Cloud Cost Management: How to Understand and Reduce Cloud Costs

November 6, 2018 Published in: Cloud Author: Vedran Bozicevic

For enterprises, managing cloud costs has become a huge problem.

Public cloud continues to grow in popularity and top providers, such as Amazon Web Services, Microsoft Azure and Google, offer competitive prices to attract enterprises. But your search to save money shouldn’t stop there. There are many factors — some of which IT teams initially overlook — that can increase a public cloud bill. Fortunately, organizations can avoid any unwanted billing surprises with a smart cloud cost management strategy.

Enterprises progressing through their cloud adoption need to ensure that they have cost management strategies in place to control their spend as they continue to migrate services to cloud providers. In this article we’ll take a look at cloud costs management strategies you can use to reduce your cloud costs immediately.

cloud cost management

The challenges of managing cloud costs

Cloud infrastructure offers many benefits for organizations, but it also presents some challenges. It’s easy to see the benefits (scalability, control, security etc.), but it’s also important to understand how moving to the cloud impacts your organization.

A major problem that contributes to cloud cost management challenges is the difficulty organizations have tracking and forecasting usage. The survey conducted for the SoftwareONE Managing and Understanding On-Premises and Cloud Spend report found that unpredictable budget costs was one of the biggest cloud management pain points for 37% of respondents, while 30% had difficulty with lack of transparency and visibility.

Evaluating costs before migration

Before you move youe infrastructure to the cloud, it is important to evaluate how much the public cloud will cost. Like any IT service, the public cloud can introduce unexpected charges.

The first step of a cloud cost management strategy is to look at the public cloud providers’ billing models. Take note of how much storage, CPU and memory your applications require, and which cloud instances would meet those requirements. Then, estimate how much those applications will cost in the cloud. Compare your estimates to how much it currently costs to run those apps on premises. Some workloads are more cost-effective when in-house due to data location and other factors.

cloud cost management

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Preparing for multi-cloud costs

When using multiple public cloud providers, integration and other factors can lead to unexpected fees. Think ahead and plan application deployments to see where you might incur additional costs. Also, look at your cloud bill and see what you are charged for access, CPU and storage. The ability to track spending across more than one cloud is invaluable.

Selecting the right vendor and avoiding vendor lock-in

Before you commit to a cloud vendor, you have to understand your business requirements, and examine what a certain vendor is offering. At first glance, most vendors have similar packages and prices, but when you examine them in detail, you can discover, for example, that one vendor has dramatically lower price for certain types of workloads.

Organizations should also avoid vendor lock-in. Moving workloads from one cloud vendor to the other can sometimes be difficult. Organizations sometimes end up paying higher prices than necessary because they didn’t do their homework upfront, and it is too difficult to migrate applications or workloads after they are in production.

Key areas where you can cut your cloud costs

To reduce your cloud costs, you must first identify waste by uncovering inefficient use of cloud resources. Cloud cost management is not a once-and-done process, but you can immediately start saving money on your cloud infrastructure costs if you address  key areas that account for the majority of wasted cloud spend and budget overruns.

  • Ensure teams have the direct ability to see what they are spending. It’s easy to get carried away spinning up services, unless you know exactly what you are already spending.
  • Identify what you have, and who owns it. Tag resources with user ownership, cost center information, and created time to give you a better handle from where the spend is coming. This information can be used to track usage through detailed billing reports.
  • Once you have a handle on what your spend is, set budgets per account. Doing this after establishing a baseline ensures that you are setting practical and realistic budgets that are based on the actual usage.
  • Whitelist Instance types (RDS & EC2) to only allow instances of specific types (e.g. t2.medium) or of classes (e.g. t2-*), or of sizes (e.g. *-micro, *-small, *-medium).
  • Prevent staff from provisioning unapproved virtual instances from the marketplace that include software license costs, or from using specific OS or DB engines from vendors with whom you do not have enterprise agreements in place or are too costly to run at scale.
  • Review in which regions you have services running. The cost of services per region can vary as much as 60%. Ensure you are balancing the need with running services in a given region with the cost of doing so.
  • Use instance scheduling to start and stop instances on a planned schedule. Shutting down environments on nights and weekends can help save you 70% of runtime costs. Determine which environments need 24×7 availability, and schedule the rest
  • Manage your storage lifecycle. Ensure that you are rotating logs and snapshots regularly. Also, backup and remove any storage volumes that are no longer in use.
  • Manage Cloudtrail configurations – ensure that you are using one Cloudtrail configuration, and have added additional ones only when absolutely necessary.
  • Review the utilization of Sandbox / Trial accounts – Ensure that sandbox or trial accounts are only utilized for exploration purposes, and for the duration committed.
  • Deploy containers. Another technological solution that can help reduce operating expenses is containers. Often used by IT teams taking DevOps approaches, containers package applications together with all their dependencies, making them easier to deploy, manage and/or migrate from one environment to another.
  • Use a cloud cost management vendor. Many organizations decide that tackling these cost optimization chores on their own takes too much time and skill. Instead, they leverage services from one of the cloud cost management vendors.

Conclusion

Cloud cost management is one of the major pain points various organizations have when migrating to the cloud. Cloud costs can sometimes be difficult to estimate, due to the complexity of the cloud infrastructure. If you have any questions about how we can help you optimize your cloud costs and performance, contact us today to help you out with your performance and security needs.

Vedran Bozicevic

I am a digital marketer with several years of experience with various types of online marketing technologies and channels. Before joining GlobalDots, my experience included working as a content marketing manager for a software development company, and several others marketing positions where I worked on digital marketing strategies and channels.

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