2020 has been a pivotal year for the cloud. It played a lead role in facilitating remote work solutions, enabling organizations to fuse their existing processes with novel cloud technologies to offer greater flexibility. The cloud expenditure of an average organization has also increased – from $6,500 in 2011 to $10, 000 in 2020, per a Flexera estimate. Gartner forecasts worldwide spending on public cloud services to grow 18.4% in 2021.
However, a conservative estimate suggests organizations waste 30% of their cloud budgets. There can be many reasons for this; resources become idle or unallocated. The cloud does offer unlimited scalability and pay-per-use. In reality, though, organizations pay for the resources they order from cloud providers like Amazon Web Services (AWS) or Microsoft Azure but end up not using them.
As services like the Internet of Things, Container-as-a-Service, and artificial intelligence grow in popularity, cloud cost optimization has become a primary focus for organizations. But cloud cost optimization isn’t the same as cloud cost reduction; there’s a difference.
Cloud cost optimization is finding the right balance between cost and performance and then maintaining it. It’s essentially the process of reducing your overall cloud spend by identifying mismanaged resources, eliminating waste, reserving capacity, and rightsizing computing services to scale. To do this level of scaling, organizations must have complete visibility over their cloud accounts and control over future deployment. Without this level of visibility and control, there would be no accountability, and subsequently, no governance. Without any form of cloud governance, no matter what efforts are taken to optimize cloud costs today would be in vain.
There are several approaches you can take to optimize your cloud costs.
Find unutilized resources
In most IT departments, it often happens when an administrator or developer “spins up” a temporary server to perform a function, only to forget to turn it off or remove storage attached to the instances. A cloud provider will bill you for the resources you have bought; it doesn’t matter to them if you’re not using them. The first step in your cloud cost optimization strategy would be to identify unused and completely unattached resources and remove them.
Consolidate unutilized resources
An idle computing instance might be utilizing just a small portion of your CPU, but you are billed for 100% of that computing
instance - a gigantic waste. Once you identify such resources, consolidate such computing jobs onto fewer instances. With the cloud offering autoscaling, load balancing, and on-demand capabilities, you can scale your computing power at any time.
One of the benefits of the cloud is the possibility to spin up resources when you need them and vice versa. Powering down the instances when they are not in use is an effective way to save costs while deploying the public cloud. If there are a few instances, you can do them manually. There are many tools available in the market like AWS Instance Scheduler or Google Cloud Scheduler to manage the entire process and configure a schedule to establish start and stop times.
There is something called Reserved Instances (RI) that you can invest in to save costs. All cloud providers offer lucrative discounts like these based on time commitment and upfront payment. As per Amazon, RIs can provide up to a 75% discount compared to on-demand pricing and are available in 1 to 3-year contracts. However, before investing in RIs, perform a thorough analysis of your past usage patterns. Refer to cloud providers’ pricing guides for further guidance.
Right size assets
Cloud administrators often have a million possible combinations, which makes it difficult to size instances correctly. So, efficient analysis of computing services and modifying them to the most efficient size is critical. In this analysis, you can also optimize servers for memory, databases, computing, graphics, storage capacity, throughput, and more.
Just like Spot Price in commodity markets, you can invest in Spot Instances – spare computing capacity that you can bid on. If you get the right price, you can purchase it for immediate use. However, one disadvantage with this is that they aren’t always readily available and can be terminated with minimal warning. But this also means they are best suited for quick tests, batch jobs, or tasks that can be closed quickly.
Just like websites, you can use heatmaps to identify when resources are idle and shut them down for that duration. You can also automate the start and stop schedules for different instances to eliminate manual errors.
There are many cloud cost optimization tools from the big three as well as independent cloud providers you can use depending on your scale and complexity.
AWS Cost Explorer
Google Cloud Platform Billing
Azure Cost Management + Billing
Cloud cost optimization has become a driver for investment. Our research says 75% of industry leaders, or as we call them – Digital Champions are saving on IT infrastructure costs in a big way.
As part of our strategic execution analysis, Trianz takes a comprehensive approach to analyze a client’s readiness to migrate applications to a public or private cloud infrastructure.
We begin every cloud migration assessment and strategy by gathering the right information from your business units. This step of our framework includes conducting a current-state analysis and further refinement and evaluation to ensure the application portfolio meets the fundamental evaluation criteria.
Our step-by-step process includes:
Define strategic objectives
Create a cloud council, detailed technology, and execution roadmap
Gain cross-functional company-wide buy-in
Undertake financial planning
Estimate cost(s) for solutions
Evaluate application and processes for migration (as-is-recoding)
Understand issues related to the public cloud, security, governance, risk, and compliance
Besides these, our cloud strategy services specialists also recommend the best architecture to make your ‘cloud-first’ strategy implementation successful. With our approach, your business will realize these benefits:
Elimination of upfront hardware costs
Reduced operational expenditure
Application and infrastructure optimization
Application and infrastructure scaling
Decentralized control of cloud accounts is a major contributor to wasted cloud spending. Cloud cost optimization enables cloud governance teams to work collaboratively with business units and cloud resource owners to optimize spending.
With cloud optimization approaches, you can monitor cloud usage, costs, and discounting structures for all your public and private cloud accounts, allowing you to identify optimization opportunities and present smart recommendations.
The right cloud cost optimization provider can give you comprehensive capabilities to reduce costs across your entire cloud environment. If your organization is looking to optimize cloud costs, Trianz is here to help.
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