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7 Actionable Tips for Saving Money in the Cloud

Here are seven strategies that businesses should consider adopting to reduce their cloud spending.

The ability to save money often features on lists of reasons to move workloads to the cloud. The thing is, though, that the public cloud doesn't automatically deliver cost savings. On the contrary, poorly configured workloads can end up costing much more in the cloud than they would on-prem — so much so that 32 cents of every dollar businesses spend in the cloud is wasted, according to Flexera.

That's why taking deliberate steps to optimize your cloud workloads for cost is essential if you want to get as much value out of the cloud as possible. This article explains how to do that by discussing seven actionable cloud cost savings tips.

The Need for Cloud Cost Optimization

Before diving into cloud cost savings and management practices, let's talk about why having a cloud cost optimization strategy in place is so important.

The main reason is that cloud infrastructure and services can be quite costly, and public cloud providers certainly don't go out of their way to tell you when you're overspending. As a result, cloud workloads that are not optimized from a cost perspective may end up consuming many more resources than they need, leading to bloated bills.

Complicating matters is the fact that cloud pricing schedules tend to be very complex — so simply figuring out where you're overspending can be deeply challenging. Here again, cloud providers aren't very helpful because they typically only tell you your total bill, not whether you could achieve similar levels of performance while reducing costs if you made some changes to your cloud infrastructure or configuration.

7 Ways to Cut Cloud Costs

The good news is that there are a number of effective strategies that businesses can adopt to reduce cloud spending.

1. Invest in granular cost reporting and visibility

Again, the cloud providers offer tools (like AWS Cost Explorer and Azure Cost Management) that let you track your total cloud costs. But on their own, these tools don't deliver a deep level of visibility or granularity. They can tell you your total bill and how it varies from month to month, but not where you're overspending.

To achieve more actionable insight into spending, consider adopting third-party cost management tools (such as CloudHealth, Cloudability, and CloudCheckr, to name a few) that provide more granular spending visibility. These solutions also often offer suggestions on how to reduce spending.

In addition, tagging cloud resources comprehensively can increase spending visibility by making it easier to map spending onto specific workloads and infrastructure.

2. Allocate costs and budgets

In addition to tracking spending in a granular, workload-by-workload way, you should also be able to map spending onto different parts of your business. That way, you can determine how much each department or function is spending, for example, and compare actual spending to the allocated budget. You can also forecast spending and set future cloud budgets more accurately.

3. Right-size cloud resources

When deploying a cloud workload for the first time, it can be tough to predict exactly how many resources it will require. As a result, you may end up choosing a cloud server instance type that has more CPU and memory than you'll actually need, for example — which leads to wasted money because you are paying for unnecessary resources.

This is where rightsizing comes in. Rightsizing means reconfiguring cloud resources or workloads such that they receive the resource allocations they need to meet performance goals but are not overprovisioned. By continuously monitoring how many resources your workloads actually consume and comparing those numbers to allocations, you can rightsize as needed to achieve a better balance between cost and performance.

4. Implement governance policies

Governance policies, which define rules about how cloud workloads should be deployed and configured, are another way to get ahead of overspending. For example, you can set budget limits and require that workloads be tagged with certain labels to make it easier to monitor what they cost.

A common challenge with governance rules is that they are not always easy to enforce. But even if your team doesn't always follow governance mandates perfectly, establishing policies helps provide a foundation for healthy cloud spending.

5. Optimize cloud storage costs

All of the major public clouds offer a range of different types of storage services (such as object, block, and file storage), as well as different storage "tiers." Each tier offers a certain level of performance at a given price point.

Depending on what kind of data you're storing and what you're doing with it, one type of cloud storage may prove to be much more cost-effective than another. For instance, archival data that you need to retain for compliance purposes is a great candidate for "cold" object storage, which is very inexpensive but where data needs to be "thawed" before you access it (a process that can take up to about a day).

6. Negotiate cloud contracts and pricing

Buying cloud services is a little like buying a car: You often don't need to pay the sticker price. You can negotiate it down, especially if you're a large business that will be consuming major volumes of cloud services, and if you're willing to commit to using cloud services for a set period of time (such as three years).

The cloud providers can always say no if you ask for pricing discounts, of course. But it never hurts to ask for a deal — and often, doing so is a very effective way to cut cloud spending because it reduces your costs across the board, without the hassle and complexity of having to reconfigure any cloud resources.

7. Consider moving from IaaS to PaaS

In many cases, public cloud vendors offer PaaS versions of their core IaaS services. For example, while you can deploy workloads on cloud servers that you manage yourself using a service like Amazon EC2, you could also use AWS Lambda, which lets you run server-based applications without having to manage the servers.

In general, the direct cost of PaaS is higher than IaaS. But your total cost could end up being lower if PaaS saves your staff time, allowing you to do more without having to hire more engineers.

In addition, PaaS may allow you to consume infrastructure more efficiently, which also lowers costs. For instance, if you use Lambda, you typically pay only for when your workloads are active, whereas with EC2, you pay for the total duration that your servers are running, even if the applications they host are sitting idle for part of that time. This can make Lambda the more cost-effective choice for workloads that run sporadically.

Conclusion: Tailor Cloud Cost Management to Your Business

All of the tips I've described above have the potential to help businesses save money in the cloud. But ultimately, there's no one-size-fits-all strategy, or "one dumb trick," that you can use to cut your cloud costs. Instead, you need to consider your business's unique needs and resources.

If your cloud usage is large enough to enable you to negotiate cloud pricing discounts, for example, you'll certainly want to leverage that capability, but not every organization has that luxury. Likewise, PaaS can be a great way to save money for IT departments that are already overstretched, but IaaS may be a better option if your team has the time and skills necessary to administer self-managed workloads running on standard IaaS.

The bottom line: Saving money in the cloud is critical for all businesses, but each business should approach cloud cost optimization in a unique way.

Scott Wheeler is Cloud Practice Lead at Asperitas.

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