Understanding Cloud Cost Optimisation

Today, organisations face a multitude of challenges while navigating the digital landscape. These include managing technology costs, grappling with a rapidly evolving cyber security ecosystem, and ensuring scalability and flexibility to be able to adapt to changing circumstances and workloads.

Recent years have seen cloud computing assist businesses in overcoming digital challenges like these; after all, the public cloud offers the agility, scalability, and cost-efficiency necessary to grow and adapt to market demands quickly.

However, in order to continue benefiting from the advantages the public cloud has to offer, it’s also essential that organisations don’t become complacent. Simply having cloud technology in place is not enough, instead, it’s important that organisations continue to identify and reduce inefficiencies in cloud resource usage, maintain performance and availability in the cloud, and make adjustments to ensure that the business only pays for cloud resources it needs. This in-depth and comprehensive process is called cloud cost optimisation.

In short, cloud cost optimisation is designed to help organisations enhance their cloud computing operations across multiple dimensions. For example, as well as efficiently managing and reducing expenses, this service also focuses on:

• Improving operational efficiency 
• Enhancing performance and reliability 
• Optimising resource allocation 
• Increasing scalability and flexibility 
• Strengthening security measures 
• Providing a clear view of cloud usage and spending trends

Why do organisations struggle with managing cloud costs?

Due to the dynamic nature of cloud usage (combined with the need for specialised expertise/experience and effective tools in order to manage costs properly), organisations can sometimes struggle to manage their cloud spend. Some businesses even finding their cloud costs spiralling, impacting both the financial health and operational efficiency of the business. This can occur for several reasons, including:

Complex pricing models It’s true that public cloud providers often have complex and variable pricing models that can be difficult to understand and predict. For example, charges may vary based on usage, data transfer, and different service tiers and inexperienced users may be unaware about hidden costs associated with data transfers, API calls, and storage, leading to unexpected spending.

Lack of visibility Without proper monitoring and reporting tools, organisations may struggle to track and understand their cloud resource usage and the associated costs. Additionally, costs can be fragmented, spread across multiple services, accounts, and departments, making it hard to get a consolidated view of overall spending.

Over provisioning In attempting to remain flexible and avoid performance issues, organisations often find themselves allocating more resources than necessary to the cloud (not to mention, initial default configurations often lead to over provisioned resources that may not be adjusted as usage patterns change) leading to wasted resources.

Lack of optimisation Perhaps it goes without saying that inefficient resource allocation, undertaken without regular reviews and optimisation strategies, can lead organisations to use sub-optimal or outdated resources. Furthermore, less experienced users may not know how to take full advantage of reserved instances, savings plans, or other cost-saving options offered by cloud providers.

Evolving needs By their nature, cloud environments are highly dynamic. However, this can mean that organisations struggle to match resource allocation with varying demand, leading to either overuse or underuse of resources. Additionally, as businesses grow, their needs can change at a rapid pace, and it can be challenging to continuously adjust and manage cloud resources effectively.

Poor governance Without clear policies and governance around cloud usage, departments and teams may use resources without considering cost implications. In larger organisations with more decentralised management structures, e.g., cloud usage can differ hugely between different teams or departments, leading to inefficiencies and duplicated efforts.

Inadequate monitoring and reporting Sadly, not all cloud cost management tools are created equal, and they don’t all provide comprehensive insights into usage and spending. Businesses using the wrong monitoring tools for their needs may struggle with insufficient data or reporting capabilities. Indeed, even with access to great monitoring tools, interpreting and acting on the data can be complex without the right expertise.

Complex multi-cloud environments It’s also worth noting that large organisations using multiple cloud providers may face challenges in tracking and managing costs across different platforms with varying pricing models and billing structures.

Using a cloud cost optimisation service 

Managing cloud costs effectively requires specialised cloud optimisation knowledge and skills and, since many organisations don’t have (or can’t afford full-time) this expertise in-house, utilising a cloud cost optimisation service can be a very sensible choice – especially when it comes to keeping up with the rapidly changing nature of cloud technologies.

Cloud cost optimisation helps businesses control and reduce their cloud expenses, increase efficiency, and ensure they get the most value from their cloud investments without compromising performance or scalability.

To this end, key aspects of a cloud cost optimisation service include:

Right-sizing resources

Cloud professionals will regularly review your cloud resource usage and performance metrics to ensure you are using the right-sized instances or services for your workloads. They will adjust (scale up or down/change) instance types based on current needs to avoid over provisioning.

Implementing autoscaling

Dynamic scaling makes use of automation to adjust the number of instances or resources based on the demand of your organisation. This ensures you only use and pay for the resources needed at any given time. Additionally, thresholds may be set using autoscaling and configured according to spending/usage rules to balance cost and performance effectively.

Leveraging reserved instances and savings plans

Organisations can discuss options with their service provider to buy reserved instances for predictable workloads that will take advantage of discounted rates compared to on-demand pricing. It’s also useful to talk to those in the know about exploring any savings plans offered by public cloud providers across different instance types and regions.

Optimising storage costs

Cloud experts can help organisations optimise cloud storage using several strategies, including selecting the right storage tiers, implementing data lifecycle management, and using tools to monitor and analyse storage usage. Your service provider will also be able to leverage data compression, de-duplication, and efficient access management, to help reduce storage expenses (along with regular audits, negotiation with providers, and educating teams about cost-efficient practices).

Utilising cloud cost management tools

Utilising cloud cost management tools is crucial for effectively managing and optimising cloud expenses. These tools help businesses monitor, analyse, and control their cloud spending to track usage, set budgets, and receive alerts for unexpected spending.

Optimising networking costs

Your service provider can help review data transfer costs; this includes optimising data transfer between cloud services and regions to minimise costs and using content delivery networks (CDNs) to reduce the load and costs associated with data transfer. By working closely with your service provider to implement these strategies, you can effectively optimise your data transfer costs, leading to significant savings in your overall cloud expenditure while maintaining or even improving your application’s performance and reliability.

Enabling cost efficiency features

In collaboration with you and the way your organisations prefer to work, your service provider can utilise spot instances (AWS) or preemptible VMs (Google Cloud) for non-critical or batch processing workloads to benefit from significant cost savings. It might also be helpful to schedule instances to run only during necessary periods (e.g., business hours) and shut them down outside of those times to save on costs.

Final word

Effective cloud cost optimisation involves a combination of strategies such as right-sizing resources, implementing autoscaling, leveraging reserved instances, optimising storage and networking costs, and using specialised cloud cost management tools. By adopting these practices, businesses can better manage their cloud expenditures and ensure they are only paying for what they need while still maintaining the performance and scalability cloud technology offers.

If you would like to speak to our approachable and knowledgeable cloud experts about utilising Littlefish’s cloud cost optimisation service, please get in touch using the button on this page.