Cloud Cost Management, Optimization & Governance

By June 26, 2021Software development

According to the 2021 Flexera’s State of the Cloud Report, responders note that their cloud expenses go over budget by 24% on average. The same report found that most organizations waste about 30% of their cloud resources due to ineffective practices. Optimization is the analysis of computing services to determine the most effective scale at a given time. With a sizing tool, you can optimize not just compute instance sizes, but also other factors like database, memory, storage capacity and hardware acceleration.

Your provider takes care of security, making it possible for you to find savings in this important area. Through autoscaling, you can automatically increase or decrease the availability of computational resources. When you notice clear trends in your usage, you can schedule autoscaling way ahead and save yourself a lot of money.

No strategy and lack of oversight can create spikes in cost, unused resources, and poor performance. This article will tell you how to adapt the right cost management framework for private, public, and hybrid cloud services. Read until the end to discover 13 strategies that can help you use your resources more efficiently.

Cloud providers recoup network costs by charging egress costs as well as costs between regions. These network charges are not necessarily visible in a cloud architecture. The standard egress fee for a Public Cloud Provider is somewhere between $0.08 – $0.20/GB depending on region. Achieve greater visibility, optimization and control across public, private and hybrid multicloud environments to keep cloud costs under control.

What is cloud cost optimization

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In an enterprise organisation different teams may choose different units of business value, and may choose more than one. Attempting to answer what is the appropriate amount to spend without broader context is challenging. It can mean walking a tight-rope between allowing inefficiency through wasteful resource consumption and starving the organisation of growth opportunities through excessive cost control. Unit economics adds business context to cost, revealing the business value of the spend to support data-driven decisions on spending.

  • Lastly, monitoring can help you spot outliers or abnormalities in usage quickly that, if left unchecked, will result in excessive charges.
  • The cloud native VDI tools integrate the advantages of VDI with the cost optimization of the cloud build.
  • AWS Cost Anomaly Detection enhances your control over your costs and helps you avoid surprises.
  • Owners can help your teams understand the purpose and business value of each application.
  • You should know that the cloud has shared responsibility on both sides to keep a compliant environment and have the needed stets to achieve continuous compliance.
  • Both forms of autoscaling can reduce costs and have their place in optimizing.

If you have a good understanding of your expected usage, the commitment model could provide a lower cost due to discounted service pricing. But if your usage drops or increases significantly then you could end up paying more when using this model. Following are some of the key attributes of the information in this dashboard that can allow IT, administrators, to dig deeper into the cloud resource cost and aid with right-sizing of the resource. Cloud Cost Optimization allows end users to run “what-if” scenarios based upon the most current pricing changes, allowing IT to continually provide savings insights to the business.

You will not be spending a penny more than you should and you will be happy to know that your system is scalable, efficient, and ready to be further expanded. Outsourcing the management of the cloud in the serverless model means that you can keep your cloud team rather small. Reserved instances – that way you can get resources at a discount in return for a commitment to pay over a specific period of time. When done correctly, it improves the security of your data by providing backups and safe storage. Rightsizing refers to various ways of making sure that your system’s workload matches the type and size of your instances. The goal, of course, is to ensure that your system works smoothly at the lowest possible cost.

Utilize Tools

Finance processes will often run monthly, quarterly or yearly—a different cadence to what is suitable for managing costs in a dynamic cloud environment. For cloud cost management, a more continuous, iterative process is required to reduce waste and operate efficiently. For the most cost-effective cloud environment, it is necessary to shift to a mindset of continuous cloud optimisation, underpinned by data transparency, taking value based optimisation actions. In a recent project, The Software House team managed to reduce a client’s cloud bill from $30,000 to $2,000 a month. This experience made us realize just how many companies struggle with cloud cost optimization.

Adopting public cloud technology is meant to be an engine of innovation that drives agility and scalability, but what’s the right way to ensure financial success? It takes a modern approach to processes, skills, architecture design and tools to become financially efficient in managing and optimizing cloud spend. Improve your application’s performance while generating more targeted user experiences and reducing operational costs. As demand fluctuates, continuous observation and refinement of cloud resources is needed to maintain optimum performance. Consider integrating an SD-WAN environment with the cloud’s native networking tools. Stopping uncontrolled cloud spend and planning accurately for resources requires visibility into service consumption in all cloud environments.

The Benefits Of Cost Governance

You can choose a microservices-based approach and run containers or use standard monolith applications run by virtual machines. One way to determine whether you’re overspending on resources is by employing rightsizing analysis. It involves comparing usage and capacity to see whether a resource is underutilized and therefore needs tweaking. Once you’ve determined that a resource is indeed underutilized, you can then reduce its capacity to make it closer to the actual usage. Multi cloud can help ensure that you’re fulfilling every niche and providing a solution to every problem.

The value of the steps can be shared within an organisation to obtain buy-in and investment in FinOps practices, continuing the journey around the lifecycle to achieve maximum business value. Shared learning across cross functional groups will break down silos and creates a development opportunity to champion FinOps principles within an organisation. Effective Cloud Cost Optimisation needs to measure the right metrics, aligned to the desired business outcomes. The metrics chosen should reflect the desired business agility, growth and sustainability first. We define accessible data as data that can be accessed visually and programmatically without friction and is described in a common language that is widely understood by many teams.

