Running a successful company isn’t more than building unique products and having many clients. Long-term success requires cost efficiency, making cloud cost optimization vital for businesses. Using proven strategies, you can reduce the company’s day-to-day expenses and ensure that your applications utilize cloud resources effectively.
Multiple companies nowadays rely on cloud infrastructure to host their whole ecosystem. That makes this guide to cloud cost savings relevant to businesses of any size and specialization. Here, we will describe how to leverage effective management, resource allocation, and operations structuring to ensure your budget isn’t being wasted.
Explore these cloud cost optimization and management statistics to understand what other businesses are doing when it comes to cloud cost optimization.
- 49% of businesses find it hard to keep cloud costs under control.
- 33% of businesses overrun their cloud budget by 40%.
- 78% of businesses realize too late that their cloud costs change. Only 22% quickly detect modifications in their cloud spending.
- 49% of business leaders find it hard to measure the value they get from cloud spending.
- 48% of chief financial officers (CFOs) are not confident about measuring cloud return on investment (ROI).
- 24% of technology leaders measure cloud value by how it speeds up innovation and service delivery.
This focus on smarter cloud spending should allow your business to maximize your infrastructure's potential. Let’s get started, using JetBase’s decade of experience in the market to learn the best approach for cloud cost optimization.
What Is Cloud Cost Optimization?
Don’t let the singular name misguide you. Instead of just one catch-all process that reduces your spending, optimizing a cloud requires a mix of elements. Cloud spend optimization presumes using tools, management techniques, best practices, and regular adjustments. All of these efforts will ideally result in a reduction in daily spending and more efficient resource use.
By employing a variety of approaches, you can gain deeper insight into how your business operates and, more importantly, the reasoning behind certain decisions. Thus, you’ll determine what to adjust for greater efficiency and which elements are best left alone.
While the process of cloud cost reduction doesn’t end at simply choosing the best cloud platform and pricing plan, it’s certainly part of the suite. Smarter initial spending makes optimizing your resulting cloud capacity and cloud cost optimization associated with it easier. Consider is the first step of a larger endeavor.
Why Cloud Cost Optimization Is Important
Despite their seeming complexity, cloud cost optimization strategies are essential for any business that relies on a cloud infrastructure. Before we describe them and point out the best ones, let’s address what makes them so vital.
Lower Expenses
Let’s start with the obvious - optimizing your work with the cloud means spending less money. You will get the same processing power, reliability, and quality but at a fraction of the price. There is simply no reason not to look into cloud cost optimization. The freed-up funds can go toward new development and refining current products.
Strengthened Performance
While your ultimate goal may be to reduce cloud costs, you will also see a marked improvement in your system’s speed and stability. Simply put, cloud cost optimization has a knock-on effect that helps you access more resources or, at least, allocate them more appropriately. As a result, the processes that need it most will get more power while the load on your platform is evenly distributed.
Higher Visibility
Rooting around in your cloud architecture means gaining a unique insight into it and how it functions. As a result, your team can better understand the capabilities at your disposal and utilize them better. You will also be able to predict potential problems and diagnose issues faster. This helps ensure stability and keep your services reliable for your customers.
More Control
Going through the process of revamping your cloud platform and your interactions with it will ultimately make you more aware of how it all works. This, in turn, means you can have granular control over the precise steps for:
- boosting performance;
- increasing throughput;
- restructuring your databases.
It can inspire new ideas, as well as make maintenance faster and less risky.
Getting Started with Cloud Cost Optimization
Your first step on the way to healthy cloud cost optimization is to understand your cloud better. First, let’s break down the spending into several categories. These are:
- Computing costs
- Networking costs
- Storage costs
Computing Costs
These include all the RAM and core usage that your enterprise requires. While these inevitably increase along with your company’s growth, there is absolutely room to cloud cost optimization. Being more efficient with your resources and not letting idle instances hog any power is a good start. You can also consider whether some power-hungry processes are justified cost-wise and cull those that aren’t.
Networking Costs
Any bandwidth you use and data you transfer will rack up a bill, one that increases the more you use your cloud. The easiest way to start off here is to assess your usage, tracked over a long period. If you’re seeing an upward trend, upgrading your cloud pricing plan might make sense for cloud cost optimization. That way, you may negotiate better terms while matching your system’s growing needs.
Storage Costs
Storage expenses are quite straightforward - the more you use, the more you pay. There is some nuance in the form of different storage types (block, file, object), but the general approach is simple.
First and foremost, make sure you’re not storing anything that’s no longer relevant to your current operations. Then, consider reformatting your storage practices to capitalize on storage types’ varied pricing.
