Cloud Cost Optimization: Best Practices to Optimize & Manage Cloud Costs

As businesses are increasingly opting for cloud-based services, cost optimization becomes a critical issue. Though cloud providers offer amazing scalability and flexibility, costs associated with these services are often difficult to track. This is why organizations relying on the cloud have started adopting cloud optimization strategies to understand and control the costs of cloud-based systems while maximizing efficiency.

A variety of solutions, platforms, and practices aimed at addressing cloud cost optimization have emerged to help companies move forward with their strategies. Below, we look at some of the prevailing best practices that help manage and optimize cloud costs.

What is Cloud Cost Optimization?

Cloud cost optimization represents the actions undertaken to reduce the overall spending on the cloud while maximizing its business value. It is essentially a combination of tools, techniques, strategies, and best practices that focus on enhancing cloud cost efficiency by spotting mismanaged resources, reserving capacity through discounts, and right-sizing resources to workloads and applications in the cloud environment.

Cloud cost optimization helps organizations achieve a balance of cost, requirements, security, and compliance requirements to make sure cloud investments align with organizational goals. Every cloud deployment has unique and evolving requirements, which means you should determine the performance threshold for every workload.

Cloud cost optimization aims at reducing costs while ensuring that performance thresholds are achieved.

Top Cloud Cost Optimization Best Practices

Let us discuss some best practices that you can follow to devise an effective cloud cost optimization strategy for your business.

Identify idle and under utilized resources

One of the simplest ways to optimize the cost-efficiency of the cloud is to identify unused or unattached resources. This will ensure you don’t waste money on temporary servers that somebody forgot to turn off or storage devices associated with instances already terminated.

Businesses often end up paying for resources no longer in use, so this is a great starting point. You can also find and consolidate idle resources to optimize cloud costs. Some instances may have low resource utilization, but you still pay the full price for them.

These tasks can be consolidated to ensure complete utilization; newer resources can be provisioned when the demand rises.

Align the budgeting process with your business goals

A primary factor affecting cost control is an organization-wide understanding of the goals and budget for a project.

Rather than giving a random number, leaders should discuss with product executives to understand the cost requirements.

These considerations are based on the way services are delivered and should be referenced throughout the processes along with other primary requirements like resiliency and speed.

Choose between single or multi-cloud deployment

Some businesses tend to adopt multi-cloud solutions to avoid lock-in periods. Though the strategy helps improve uptime and availability, these companies may lose volume discounts offered by a single cloud provider.

Moreover, switching between cloud platforms can be a hassle and demand additional training. At times, you may save a lot of money by shifting to a single cloud solution.

It is best to evaluate whether a single-cloud or multi-cloud deployment suits the needs of your organization.

Audit cloud costs regularly

Most organizations think they are spending too much on their cloud as they don’t perform audits at regular intervals. Cloud costs can build up over time and may not always be applied to the right items. It is important to audit cloud costs to spot areas where you are underperforming or overperforming, underspending, or overspending.

When you conduct the audit, you should pay attention to areas you think are overlaps or gaps. You might have multiple cloud systems doing the same thing. You might also have some areas that need to be improved to become truly effective.

Build cross-functional teams

Different people associated with the business, including admins, users, and developers, might have different ideas about where money should be spent.

While they can all be right in their place, employees are responsible for monitoring the cloud costs with some supervision and guidance from the administrators.

One of the most effective ways to optimize cloud costs is to create cross-functional teams, as it ensures that you don’t spend on areas that don’t require and pay attention to areas that demand improvement.

Use real-time analytics to make decisions

Businesses that can access the right data at the right time can make timely decisions impacting the bottom line. You certainly don’t want to discover cost-saving opportunities when it is too late. You need to track cost indicators as they undergo changes.

Using these indicators, you can easily determine whether your costs are behaving normally or if there are activities that could lead to overspending. If you see something you don’t like, it is possible to take quick action to prevent any further loss.

You can also consider assigning extra resources to a workload if it gives better earnings.

Rightsize the cloud computing resources

Rightsizing means analyzing computing services and scaling them to the most efficient size. With such a large number of potential combinations, it can be challenging to size instances accurately.

Servers can be optimized not only for size but also for database, memory, storage, graphics, and more.

A good way to save on cloud costs is to monitor your computing resources proactively and right-size the infrastructure.

This process not only helps with cloud cost reduction but also with cloud optimization for achieving maximum performance out of the resources you pay for.

Automate cloud cost optimization

Identifying and monitoring the right-sizing and cost-optimization opportunities takes both time and labor.

Manual processes might not be able to help teams leverage these opportunities. Automation proves to be useful in such a case.

Modern cost-optimization solutions can quickly scale down the usage of resources, while some tools can also terminate instances on the basis of predefined capacity or time limits.

Such measures can be difficult to accomplish manually in real-time without compromising performance.

Create a culture of cost awareness

Lastly, an effective thing you can do for cloud cost optimization is to nurture a culture of cost awareness.

This can be done easily by making cost optimization a continuous process alongside others. Standardizing the techniques and practices for cloud operation helps accomplish this. Cost control responsibilities can be assigned to a person or team to ensure consistency, accountability, and continuous improvement.

It helps to incorporate a culture that focuses on the goal of maintaining a cost-efficient cloud system.

Next Steps: Cloud Cost Optimization

A cloud infrastructure will almost always result in lower operating expenditures, regardless of your other costs and how well you optimize it.

If you judge that you are not receiving enough from your cloud, or if you do not see that you are getting your money’s worth from your cloud, then it is possible that you need to begin the process of cloud cost optimization.

Think about the ways in which your company now functions in the cloud. Is there a well-defined Cloud Operating Model in place at your company?

Cloud cost optimization doesn’t have to be hard, but it does demand a disciplined strategy that sets strong right-sizing behaviors and regularly drives insights and action through analytics in order to reduce your cloud bill.

But doing something by oneself isn’t always the easiest thing in the world. An audit is typically where cloud optimization projects get their start.