12 Cloud Cost Optimization Strategies to Maintain Your Cloud Budget

Shared By Jerry Kent, Andersen Alumnus and currently Chairman and CEO of Tierpoint.
Copyright 2023 Tierpoint. This article originally appeared in Tierpoint’s Digital Breakaway, original copy can be found here. Reprinted with permission. No further reproduction is permitted without permission from Tierpoint.

With IT spending projected to keep increasing year-over-year, it’s more important than ever for businesses of all sizes to implement effective cloud cost optimization strategies. However, developing and launching a strategic cost optimization plan isn’t only beneficial in decreasing the amount of cloud computing dollars going to waste. Once deployed, over time, a successful process should also help:

Maximize system performance.
Identify and anticipate potential problems.
Enhance end-user and customer experience.

Below, we’ll explore the definition of cloud cost optimization, the differences between cost optimization and cloud management, and dive into a collection of best practices to maintain your cloud budget and optimize your cloud bills.

What Is Cloud Cost Optimization?

In a nutshell, cloud cost optimization identifies ways to reduce your overall cloud spend while maximizing the value of the cloud. Contrary to popular belief, this method doesn’t just focus on cutting costs. Instead, it also works to confirm areas of cloud spending that correlate with productive and profitable processes, procedures, and activities and maximize cloud spend optimization.

Before developing an effective optimization strategy, it’s pertinent to conduct an initial cloud cost management (or cost intelligence) audit to analyze cloud spend and identify areas for improvement, like mismanaged resources, cloud sprawl or inefficient processes. After the audit is complete, you can then use a combination of best practices, tools, and techniques to develop and implement helpful optimization strategies.

Cloud Cost Optimization vs Cloud Cost Management

When it comes to cloud cost management vs. cloud cost optimization, you can’t have one without the other. Rather than put one up to bat against the other, both processes must work together as a team.

Cloud cost management involves issuing, monitoring, reporting, and tracking cloud spend. Cloud cost optimization then uses those insights to understand how to maximize cloud value while cutting unnecessary costs. As you see, both processes go together. The intel granted by cost management and cloud monitoring initiatives is critical to building the foundation for an effective budget-saving and optimization plan.

12 Cloud Cost Optimization Strategies To Maintain Cloud Budget

Now that the overview of cloud cost optimization is out of the way, are you eager to start designing your plan? Here are 12 cloud cost optimization strategies to help you maintain your cloud budget and decrease your cloud bills.

1. Monitor Compute Resources And Rightsize Infrastructure

Proactively conduct a cloud audit to understand your spending and review all active and idle instance types. With this information on hand, you can develop a plan to:

Refine your spending patterns
Consolidate applicable computing functions onto fewer instances
Rightsize your cloud infrastructure to suit your business’s needs

2. Rightsize Computing Services

Considering there are so many instance sizes to choose from, it can be difficult for cloud administrators to correctly size instances. Rightsizing tools can be used to analyze and modify your computing services to efficient sizes and offer change recommendations across instance families, as well as optimize servers for storage capacity, graphics, memory, and more. Rightsizing not only helps reduce cloud costs, but also enables better cloud optimization and enhances performance.

3. Watch And Review Cloud Usage, Analytics and Costs Regularly

Like a utility bill, cloud usage and fees can fluctuate depending on a few factors, such as changing needs or seasonality.

Without proper insights and analytics, it can be difficult to understand which resources are most often consumed by who, identify unused resources, or accurately forecast spend.

Luckily, cloud monitoring and cloud analytics tools can be incorporated into your system to give you a deeper level of insight. These tools provide real-time dashboards and reporting that help you identify troublesome areas that may cause…

Overspending
Resource underutilization
Issues down the road

4. Identify and Maximize Software Licensing Spend

Recurring software license fees are a big contributor to operational expenses (OpEx); and considering there are so many scattered across your on-premises infrastructure and cloud platforms, they can be tough to keep up with. Even one untracked and unused license could cost your company a chunk of change. With that, it’s important to use proper tools for asset tracking to identify and maximize your software spend.

5. Adopt A FinOps Framework

A cloud financial operations (FinOps) framework optimizes an organization’s cloud to maximize business value.

