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The bad news though is that a fair portion of these billions is wasted money! Yes, many organizations are spending way more than they actually should because of inefficient utilization of the cloud resources.
How can organizations optimize cloud resources to bring the costs down? Have a look at the best practices both in the short and long term.
Cloud cost optimization best practices
Cloud cost optimization is the process of minimizing expenses and maximizing the efficiency of cloud resources.
The means to achieving this optimization takes a combination of practices, and these are the key ones that leading organizations have implemented to great success:
1. Identify and eliminate unused resources
Are there instances, storage, or other cloud services that are no longer in use or needed?
Unused resources, such as idle virtual machines, unattached storage volumes, or abandoned databases, can incur ongoing costs that add up over time.
So the trick is to actively identify and remove these unused resources.
In addition to cost savings, eliminating unused resources enhances your cloud environment’s security. It reduces the attack surface and minimizes potential vulnerabilities that could exist in unmonitored and forgotten assets.
This initiative not only benefits your business financially but also contributes to reducing your environmental impact. Unused cloud resources consume resources like electricity, resulting in unnecessary carbon emissions. By taking action and removing these resources, you demonstrate your commitment to environmental responsibility.
To identify unused resources effectively, you can utilize tools and services provided by your cloud service provider or consider employing third-party cloud management and optimization platforms. These tools will scan your cloud environment, detect inactive or underutilized resources, and provide recommendations for their removal or optimization.
2. Make use of spot instances
This is all about utilizing the cloud provider’s temporary, discounted computing resources whenever available for non-critical workloads.
Spot instances are virtual machines offered by cloud service providers at significantly lower prices than on-demand instances. The pricing model is based on the concept of “spot pricing,” where the cost fluctuates depending on the supply and demand of spare compute capacity in the cloud data centers. This makes spot instances a highly cost-effective choice for various workloads and applications, especially those that are fault-tolerant and can handle interruptions.
This cost-saving advantage is particularly appealing for businesses with fluctuating workloads, batch processing tasks, or non-critical applications that can tolerate potential interruptions without adverse consequences.
However, it’s essential to understand that spot instances come with a unique characteristic: they can be terminated with little notice if the cloud provider needs to reclaim the resources for on-demand or reserved instances. Thus, not all applications or workloads are suitable for spot instance usage. Mission-critical applications with strict uptime requirements or data-intensive workloads that can’t afford interruptions may not be the best fit for spot instances.
To make the most of spot instances while mitigating the risk of interruptions, consider implementing strategies like fault-tolerant architectures and auto-scaling. Fault-tolerant designs distribute workloads across multiple instances, so if one spot instance is terminated, the system can seamlessly continue on other running instances. Auto-scaling allows the system to adjust the number of spot instances based on demand, ensuring that sufficient capacity is available when needed.
3. Use heatmaps to see things clearly
In this context, heatmaps are visual representations that use color-coded intensity to display cloud resource usage and associated costs.
They offer an intuitive way to identify areas of high utilization and expenses, enabling you to make informed decisions to optimize your cloud spending.
To implement heatmaps effectively, start by collecting data on your cloud resource usage and costs from your cloud service provider. This data includes information about instances, databases, storage, and other services, along with their associated costs.
Next, utilize specialized cloud management tools or third-party services that offer heatmap capabilities. These tools will analyze the collected data and present it visually through color-coded heatmaps. High utilization will be represented by warmer colors (e.g., red or orange), while cooler colors (e.g., blue or green) indicate lower usage.
By examining the heatmap, you can quickly identify resources that are underutilized or experiencing excessive costs. This insight allows you to prioritize areas for optimization and cost-saving efforts.
Heatmaps can also help you track trends and identify usage patterns over time. This historical view enables you to make proactive adjustments to your cloud infrastructure based on seasonal or fluctuating demand, further optimizing your cloud costs.
4. Watch out for shadow IT
Shadow IT is the use of IT resources by employees or end users without the IT department’s approval or oversight.
Shadow IT can contribute to increasing cloud costs in a number of ways:
- Duplicate services: Employees may be using multiple cloud services to do the same thing, which can lead to duplicate costs. For example, an employee might use a cloud-based CRM system for sales and a cloud-based project management system for tracking projects. If these two systems are not integrated, the organization is essentially paying for two different systems to do the same thing.
- Overprovisioning: Employees may be provisioning more cloud resources than they need. This can lead to increased costs, as the organization is paying for resources that are not being used. For example, an employee might provision a large amount of cloud storage for a project that only needs a small amount of storage.