There are also extra expenses like maintenance and support. Yet, those are harder to predict due to their nature. With the cost breakdown out of the way, let’s move on to the main course - using cloud cost management strategies for cloud cost optimization.
13 Best Cloud Cost Optimization Strategies
There are plenty of ways to optimize cloud costs, and each company eventually develops its own array of practices and tools for the purpose. This section will compile some of the most effective cloud cost optimization methods that JetBase has applied to restructure our clients’ spending. You can pick up something for yourself or simply use these as inspiration to craft your own suite of measures.
Avoid Overcommitting
It’s important to strive for more in the business world, but that doesn’t mean you should sign up for excessive pricing tiers. Basically, you need to have a level-headed estimate of your resource needs and pay for them accordingly. Committing to a higher pricing tier may be tempting as you expect your business to grow, but there’s no need to rush.
Decide according to your current requirements; an upgrade is always possible. Besides, it might be beneficial to negotiate a higher tier when you’ve already worked with the platform for a while. This allows you to have legacy pricing or inquire about custom plans instead of using the non-flexible general ones.
Diversify Providers
Nothing is stopping you from using multiple established clouds for your business and cloud cost optimization. Depending on the purpose, AWS and Azure might both be beneficial and serve different roles. This approach also lets you keep tabs on each provider's capabilities. That, in turn, makes it easier to switch between them if a lucrative offer or feature comes along.
With all that said, having multiple clouds to focus on can be challenging without the right structure. That leads us to our next point…
Tighten Billing Processes
Truthfully, this applies to companies that use just one cloud provider and those that operate on multiple clouds. Having a streamlined, clear billing structure with full transparency is absolutely essential to reduce cloud costs. It helps:
- spot excess resource use;
- estimate costs
- see the full breakdown of your units’ payment histories.
It’s particularly vital for large enterprises, where departments may not have the clearest communication, resulting in excess purchases and failure to bill them properly. Implementing a unified standard for financial reporting is a good FinOps practice and will help your management.
Invest in Monitoring
Most platforms will have special tools that allow you to monitor resource consumption and track system events. It’s paramount that you monitor those and analyze the data to assess your cloud’s performance. This may help you see areas that can be retooled to use fewer resources without sacrificing their utility to optimize cloud costs.
Track Separate Metrics
Similar to monitoring the overall state of your cloud infrastructure, you also need to do a deep analysis of your system’s metrics to reduce cloud costs. You need to assess: CPU load;
- network usage;
- storage space;
- virtual machine instances.
This gives insight into which parts of your system are overly resource-hungry and allows you to measure critical load times.
As a result, you’ll be able to fine-tune specific VMs and processes to consume fewer resources and optimize cloud costs. In addition, this will optimize your products’ performance, speeding it up and reducing the load on your infrastructure. Most cloud providers have the right tools for this, although using your own software to do the tracking is possible.
Automate Allocation
The provider’s own systems don’t aim to optimize cloud costs for you. Instead, their core priority is keeping the system running stably. As a result, the auto-checks often commit too much processing power to resources, ballooning cloud costs.
Crafting your own sophisticated systems of checks that allocate just the right amount of resources is the way out. As long as you understand your infrastructure and needs keenly, you can rely on solutions like Kubernetes services to automate the resource spread. This way, you’ll see a reduction in resource usage and, thus, the cloud cost optimization without sacrificing any throughput.
Prepay for Instances
Inquire with your cloud provider if they offer a prepayment plan, where you can cover 2 or 3 years of expenses for an instance.
These usually provide a very lucrative price compared to monthly payments, sometimes up to a 30% discount.
As a result, you can prepay for your entire cloud network and save substantially without doing much at all. This is only limited by what your providers offer, as well as your willingness to commit to long-term use of that cloud.
Cut off Excess
Idling instances or ones with minimal activity can be refactored or even removed completely. You’ll obviously have some lulls where you need fewer resources than at peak times, but it’s quite easy to spot excessive parts that only drain your budget.
- Knowing when to cut them is important, especially since acquiring more cloud resources in the future isn’t a problem.
- Keep your system lean to keep the budget healthy.
Rely on Real-Time Analytics
It’s important to see the bigger picture and track your resource use and cloud costs over long periods. However, it’s equally vital to base your cloud cost optimization on up-to-date information. Ideally, you should have real-time analytics to provide relevant, timely status updates on your instances and processes. This way, you can pivot quickly but without risking too much.
Bid on Spot Instances
On occasion, cloud providers offer unused capacities with large discounts. While relying on these constantly is not ideal, you can use them to beef up your system at a fraction of the cloud cost. This will give the non-essential parts of your infrastructure the processing power while saving the more reliable and expensive resources for critical infrastructure sectors.