Developing and implementing FinOps is critical to ensure the entire business –from DevOps to Finance teams—works collectively and feels empowered to make informed decisions that:

Elevate business value
Drive the right business outcomes
Streamline product progress to benefit customers more quickly, among others

Additionally, operating with a FinOps framework builds an internal culture of cost awareness, which can encourage cost savings across individual teams.

6. Try Using A Heat Map

Heat maps are helpful tools that create visualizations of peaks and valleys in computing. With these visual reports readily available, it’s easier to identify the start and stop times to help reduce IT spend. For example, with this information, you may discover it’s safe to create an automation that shuts down a development server from 2 am – 5 am on certain days of the week to optimize costs.

7. Decrease Cloud Sprawl

As with that streaming service you haven’t gotten around to canceling, many organizations forget to eliminate services they no longer use within their cloud strategy. You can use cloud monitoring to achieve better cloud visibility that will help lessen your overall cloud sprawl. You could also consider setting up an internal process that outlines when it’s time to decommission cloud resources or shut down workloads that are no longer needed to prevent unnecessary cloud spending.

8. Identify Proper Storage Options

When you get down to it, there are many cloud storage products on the market, and the right storage type will vary depending on whether you are managing a public cloud, private cloud, hybrid cloud, or multi-cloud.

In general, cloud storage options fall into three categories:

Object storage
File storage
Block storage

When selecting your cloud storage option, make sure you’ve chosen an access (how often you need to access the files) and performance (how fast you obtain access or read and write access to a file) tier that can meet your needs while helping reduce cloud costs.

9. Pause Idle Clusters

When using a cloud data warehouse, if applicable, consider pausing idle clusters that are not in use. For example, when running AWS Redshift clusters, you’re paying to use compute nodes even when your clusters aren’t actively in use. Within Redshift, there’s a pause and resume product feature that easily allows you to minimize costs associated with idle clusters.

10. Use Policies and Rules

You can create (or use pre-built) policies and rules to enforce cost governance, such as:

Set up allowed VMs and restrict expensive VMs or supercomputers
Block resources from being created
Define allowed storage types that can be created on the account

11. Set Up Autoscaling to Automate Cloud Cost Optimization

Certain cloud services, like Microsoft Azure, provide features that allow users to easily scale up and scale down resources according to your needs. By configuring autoscaling within your cloud, you can ensure you’re paying for the right amount of resources that match your performance needs, and nothing more or less. Essentially, with this Azure cost optimization tactic you don’t have to overprovision to allow for spikes and only scale when you need to.

12. Use Reserved or Spot Instances

Organizations can save thousands by opting for cost effective on-demand resource alternatives, like reserved instances in AWS, spot instances or other AWS cost optimization best practices.

Accounts that commit to using AWS for one or three years are eligible for their reserved instances discount program, which can result in savings of up to 75% vs on demand.

Companies that use spot instances, on the other hand, have the potential to save even more. However, there are a few caveats that accompany spot instances: they won’t result in cutting costs for all workloads, prices can fluctuate, and they’re best suited for workloads that last a very short amount of time.

In either case, no matter what instances you choose to use, it’s crucial to do your due diligence: look at your past usage and look to the future to determine which option is best for your needs and will help you stay within your cloud budget.

Designing A Successful Cloud Cost Optimization Plan

There are dozens of strategies you can incorporate into a cloud cost optimization plan, and the above 12 are best practice suggestions to help you get started. As you build your plan, remember that no one strategy is a one-size-fits-all solution. After all, what may be applicable for one organization may not necessarily be beneficial to implement for yours.

Feeling a little lost? If you need direction when putting together your cost optimization plan, consider working with a cloud provider with a focus area on optimizing IT spend across different types of cloud environments.

How TierPoint Can Help Maintain Cloud Budget And Optimize Costs

Leveraging a managed cloud provider like TierPoint who can help with tools and recommendations means you can better forecast your company’s usage and plan effectively. At TierPoint, we provide a consolidated view of both managed AWS and managed Azure resources in a single dashboard that offers visibility into both resources and usage. We also have AWS and Azure engineers and architects on-staff who can provide guidance on what adjustments can be made to achieve cloud spend optimization.

Need help building your cloud cost optimization plan? Get started here.