Insights, Strategies, And Tools For You And The Community

This will force them to use independent software that can compromise your cybersecurity. While the initial process requires following each step, this process is iterative. Lowering cloud costs is not a one-step process and does not always require following the steps in order. Instead, it requires going back over each aspect of optimization to find areas to reduce spending. Managing and optimizing cloud costs requires a multifaceted and comprehensive approach.

What is cloud cost optimization

When using S3, you should always keep an eye out for which of your buckets are frequently and infrequently accessed, and select your storage tier accordingly. If you are unsure, opt for S3-Intelligent Tiering, which automatically tracks your access patterns and selects the optimal storage tier for your bucket. AWS offers over 300 different instance types—each suited for a variety of workloads. With such a vast selection available, selection of the right instance is overwhelming even for expert cloud architects. Save more by automating tasks, rightsizing resources and making smarter reserved instance purchases. NCM Cost Governance drives financial accountability with intelligent resource sizing and accurate visibility into cloud metering and chargeback.

Your business can use a multi-cloud solution to ensure that you’re taking advantage of specializations and enjoying the benefits that come with using different providers. This goes back to getting the right data to the right people at the right time. Discovering opportunities for cloud-cost optimization too late is frustrating. Instead, you should be able to observe and immediately identify trends and take immediate action. For example, you shouldn’t use this strategy for production workloads and services without data persistence because you can lose the data created between sessions.

Improve Usage And Spend Insights

Adopting an architectural principle that considers cost with a cadence for architectural reviews will improve cost effectiveness and encourage sharing of best practices. Cost effective architecture patterns should be shared across an organisation to provide teams with cost efficient solutions to commonly occurring scenarios or problems. The unit cost mode model can be extended to consider wider business costs and benefits through use of a Cloud Benefits framework. FinOps Cloud Cost Management is a cloud financial management discipline and cultural shift for operating in the variable spend model of cloud. By breaking down silos between business, engineering, finance and procurement, organisations can follow FinOps best practices to enable maximum business value in the cloud and reduce financial risk. If you want to make sure that you follow all of the cloud cost optimization strategies, make sure to bookmark this article or download the infographic below.


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Cloud Cost Optimization: Four Steps To Success

By applying the principles above, you can start to control spending, establish realistic cloud operations budgets, and ultimately reduce costs and waste. Cloud providers have refreshed their computer platforms over the years to provide renewed power to certain use cases. These instances are also often less expensive because they are more efficient than previous generations.

Four Aspects Of Cloud Cost Optimization

However, on-the-side models require a strong culture of cost awareness in the organization. Tagging means attributing resources with metadata that will appear next to each line item in the provider’s bill. Organizations can customize their tags and apply them to instances and resources on different projects or subscriptions. On top of that, labels don’t create any implications or dependencies on the resources.

To combat rising cloud infrastructure costs, use these proven best practices for cost reduction and optimization to make sure you are getting the most out of your environment. Every individual item is charged, sometimes by the millisecond, and the charges vary month-to-month, too. As a result, it may be tempting just to pay the bill, rather than trying to understand the details. The surging popularity of remote and hybrid work environments has resulted in increased adoption of cloud, virtual desktop infrastructure , and Desktop as a Service solutions.

You can easily integrate the RESTful Anomaly Detector API into your applications. In the past, a computing architecture was designed to achieve certain objectives, such as performance, security, and availability. These objectives were provisioned by a finite set of resources, which were designed for optimal, peak performance. Here are a few best practices that can help you build a cost-optimized cloud environment. Densify has mastered the science of effective cloud purchasing to ensure that customers get the most return out of their investment. Densify automates the highly-complex process of cloud procurement based on ideal usage patterns and considers factors such as term length, payment options, and past usage history.

Committed Use Discounts give a discounted rate for committing to an amount of usage. Designing systems with cost in mind is a powerful way to be cost efficient in the cloud. Starting with a cost efficient architecture will often give greater benefits than optimising the individual components of an inefficient architecture.

Cloud Dedicated Servers Single-tenant, on-demand dedicated infrastructure with cloud features. Application PaaS are mapped to underlying compute resources, which is why you should monitor them and decommission those you don’t need. You need to consider software license fees because they can comprise a significant part of the operating costs. While tags will appear in bills after implementation, they do not appear on previous bills, so it’s critical to implement tags as quickly as possible to enable cost tracking. Our experts know your industry, and they know the challenges you’re facing.

According to Gartner, nearly all legacy workloads that migrated to the public cloud infrastructures require a proper framework to become cost-effective. Cloud cost optimization is a new discipline that organizations need to deploy cloud computing effectively. Here is some guidance to help you create a comprehensive and standardized optimization process to improve cloud cost. Typically, organizations start their cost optimization journey with first-party tools provided by their cloud provider. With cloud optimization, you can improve cloud performance and reduce costs.

In some cases, traditional solutions can limit your productivity, which will only add to your expenses. Autoscaling, or enabling applications to increase or decrease in response to events, can significantly optimize costs. However, autoscaling is either “vertical,” making one instance bigger, or “horizontal,” adding more instances of a similar type and distributing them across.

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