optimization involves reducing the business’s cloud spending without negatively affecting its performance and ability to scale. Although cloud environments bring excellent scalability and features such as automated and flexible resource scaling, it is crucial to know that reserving services, rather than using them, is the primary contributor to cloud bills.
Today, well-known cloud providers, like Microsoft Azure, Amazon Web Services (AWS), or Google Cloud Platform, have elastic service offerings that can streamline resource scaling. But these offerings can also significantly increase cloud investment compared to the case when a company takes a proactive approach to reserve the required resources in advance.
At the same time, continuous improvement is essential for proper cloud optimization, aiming to avoid wasteful usage of cloud resources and ensure their acquisition aligns with the organization’s infrastructure and service requirements. For multiple businesses, this process covers a cultural shift towards prioritizing accurate forecasting and tackling complexity- and scale-related challenges. After all, implementing advanced tools and techniques is vital to eliminate cloud waste effectively.
How Cloud Cost Optimization Differs from Cloud Cost Management
Cloud cost management includes the allocation, tracking, reporting, and analytics of cloud expenses. On the other hand, cloud cost optimization depends on these insights to define how to achieve the highest possible business value while minimizing the cloud budget. However, such optimization is not only about cost reduction; it also focuses on the costs’ alignment with business objectives. Thus, if a relevant increase in revenue accompanies an increase in expenses, it may not necessarily be an issue.
Moreover, this increase is frequently attributed to growth metrics such as acquiring more clients or introducing new features. The boost in revenue often leads to improved margins, higher profit, and better investor interest, mainly in the Software-as-a-Service (SaaS) sector.
A crucial objective of cloud cost optimization is ensuring that costs align with profits and productivity. Meaningful data, known as cloud cost intelligence, is essential to achieve this goal. However, whether your cloud cost optimization strategy will succeed or fail will ultimately rely on how effectively you utilize that intelligence.
Why Is Cloud Cost Optimization so Critical?
The appropriate cloud cost optimization offers powerful short- and long-term advantages, including the following:
- A deep understanding of your cloud costs
- More cost savings
- Improved margins
- The appearance of new revenue streams
- Higher performance in a cloud environment
- Alignment of costs to value
- A culture focused on cloud cost-efficiency
- Enhanced cost allocation
- Increasing engineering productivity
After all, managing cloud costs means that your software developers can focus on their primary tasks. Therefore, your organization can continue releasing new, advanced features to get new customers and retain the existing ones.
Things to Consider Before Cloud Migration
To prevent the cloud from becoming a financial burden, engaging professionals like Reenbit when strategizing your cloud transition is vital. Below are a few key considerations to keep in mind when making optimal decisions for cloud optimization.
- Analyze the Service Level Agreements (SLAs). When selecting service providers to design your cloud transformation, you should review their service-level agreements (SLAs) and assess how well they align with your internal SLAs.
- Ensure seamless integration. During new software deployment, you do not need a complete overhaul of the entire IT setup. But evaluating whether the relevant software can seamlessly integrate with your current infrastructure is crucial. That allows for reducing expenses and minimizing any potential downtime.
- Assess scalability. Can your cloud provider scale, following your requirements? Scalability is the primary advantage of cloud migration. Thus, you should examine whether you can tailor the application to accommodate your demand patterns or future customer growth.
- Evaluate operation quality. Assessing and comparing the level of data security provided by a single cloud vendor compared to on-premise solutions is also a helpful practice. Additionally, you should verify the availability of a well-staffed team that can assist if needed.
- Examine security policies. Information security is a fundamental requirement for each business. You must thoroughly review cloud vendors’ security and privacy policies and ensure they align with your company’s rules and needs.
Lastly, you may utilize a Total Cost of Ownership (TCO) Calculator to calculate your expenses and assess the optimization level. That will allow for estimating cloud cost savings you can achieve over a specific time.
Cloud Cost Optimization Strategies
Now, after learning why cloud cost optimization is necessary for businesses struggling with excessive cloud expenses, it is time to analyze its relevant strategies. Thus, below are ten best practices for optimizing cloud costs effectively.
Making cost a priority metric
Here, fostering a culture of cloud cost awareness within your company and providing your developers with easy access to comprehend the actual costs are critical. Thus, you should also prioritize cost considerations during engineering decision-making processes. To ensure cost data is easily understood, it should be up-to-date, easy to measure, and have a proper context. Ultimately, the key metrics regarding cloud cost are unit cost, idle cost, shared infrastructure, innovation/cost ratio, etc.
Rightsizing computing services
To properly adjust the size of your cloud services, you should have a complex understanding of them. Thus, you must centralize your IT operations or ensure that every department uses a unified account within the same cloud environment.
For instance, you can gain detailed visibility to identify over-provisioned or idle resources. Also, the rightsizing tool suggests adjustments to optimize resource utilization and guarantee cost reduction. These solutions enhance cloud performance by maximizing the utilization of paid resources, resulting in optimal efficiency.
Finally, a rightsizing tool will send you notifications if costs exceed a specific percentage within a set timeframe. And you can configure it to automatically terminate unused assets after this period, providing ongoing optimization of your cloud costs.
Identifying and maximizing software licensing spend
Software license fees represent a substantial portion of operating costs for on-premises infrastructure and cloud environments. Due to the challenges of manually managing and tracking them, many organizations end up paying for many untracked and unused licenses.
For example, the AWS Marketplace provides a vast selection of public and commercial Amazon Machine Instances (AMIs) for utilization. With a reliable partner like Reenbit, you can analyze your AWS cost and usage reports, enabling the identification of running costs related to commercial software and AMIs. So, you can effectively monitor and manage idle and unnecessary software licenses.
