Today’s organizations rely increasingly on cloud-powered services to fuel their operations, enable scalability, and drive innovation. This momentum will continue as organizations plan to increase their cloud adoption to meet the evolving business needs. However, the benefits of cloud computing and its adoption come with a crucial caveat: cloud cost optimization.
Managing and optimizing the cost of cloud is an ongoing challenge among the organizations. According to an IBM report, almost 80% of organizations have reported receiving cloud services bills two to three times what they expected. The truth is that while the promise of cloud is that organizations only pay for what is used, the reality is organizations need to pay for what is being provisioned.
Challenges Organizations face towards Cloud Cost Optimization
When it comes to reducing the cloud spends, suggestions like turning off irrelevant instances and removing unused storage look so real. However, these actions do not give a comprehensive view of cost management. In fact, some of these tasks like turning off unused instances can even lead to disruption.
Organizations need to develop a secure financial management process to customize cloud costs and create more proficient cloud service consumption. This process will affect several departments and roles within the organization. It will bring in changes to management requirements and selection of new tools.
Why Organizations should Prioritize Cloud Cost Optimization?
The cloud offers flexibility, scalability, and innovation opportunities, making it a key component in modern tech strategies. As organizations embrace digital transformation, cost control becomes a primary goal while addressing the various challenges. Here are the major reasons to implement a cloud cost optimization strategy:
- Maximizing ROI: Cloud cost optimization allows organizations to pay as per usage. Businesses can ensure the best value for each service to enhance their ROI by managing cloud expenses.
- Ensuring Financial Predictability: Prioritizing cost optimization means bringing predictability to cloud expenses. This allows better financial planning and reduces the risks of unexpected budgetary overruns.
- Efficient use of Resource: Cost optimization goes hand-in-hand with resource efficiency. Keeping track of cloud costs helps organizations to be aware of idle resources and improves performance.
- Mitigating Risks: Overlooking cost optimization can lead to uncontrolled spending and a lack of stability. Organizations can prevent financial risks associated with unchecked cloud resource consumption by being proactive in cloud cost optimization.
- Empower Innovation: Organizations can channel their savings from cloud cost optimization back into the business growth avenues, whether it’s investing in research and development, expanding into new markets, or enhancing customer experiences.
- Gain Competitive Advantage: With cost optimization strategies in place, organizations can manage their cloud expenses to reinvest their savings. However, organizations can adopt the latest technologies to avoid rising cloud costs and can gain a competitive advantage in providing cost-effective solutions and services to clients.
- Mitigating Risks: Overlooking cost optimization can lead to uncontrolled spending and results in a lack of stability. Organizations can prevent the financial risks associated with unchecked cloud resource consumption by being proactive in cloud cost optimization.
Cloud Cost Optimization: Strategy and Best Practices
Cloud cost optimization is not only bound to the finance team. It requires acceptance by major stakeholders such as managers, product owners, DevOps engineers, and IT owners. However, selecting the relevant tools such as dashboard visualization, heat maps, cloud cost intelligence, container cost optimization, etc., and implementing the valuable chargeback model can help organizations increase visibility for cloud cost optimization. Now, let us see the four aspects of cloud cost optimization:
1: Create a Plan
Organizations need to forecast their consumption and create a budgetary expectation to define their cloud infrastructure. This will help in maintaining capability and running processes before deploying projects and applications in the cloud. A Cloud Center of Excellence (Cloud CoE) needs to interpret requirements to recognize the exact outcomes that affect cloud services design. Product owners and stakeholders can collaborate to preserve the understanding and value of each application for the organization.
2: Increase Spend Visibility
To increase spend visibility, organizations can define metrics such as cost of service, capacity, utilization, availability, and performance. These metrics are crucial to building reports and dashboards, as well as managing automated workflows to optimize spending. Almost, every large cloud service provider uses these metrics as a fundamental governance model for cost tracking within the cloud infrastructure. Thus, organizations can build reports and maintain them regularly to maintain spending visibility. Some of the reports that organizations can easily access are:
- Top and least spenders
- Trending daily, monthly, quarterly, and annual patterns
- Actual versus planned spending
- Overall spending
- Estimated spending waste
3: Decrease Spending
Organizations need to recognize and define their vital and legacy data. To decrease spending, the legacy or unused data from various established data centers can be discarded to decrease spending. Below are additional ideas to decrease cloud spending:
- Schedule Services: It is usual for organizations to have resources idle at specific hours or days. Scheduling cloud services based on patterns such as batch processing jobs, database backups, or running non-urgent tasks at nights or weekends when resources are typically less expensive is a great way to cut down on costs.
- Optimize Allocation-based Services: Optimizing the size of the allocation to adjust the actual workload demand can lead to cost reduction. Regularly review and optimize the data storage (such as container, compute, storage, database, etc.) to reduce database overhead and costs.
- Utilize Discounts: Pay-as-you-go (PAYG) models does not work for every organization. If workload is stable and utilization in the future is foreseen, organizations might be able to get discounted prices.
4: Optimize Resources
Optimizing resources in the cloud environment ensures the proper usage of cloud resources, both in terms of amount and type, to meet an organizations requirement aptly. Below are some best practices to optimize cloud resources:
- Utilize Serverless Computing: The benefits of serverless architectures are manifold. By adopting serverless computing organizations mitigate the need to manage underlying infrastructure and have to only pay for the actual compute resources used during execution, leading to cost savings for event-driven or sporadic workloads.
- Leverage Horizontal Autoscaling: Autoscaling can help organization optimize cloud costs. Horizontal autoscaling involves adding or removing instances to manage changes in workload demand automatically, maintaining optimal performance and cost efficiency within the cloud environment.
Optimize Cloud and Infrastructure Cost with AgreeYa’s FinOps Services
Cloud cost optimization is all about empowering organizations to amplify innovation and stay ahead in the digital age without compromising financial stability. AgreeYa’s FinOps services offer a comprehensive solution to optimize cloud and infrastructure spending, ensuring the best value of investment with the AgreeYa advantage:
- Proven Expertise: Benefit from our deep expertise in cloud services and infrastructure management.
- Tailored Solutions: Receive customized FinOps solutions aligned to goals and challenges within the organization.
- Advanced Analytics: Utilize advanced analytics tools to derive actionable insights for cost optimization.
- Cost-efficiency: Achieve significant cost savings while maintaining operational excellence.
- Comprehensive Support: Rely on our end-to-end support from strategy development to implementation and ongoing management.
AgreeYa’s FinOps services empower organizations to implement a cost-efficient and performance-optimized IT environment with a wide array of advantages that range from flexibility to innovation. Connect with us today to embark on journey to cloud cost optimization!