Loop People In
Regardless of the size of your business, it’s important to ensure every manager knows what you’re doing and the budget limits. Otherwise, you may find yourself with a heavily optimized system that then falls apart because one department needs way more resources. Establishing clear reporting of team needs and expenses helps see the bigger picture.
It’s almost impossible to have lasting cloud cost optimization unless your entire company works as one team and prioritizes smart spending over their ambitions. This shouldn’t curb new projects and ideas, of course. Instead, it should provide reasonable limits within which your employees and products can still thrive.
Go Cloud Native
Adapting your products and infrastructure to the cloud has long been the standard approach, but it’s not the best method anymore. If you opt to go cloud native, you will be using resources more efficiently, thus requiring fewer of them to run your services. This also helps make deployment and maintenance much easier, bringing a double benefit for companies willing to reinvent themselves.
Pick Your Storage Wisely
Similarly, your choice of storage influences both performance and cloud cost optimization. It’s important to pick the right type:
- block storage;
- object storage.
Additionally, you should have automatic management policies that work with unused data. Archiving it away from the cloud or moving it into cheaper storage may not seem like much, but it adds up to pretty solid cloud cost savings over time.
Why Is Controlling Cloud Costs So Complicated?
Controlling cloud costs can be quite complicated due to several factors:
- Complex Pricing Models: Cloud service providers offer a wide array of services with different pricing models. For example, pricing can be based on usage (pay-as-you-go), reserved instances, spot instances, or a combination. These models have varied cost implications, making it difficult to predict and control expenses.
- Dynamic Scaling: One of the main benefits of cloud computing is the ability to scale resources up and down based on demand. While this flexibility is advantageous, it also leads to fluctuating costs that can be hard to track and predict. Mismanagement or over-provisioning can quickly lead to unexpected expenses.
- Multiple Services and Vendors: Organizations often use multiple cloud services and sometimes even multiple cloud vendors (multi-cloud strategy). Each service and vendor has its own billing and pricing structures, making it challenging to get a comprehensive view of overall costs.
- Lack of Visibility: Without proper monitoring and management tools, it can be difficult to see where and how resources are being consumed. This lack of visibility makes it challenging to identify inefficiencies or areas where costs can be optimized.
- Unpredictable Data Transfer Costs: Data transfer between different regions or between different services within the cloud can incur significant costs. These data egress fees can be hard to predict and control, especially if the data flows are not well-understood or monitored.
- Frequent Changes and Updates: Cloud providers frequently update their pricing structures and introduce new services. Keeping up with these changes and understanding their impact on the organization's costs requires continuous attention and can be overwhelming.
- Integration with On-Premises Systems: Many organizations use a hybrid cloud approach, integrating on-premises systems with cloud resources. Managing and optimizing costs in such a hybrid environment adds another layer of complexity, as it requires a clear understanding of both on-premises and cloud cost structures.
- Lack of Cloud Cost Management Expertise: Cloud cost management requires specific skills and expertise, which might not be readily available in all organizations. The learning curve for effective cloud cost management can be steep, and without the right expertise, organizations may struggle to control costs effectively.
Cloud Cost Optimization with JetBase
As we said above, JetBase is no stranger to optimizing cloud expenses. Our decade in the market has given our developers plenty of experience in cloud projects emphasizing optimizing cloud costs.
For example, JetBase’s work on Energex was all about retooling the system with a focus on cloud cost savings. This smart home app was sending way too much data to the cloud, racking up an excessive bill. The team restructured data processing, resulting in thousands of dollars saved for every thousand devices. On a wider scale, this cut the solution's cloud costs in three.
In addition to the cloud cost optimization, JetBase refactored much of the app’s code to facilitate IoT integration. Thanks to that, Energex can integrate with different hotel chains, tailoring its features to a particular client.
There’s a reason we highlighted the importance of automation, reflected by our experience with AdTool. This SaaS project helps manage LinkedIn ads, cut expenses, and control advertising campaigns. However, it needed JetBase’s help to automate campaign processes and establish preset budget limits. It made the app more useful for major advertising while preventing excess spending.
While we could discuss more cases from JetBase’s portfolio, it would take a while to list them all. Instead, we want to stress one more time that cloud spend optimization can benefit any business. It's the best way to cut expenses, boost performance, and ensure a bright future for your company.
To make sure the process is successful, you will need an experienced team that can guide you along or handle the job for you. Thankfully, you don’t need to look far, as JetBase is ready to lend its services. We can consult you on the best practices for cloud cost optimization and help implement them to strengthen your business. If you’re ready to get started, reach out to us now.