- Unexpected costs: The IT department may not have visibility into the cloud costs that are being incurred by shadow IT. This can lead to unexpected costs.
To mitigate the risks of shadow IT and reduce cloud costs, employees should be trained on the risks of shadow IT and the policies that govern the use of tools not sanctioned by the IT department.
5. Avoid unnecessary data transfers
Be mindful of moving data between different cloud services or regions unless it is essential for business operations. Data transfers incur additional costs, and if you don’t manage them efficiently, they’ll cost you a fortune.
In cases where you must transfer data, use approaches such as data compression and deduplication techniques. Compressing data before transferring it between services can reduce the amount of data transmitted and save costs. Deduplication ensures that redundant data is removed, further minimizing the data that needs to be transferred.
More best practices include for cloud resource optimization include:
- Think carefully around single cloud vs. multi-cloud: Decide on using one cloud provider or multiple providers based on cost and performance considerations. It’s advisable to tend more towards single cloud.
- Build loyalty, then use it to negotiate favorable terms: Establish a strong relationship with the cloud provider to potentially get better pricing or deals.
- Take feedback from users within and outside the organization: Listen to feedback to identify cost-saving opportunities.Users, especially employees, are likely to have first-hand insights that can help you cut down on costs.
- Build optimization into the SDLC: Incorporate cost optimization considerations into your software development lifecycle.
- Make use of cloud optimization services: There are a number of platforms that offer cloud cost optimization tools. Examples include CloudZero, Amazon CloudWatch, Densify, and Flexera.
Long term strategies for cloud infrastructure optimization
While most of what we have discussed above are fairly short-term strategies for cloud cost optimization, it’s essential to complement them with well-thought-out long-term approaches.
The following long term strategies can yield sustained cost benefits.
1. Choose the right provider
It’s essential to thoroughly evaluate the offerings of different providers and match them to your company’s specific long term goals.
Consider factors such as the scale of your operations, the types of services you require, and the level of technical support you need. Additionally, evaluate the provider’s data center locations to ensure they have regions near your target audience to minimize latency.
Keep in mind that migrating between cloud providers can be complex and costly. So investing time upfront to select the right one will pay off in the long run.
2. Choose services wisely
The common cloud services include Infrastructure as a Service (IaaS), Platform as a Service (PaaS), and Software as a Service (SaaS). Each service type has different cost implications and levels of management overhead.
As a decision maker, it’s vital to analyze your business needs and workflows carefully. For example, if you require full control over the infrastructure and want to manage applications and databases on your own, IaaS might be the best fit. On the other hand, if you want to focus on developing applications without worrying about infrastructure management, PaaS might be a more cost-efficient choice.
3. Forecast future needs
Accurate forecasting allows you to scale your cloud resources efficiently. This ensures that you have the right amount of resources available when needed.
This proactive approach prevents overprovisioning, which can lead to unnecessary expenses. It also helps to avoid underprovisioning, which might result in performance issues or service disruptions, which can be costly in itself.
4. Go for long term pricing plans
Cloud providers often offer discounted rates for committing to longer contracts, such as one- or three-year terms. This strategy is suitable for workloads with relatively predictable and stable resource requirements.
To implement this strategy, assess your cloud usage and identify workloads or applications that exhibit consistent resource needs. Evaluate the potential cost savings by comparing the on-demand pricing with the long-term commitment prices.
Be cautious about committing to extended contracts for all workloads, as this might limit your flexibility to take advantage of newer and more cost-effective services that could become available in the future.
Strike a balance between long-term commitments for stable workloads and keeping some flexibility for dynamic applications.
5. Go on-premise where it makes sense
Not all workloads and applications are best suited for the cloud. In some cases, running certain services on-premises may be more cost-effective and practical in the long term.
If you have workloads with consistent and predictable resource needs, and the costs of maintaining on-premises infrastructure are lower than cloud expenses, consider keeping them in your data centers.
The cumulative cost savings of cloud optimization can be huge. For example, if you can optimize and save just $10,000 per month on your cloud costs, that’s $120,000 per year. Over the course of five years, that’s already $600,000.
Of course, the specific cost savings will vary depending on the organization’s cloud environment. However, the potential savings are significant.
Finally, promote optimal use of all the cloud services you pay for. You want to gain maximum benefit from your investment in the cloud. The more you gain, the more the costs are justified.