Optimizing Cloud Spend: Tips on Cloud Cost Savings

Categories: Cloud Cost Optimization
Date: June 4, 2023

Optimizing cloud spend is critical to managing IT budgets, and businesses can save considerable amounts by implementing efficient strategies. In this blog, we’ll explore different techniques to help you optimize your cloud computing costs and ensure your cloud infrastructure remains lean and cost-effective.

Understanding Your Cloud Costs

By understanding and tracking these various components of cloud costs, businesses can better manage their cloud spend and optimize cloud spend for more significant cost savings.

Compute Costs

This includes expenses related to virtual machines, containers, and other computing resources. Typically, compute costs are calculated based on hourly usage, and the price varies based on the computing instance’s specifications.

Storage Costs

Storing data in the cloud comes with a cost. The primary factors determining storage costs include the amount of data stored and the type of storage used (such as object storage, block storage, or cold storage).

Network Costs

Cloud providers often charge for data transfer in and out of the cloud infrastructure. The cost varies based on the volume of data transferred, the distance between the data center and the client, and the peak traffic hours.

Data Processing

Some cloud services provide data processing capabilities, which come with an additional cost. Data processing costs vary based on the nature and volume of the data processed.

Support Costs

Cloud providers typically charge for technical support and services. The price may vary based on factors such as the level of support required and the number of technical issues reported.

Monitoring the above cloud costs helps businesses control costs, plan and allocate resources, continuously optimize their cloud infrastructure, and optimize cloud spending for greater efficiency and cost savings.

Cost Control

Regular monitoring of cloud costs is essential for effective cost control. Businesses can quickly identify unexpected spikes in cloud bills and take corrective action by monitoring expenditures.

Budget Planning

Monitoring cloud bills also help companies to forecast future costs and create more accurate budget plans for IT infrastructure. By understanding the components of cloud bills, businesses can anticipate expenses and set more achievable goals.

Resource Allocation

By understanding cloud costs, companies can optimize resource allocation to ensure they are paying enough for underutilized infrastructure. This understanding allows businesses to make better capacity planning and resource allocation decisions.

Continuous Optimization

Finally, monitoring cloud costs is crucial for constant optimization. By regularly analyzing cloud usage patterns and monitoring costs, businesses can identify areas where optimization can be implemented and cost savings can be made.

Tracking and analyzing cloud costs

Here are some useful tools that can help:

Cloud Cost Management Tools

Many cloud providers offer tools that allow businesses to track and analyze their cloud costs. For example, Amazon Web Services (AWS) gives AWS Budgets and Cost Explorer tools, while Microsoft Azure provides Azure Cost Management + Billing.

Third-Party Cost Management Tools

For cloud management, cost analysis, and optimization, you can use third-party tools like CloudCheckr, CloudHealth, and ParkMyCloud. These tools automatically analyze your cloud infrastructure and provide real-time insights, cost savings recommendations, and alerts.

Open-Source Monitoring Tools

Open-source tools like Nagios, Zabbix, and Prometheus are also helpful for monitoring cloud infrastructure and managing costs. These tools can capture cloud resource utilization data and provide valuable insights for optimizing cloud costs.

Custom-Built Solutions

Some businesses develop custom-built solutions for cloud cost management. These solutions generally involve integrating cloud usage data within existing IT management systems, custom-built dashboards, and reports that provide real-time feedback on cloud costs.

By utilizing these tools, businesses can promptly identify any increase in cloud spend to take swift measures to mitigate the unwanted escalation of cloud bills.

Pros and Cons of different strategies for optimizing cloud costs

Purchasing reserved instances

Pros:

- Can save up to 75% on cloud computing costs compared to On-Demand instances.
- Provides price stability for applications that have predictable workloads.
- Companies can apply reserved instances that run 24/7, providing consistent savings.

Cons:

- Investments in reserved instances are locked for a specified period.
- Not ideal for applications with unpredictable workloads.
- There may be more cost-effective options for applications that require frequent scaling.

Implementing auto-scaling

Pros:

Automatically scale up or down resources based on demand, saving cost purposes.
Ensures that the company infrastructure is adequately utilized, optimizing the cost accordingly.
It helps improve application performance by providing resources that are available as needed.

Cons:

It requires significant time and investment to set up and manage effectively.
More than adequately configured auto-scaling techniques can lead to over-provisioning and wasted cost expenditure.
Applications that encounter infrequent usage may not see the expected cost savings connected with this strategy.

Leveraging spot instances

Pros:

Spot instances can offer significant cost savings compared to regular On-Demand instances, up to 90% lower in some cases.
Especially useful for non-mission-critical workloads that can be interrupted.
Spot instances provide a way to temporarily increase capacity without paying for pricey On-Demand models.

Cons:

Spot instances can be paused or terminated at any time with a two-minute warning and are not ideally suited for running mission-critical workloads.
During periods of high demand, the price of spot instances may increase abruptly, resulting in unpredictable costs.
Spot instances are sporadic and only sometimes available when needed.

Using serverless computing

Pros:

Serverless computing allows businesses to pay only for what they use, making it one of the most cost-effective strategies.
Serverless computing eliminates the need for server maintenance and overhead costs.
Serverless computing solutions like AWS Lambda are performed to optimize cost and provide automatic scaling.

Cons:

Serverless computing may face high latency issues, affecting application performance.
Switching to serverless computing may be complicated for businesses already invested in server infrastructure.
Serverless computing may not be suitable for applications that need long-term sustained computing resources, for example, applications that run 24/7.

Each cost-saving strategy has its benefits and drawbacks, and the most effective cloud optimization approach will depend on a company’s unique needs and circumstances. Therefore, it’s essential to weigh the pros and cons of each method before implementing it, making sure that it meets your organization’s particular requirements.

We encourage readers to implement the cost-saving strategies outlined in this blog. Whether you decide to focus on purchasing reserved instances, implementing auto-scaling, leveraging spot instances, or serverless computing, it’s critical to understand how each strategy corresponds to your specific business requirements. Therefore, test different optimization techniques and track the outcome to determine the most cost-effective approach for your business.

Would you like to unpack how we can help manage your cloud spending and optimize for more significant cost savings? Schedule a complimentary call with an Oak Rocket cloud cost expert.