Cloud computing is becoming a popular choice for businesses of all sizes. Cloud adoption allows businesses to access the latest technology without making a large upfront investment, and it gives them the ability to scale their operations quickly and easily.
Globally, the cloud computing market is set to surpass $1 trillion by 2028. – Precedence Research. Another research by O’Reilley highlights that more than 90% of organizations use the cloud. About two-thirds of respondents currently operate in a public cloud and 45% use a private cloud — versus 55% who still rely on traditionally managed on-premises systems.
Not only enterprises, but over 47% of SMEs’ technology budget will also go to cloud spending in 2023 as per a study.
However, as organizations move towards cloud computing, one of the major challenges faced by them is managing cloud costs. As per a study, 42% of CIOs and CTOs consider cloud waste the top challenge in cloud adoption. While 7 out of 10 companies aren’t sure what they spend their cloud budget on.
So, how to reduce cloud costs?
When migrating to the cloud, organizations should also focus on cloud cost optimization to get their cloud strategy right, apart from strategy planning and creating a roadmap. Cloud cost optimization is the process of reducing cloud costs while maintaining or improving cloud performance. It aims to minimize cloud spending while maximizing cloud value. To optimize cloud costs, you need to understand your cloud usage, identify ways to reduce cloud spending and automate processes.
When combined with other cloud costs reducing exercises, it helps organizations save money on their cloud journey while ensuring that they get the most out of their investment in the cloud. Below we will discuss top cloud cost optimization best practices and ways to reduce your cloud bill.
7 ways to reduce your cloud bill
1. Set a budget
When migrating to the cloud, it is important to set pre-defined budgets. It should not be just any arbitrary number – rather a strategically calculated number that defines the project’s objectives, resource requirements, hidden costs, etc. By setting a cloud budget, you will be able to reduce cloud waste and redundancies, while bringing down the TCO (Total cost of ownership).
Your cloud hosting provider here might play a key role. Based on an analysis of your business or project requirements, your hosting provider should provide you with an accurate quote. Also, don’t forget to enquire about monthly spending and future estimated costs based on the various cloud services you choose or the pricing model you opt for.
2. Plan Capacity
Another way to reduce your cloud bill is to perform cloud capacity planning.
Cloud capacity planning is aimed at matching demand with available resources. It starts by first analyzing the available systems, measuring their performance, and then predicting demand. Based on the result, you can allocate cloud resources for a particular project. This involves studying components like load balancers, server infrastructure, processors, memory, storage, networks, etc.
You must analyze how many resources a particular demand can consume and set quotas accordingly. You should know that even if you can scale your cloud resources as and when required, you might end up paying for unused capacity. You should also ensure that your cloud resources can handle sudden spikes in traffic. You can save money by ‘right-sizing’ the cloud instances. Explore auto-scaling features available in cloud services offered by hyperscalers like AWS (Amazon Web Services).
3. Consider Reserved Instances
Reserved Instances (RI) in cloud computing refers to a discount billing concept. Here, you can obtain significant discounts from the cloud provider on prepaid Reserved Instances for a commitment of a specific level of usage for a specific time.
For example, you can book a RI for a 1- or 3-year commitment period. The discount benefits can reach up to 75% with some providers as compared to on-demand cloud computing prices.
The important thing to note here is that you must book an instance based on your historic spending or usage pattern.
In AWS for example, RIs are available in 3 options – All up-front (AURI), partial up-front (PURI), or no upfront payments (NURI). You can avail up to 75% discounts.
4. Set limits on data transfer fees
When you use a combination of on-premises and cloud computing solutions, you might want to transfer on-premises data to the cloud or from a public cloud. This involves data transfer fees.
Cloud providers typically charge an egress fee to move data between regions or platforms. This can significantly up your cloud bill if not monitored frequently.
To set limits on data transfer fees, you must start by identifying applications that are frequently using cloud data or that communicate with a cloud resource regularly. You can move such applications completely to the cloud to avoid any data transfer requirements.
You must ask your cloud provider about their data transfer fees and even compare it with other providers. Hyperscalers like AWS and Azure provide dedicated network connection services like AWS Direct Connect, Google Cloud Interconnect, and ExpressRoute to help with data transfers.
5. Use cloud cost management tools
Cloud bills are quite lengthy and understanding where exactly your money is going amidst texts and tables can be challenging. As per a study by CloudZero, more than half of the organizations believe that their cloud bill is too high.
Using a cloud cost management or monitoring tool is a great way to get control over your cloud costs and bring your bill down.
A robust cloud cost management tool will help you improve your cloud forecasting, planning, and budgeting. It gives you better visibility into your cloud spending and discovers areas that could use some rearchitecting for increased profitability.
Many platforms will go a step further and allow you to allocate sufficient resources to the right use cases, deployment projects, and instance types. Some popular cloud cost management platforms include names like Amazon CloudWatch, Azure Cost Management + Billing, CloudHealth, and more.
6. Optimize cloud costs at each stage
Cloud cost optimization should be a part of your overall cloud deployment or migration strategy. While you can reduce spending to bring the cloud costs down – ensuring that each business process is optimized to reduce cloud waste, is another great strategy to have control over costs. A survey by StormForge of 131 IT professionals shows cloud waste could be as high as 47% of a cloud budget. Hence, it is important to follow cost optimization techniques to reduce this waste.
For example, when you are using the cloud to build and launch a software product, it is important to implement cost optimization throughout the software-development lifecycle. This starts from the planning stage – where you set budgets and product roadmap and includes all other stages like designing, building, deployment, and launch. It is not a one-time process; you need to continuously monitor to ensure that all resources are optimized and there is a positive ROI.
You can also consider using Serverless computing. It offers auto-scaling and dynamic deployment to give optimum resource utilization. Horizontal and Vertical autoscaling are also great ways to allow applications to run at optimum levels and reduce resource wastage.
7. Explore the right cloud storage and optimize it
Cloud storage is an integral part of your overall cloud utilization or spending pattern.
A common mistake many organizations make is picking cloud storage without putting much thought into it. You should select cloud storage based on your usage patterns. This prevents overspending. In AWS, you get S3 Intelligent tiering feature that automatically tracks your usage patterns and thus, can help you select the best storage tier.
Reducing your monthly cloud bill doesn’t have to be a daunting task. With a little bit of optimization and the right tools, you can easily save money on your cloud infrastructure. What tips do you have for keeping your cloud bills low? Let me know your thoughts in the comments section below.
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