Providing the right people with the right data
Defining which data types are most relevant to specific team members and seeking methods to minimize irrelevant information is a valuable practice. For instance, engineers require the capability to compare and contrast data. By having baseline data and the ability to analyze historical trends, DevOps can determine if something is malfunctioning or identify anomalies. Meanwhile, finance departments prioritize forward-facing projections over historical data.
Leveraging real-time analytics for timely decisions
Having team members with access to the correct data at the proper time enables them to make timely adjustments that directly influence the financial outcome and product quality. Thus, discovering cost-saving opportunities early on is critical to success, so proactive identification and action are vital in maximizing savings.
You should monitor cost indicators as they fluctuate. That allows you to assess whether your costs follow a usual trend or if any abnormal activities may result in significant excess. If dissatisfied with the results, you can promptly take some measures to avoid further losses.
Conversely, if the associated workload shows potential for increased earnings, you should allocate additional resources to support it. Thus, a cost platform with real-time reporting and anomaly detection capabilities is essential to achieve these actions effectively.
Capturing a big picture using one platform
Managing multiple dashboards and monitoring large data volumes from various cloud vendors can be challenging when making informed decisions. Instead, you should rely on a single source of truth that consolidates your most crucial information.
This unified view offers teams a comprehensive, end-to-end perspective on costs, enabling them to focus on specific resources quickly. The enhanced visibility allows them to analyze and break down cloud expenditure and usage on a per-resource basis, providing detailed insights like cost per customer, cost per feature, cost per deployment, etc.
Keeping engineering alongside cloud cost optimization
Engineers can only contribute to cost savings if they are accountable for expenses. In SaaS environments, engineering projects that involve development, deployment, testing, and issue resolution, often constitute the majority of cloud costs.
Properly tagging resources, rightsizing them, and eliminating unused ones is impractical without the involvement of engineers. Therefore, you should include engineering teams in all cost-related discussions to ensure comprehensive cloud cost management. If these teams can access accurate cost data, such as cost per deployment, they can make informed architectural decisions that increase business value while minimizing costs.
Conducting regular audits
With time, cloud costs accumulate organically and may not always be allocated correctly to the appropriate line items. Conducting their thorough audit allows you to identify areas where you might be overpaying or underpaying and where performance may exceed or fail.
While conducting a cloud cost audit, consider any areas you perceive as gaps or potential overlaps. After all, you may have multiple cloud systems carrying out similar tasks, mainly in administrative or security utilities. Additionally, some aspects of your cloud development may require enhancement or reinforcement to achieve optimal effectiveness.
Building cross-functional teams
Cloud administrators, software developers, and users may hold varying perspectives on allocating cloud expenses. While each viewpoint has its merits, it is often the staff directly involved in the operations who possess valuable insights into where cloud costs should be directed. By establishing cross-functional teams, you reduce the likelihood of spending on unnecessary areas and increase the chances of identifying the ones to improve.
Implementing visual tools for
system usage analysis
Understanding how a system is utilized can be challenging without data visualizations. For instance, heat maps facilitate the identification of potential hotspots, preventing them from becoming disruptive. By observing the system load trending in a specific direction, proactive adjustments can be made to balance and optimize it before it becomes problematic. After all, more than raw numbers is needed to provide key insights. But visual representations such as maps or graphs can greatly aid cloud administrators in making informed adjustments.
To conclude, the cloud offers tremendous possibilities that allow businesses of different types and sizes to unlock cost savings. But prioritizing cloud cost optimization is crucial for maximizing its advantages.
Reenbit assists organizations in managing and allocating costs, optimizing cloud spend, and reducing expenses on cloud bills. With significant experience in cloud security, compliance, and cost management, our skilled team ensures workload optimization, identification of idle and unattached resources, and proactive alerts for potential cloud vulnerabilities.
Are you aiming to reduce your cloud costs effectively? At Reenbit, we can help you develop a proper cloud optimization strategy and guide you through cloud cost management options. Contact us today to discuss the opportunities for our cooperation on your cloud journey.
Do you need to optimize your cloud costs?
You should consider cloud cost optimization if your cloud cannot deliver accurate results or the expected return on investment (ROI). But achieving this goal alone may be challenging. Thus, in many cases, cloud optimization begins with an audit. And often, involving a third-party company like Reenbit is critical for a comprehensive assessment.
Why is cloud cost optimization important?
Cloud cost optimization is essential since it allows for minimizing unnecessary cloud expenses and maximizing the advantages for your business. The aim is to pay only for cloud resources that provide the highest value for your organization. By implementing effective practices to optimize cloud costs, you can significantly reduce waste on unused resources.
Why is cloud cost control so hard?
While the concept of the cloud suggests that you are billed solely for the resources you utilize, the truth is that you are charged for the resources you allocate. The disparity between consumption and allocation can lead to substantial and unexpected costs. Finally, digital transformation and the rapid adoption of cloud services significantly strain IT teams.
What are the best practices for cloud cost optimization?
To optimize cloud costs, you should consider implementing some effective practices, such as rightsizing computing services, setting up specific monitoring tools, providing the right people with the right information, performing regular audits, making timely decisions, etc.
What is AWS cost optimization?
Effective AWS cost optimization is not daunting if you clearly understand pricing models and helpful practices. To control your costs, you should manage your expenses, continuously optimize your spending, and develop modern, scalable apps tailored to your requirements. AWS offers various services that provide flexibility to cost management while ensuring the performance and cloud capacity you need are maintained.