What is cloud cost optimisation?

Simon Edward • 9 August 2024

Are you getting the best ROI from your cloud infrastructure? Find out how cloud cost optimisation could help.

Ask anyone in the tech world to list the benefits of the cloud and it won't take long before "cost-effectiveness" is mentioned. The cloud isn't just about making software and data available to remote or hybrid workers – it's about bringing down your IT bills, too.

But like many things in life, the benefits only appear when executed properly. All too often, businesses migrate to the cloud and then find themselves hit with an invoice the length and complexity of War and Peace. This "cloud shock", as it's called, is no laughing matter.

So, how do you keep cloud costs under control? The answer is cloud cost optimisation – a set of tools, approaches and techniques to make sure you're getting the right bang for your buck.

Before we take a look at some of these strategies, let's get down to brass tacks. Why does cloud cost optimisation matter, exactly?

Cloud cost optimisation: why does it matter?

In one sense, the phrase "cloud cost optimisation" beats its own drum. Suboptimal cloud costs are, well, suboptimal. Optimised cloud costs are not.

But beyond this common-sense explanation, there are a host of reasons why your business should prioritise cloud cost optimisation.

The first comes in the form of a sobering statistic. According to IBM, "organisations waste about 32% of their spending on cloud services". Thirty-two percent! If one of your departments was using a third of its budget unwisely, you'd be having some serious words.

Cloud cost optimisation, then, is about righting this wrong and making sure you're not overspending. That's the cloud-specific answer. But the broader answer is that by reducing cloud expenditure, you free up time and resources to focus on all the other things that will help your business grow.

Finally, there's the question of sustainability. Despite its name, the cloud doesn't just float in space. It's powered by data centres – and data centres use up a lot of energy.

So, at a time when green initiatives are becoming more and more important for businesses of all shapes and sizes, optimising cloud usage isn't just good for business – it's good for the planet, too.

Why is it hard to control cloud costs?

At this point, you might be wondering why it's so hard to control cloud costs, anyway. Surely it's like any other kind of resource usage – if you're using too much, use less. No?

Well, yes and no. Sometimes, it is as simple as ensuring that you're only spending money on what you need. However, the difficulty that businesses have in controlling cloud costs runs deeper than that.

For instance, many businesses don't know what their cloud environments consist of in any detail. They're not getting a good look under the bonnet to see what's being used unnecessarily. This lack of visibility means a lack of cost optimisation.

On top of this, many businesses lack the skills and resources to forecast their cloud budgets with any accuracy. It's not as simple as looking at the billing price and totting it up for the month or year. Cloud costs are notoriously unpredictable, meaning you need to be proactive in monitoring and updating your budgets and forecasts.

How is cloud cost optimisation achieved?

There's no one way to optimise cloud costs. You need to implement a range of tools and approaches to make sure you're spending your money wisely. Here are eight options for you to explore.

1. Make the most of your provider's cloud cost management tools

The big cloud hitters, including Azure, Google Cloud and AWS, all offer cloud cost management tools. These won't give you all the insights you need – but they're a great place to start.

2. Get help from a third party

You don't need to be cynical to think that a vendor's cloud cost management tools may skew a little in the vendor's favour. One way around this is to use third-party cloud cost tools – or to get in a cloud consultant.

A cloud consultant will be able to take a detailed look at your infrastructure and make suggestions for cost optimisation, aligning technical concerns with your business's goals.

3. Get your head around cloud pricing models

Are there discounts? Savings plans? Data transfer fees? All of these will feed into the amount you pay on your cloud infrastructure. Get to grips with the details of your cloud provider's pricing models so you don't receive any nasty shocks.

4. Rightsize your services

So you know what your infrastructure consists of and how it's being charged – but are your computing services rightsized? To answer this question, you need a good grasp of the performance and usage patterns of your workloads.

5. Autoscale

Manually scaling your workloads takes time and money. Autoscaling does the same job for less.

Those interested in autoscaling can explore options like Kubernetes: an open-source container orchestration system that can automatically adjust the provision of computing resources in relation to app usage.

6. Choose your storage type with care

Not all storage methods do the same thing. The two most common are block storage and object storage. Both of these come with their own strengths, weaknesses and use cases. Make sure to investigate these before picking one for your business.

7. Look out for spot instances

A spot instance is where providers let you bid for unused capacity at a knock-off price. It's important to note that spot instances can be reclaimed by your provider. Compared to on-demand instances, however, they can be a good way of saving you some money now and then.

8. Consider FinOps

FinOps is the finance version of DevOps – an approach to cloud financial management that uses automation to identify opportunities for efficiency that haven't yet been taken. Done well, this allows you to optimise your cloud costs in real time.

Are you looking for cloud optimisation solutions? We can help. Get in touch with Ascend Cloud Solutions today for a free, no-obligation consultation.

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