According to IDC, cloud computing spending will be $1 trillion by 2024, at a rising annual growth rate of 16%. This stat could be tested in the current slow economy as organizations look to cut costs. In another survey, 64% responded that cost management is a major concern with the cloud. So, how do companies manage the cost? What is cloud cost optimization? In this article we look at 5 ways your organization can save on its cloud costs without sacrificing on performance.
What is Cloud Cost Optimization?
Cloud cost optimization simply means reducing cloud spend without compromising on system performance. To optimize cloud costs, you should know the performance requirements for every workload, the unique features of cloud services, and their pricing models. Cloud cost optimization varies according to the fluctuating application requirements and consistent changes in cloud pricing and service alternatives. Optimization helps lower costs and ensure SLOs (service level objectives) are met.
But, are there other benefits apart from cost that a company can gain from cloud cost optimization? Let’s take a look.
Why do you need to optimize cloud costs?
The major problem companies face while migrating to the cloud is the lack of clarity on who is purchasing what services. You could blame the traditional method of drafting a budget to purchase IT services as being outdated. However, when an IT team uses resources without considering the costs, the spend can go haywire, sometimes resulting in bill shock.
When you have a cost management program in action, management and cost structuring become normal.
Efficient budget allocation
Cloud cost management removes major hindrances like shared resources and unknown costs from your bookkeeping, and offers structured information about your business, programs, roles, and cost. With this information, it gets simpler for businesses to allocate budgets and map spends to their resources.
Cloud Optimization Best Practices
1. Choose a cloud cost optimization structure
Cost optimization starts with a basic assessment of cloud assets, and recognizing optimization opportunities. To be successful, cloud cost optimization structure should consider the following:
- Optimize resources to ensure every workload has the right and appropriate resources allocated.
- Improve monitoring and visibility so you have more control over costs and can better budget for future spends.
- Look for opportunities to make architectural and functional changes that save on costs and improve performance.
2. Set up a cross-functional financial operations team
FinOps is a new trend where organizations setup operations related to cloud cost optimization. This is an offshoot of the term DevOps, and is essentially the better management of finances for DevOps teams. FinOps helps develop a financial operating model to save money and better use the cloud.
3. Set up open communication with team members
Breaking silos, and encouraging open communication across teams using cloud resources will help them understand what tools are being used, and what changes they need for enhanced results and better satisfaction.
Those managing cloud cost optimization can simultaneously cut costs and increase collaboration, productivity, and results.
4. Optimize cloud resources
Optimization evaluates cloud services and their usage to find the most suitable usage for applications and workloads. Using right-sizing tools, you can streamline the size of cloud resources such as compute instances, databases, storage capacity, and more.
This doesn’t just lower costs but streamlines workload and enhances performance as there are fewer resources to be managed. Making cloud operations simpler, easier, and more lightweight is a great way to save on cloud costs.
5. Develop solutions for cloud economics
The technology architecture you use in the cloud greatly impacts costs. A cloud computing architecture helps accomplish objectives like availability, safety, and performance. These goals are supported by resources to offer optimum performance.
As new technologies are introduced, it is important to integrate them into your architecture. This will involve actively fighting technical debt, and striving for distributed system architecture where each component or service can be updated on its own without breaking other components. It’s hard to quantify the exact cost savings of such measures, but their impact cannot be understated.
Consider how your company is presently operating in the cloud. Does your business have an efficiently defined Cloud Operating Model? Have you formed a good FinOps team to optimize cloud costs?
Cloud cost optimization doesn’t need to be complex. Yet, it should be based on a model which sets up good allocation of resources and consistently reduces your cloud costs. In an economy that demands more stringent spending, there is a lot of room for you to optimize your cloud costs.
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