What is Cloud Cost Optimization? 12 Best practices to cut your Cloud bill

1. Optimizing the cost at every stage of the Software Development Lifecycle

Optimizing cost at every stage is the key to reducing the expenses on the cloud. Optimizing cloud costs at every SDLC stage needs system monitoring, data tracking, and continuous assessment throughout the lifecycle. So, you may apply cloud cost optimization at various phases of SDLC.

Planning: Plan the process of software development and, for critical decisions to avoid tech debts, use a data-driven approach. The planning stage involves cost analysis, assessing system requirements, and a framework created for the process of development.

Design and Build: The design process needs data analysis for cloud-based applications. So, you must analyze key data points such as the architecture, what they must be, and how they will impact the app performance. Also, you need to analyze the required cloud computing resources and the app architecture cost.

Deployment and Operation: You need to analyze the ROI and the operational expenses of the product developed at the development stage. Also, you must consider the cost of plan automation and cloud deployment to improve competence.

Monitoring the maintenance and performance costs: The key to ensuring better ROI is monitoring the performance and application costs. So, you need to analyze the app’s performance and behavior to define metrics. It will help you reduce expenses on maintenance costs and error rectification.

2. Conducting performance analysis and implementing continuous monitoring

Switching to pay-as-you-go or dynamic pricing will save money in many cases. You have to utilize the reporting features of a Cloud Service Provider to achieve these savings and conduct an in-depth performance analysis. The CSP data lets you know how well the application has been executing in the cloud, however, measures the experience of the end users. You will have to identify and configure your reporting tools to aim at those performance metrics that mean the maximum of your users. After a proper analysis of the application services, the peaks, resources, and users will display a clear image of whether the application will be profitable in the cloud.

Cloud Service Providers provide cost optimization tools, but the I/O team must have a real understanding of the environment. They must monitor what specs to what servers are being built continually. The reports and tools that you put for analysis form the pillar of continuous monitoring. To control costs and ensure performance, set up automated actions and alerts.

3. Investing in automation

You can take advantage of the auto-scaling as well as other automation services that your CSP provides with the wealth of data captured by your monitoring. You need to ensure that the automation you configure scales up and down. An example of this is the development systems that are used during the workday only. To turn off these systems during weekends or nights, you may set up automation so that you do not pay for the 60% of the time when anybody is not using the systems.

4. Using cloud cost as a system of measurement

When businesses keep cloud costs as a priority, they can build principles of optimizing cloud-based expenses. As a metric, cloud costs need to define key areas where organizations optimize, measure, and monitor costs. Some key areas involved are- Enablement and accountability: This is a foundational pillar to implement cloud costs as the metric culture. It aims at streamlining the financial processes for accelerating business value and accountability. Cloud enablement is a vital metric, and you can measure that in percentage.

Realization and measurement of cloud costs: It involves identifying IT-driven designators, tagging data architecture, and resource hierarchy. This pillar aims at cloud resource attributions via consistent tagging. This enables organizations to identify cloud cost centers. For this pillar, companies can measure cloud allocation in percentage.

Planning and forecasting: Because of the strategic standing of cloud cost optimization, this is a vital pillar of cloud costs. This pillar aims to create a computational budget and plan the resource requirements. So, annually you have to estimate the cloud computing costs. The calculation of annual forecast accuracy involves assessing monthly budget variances, trend-based models for steady-state workloads, and workload forecasting models.

Accelerators and tools: This pillar aims at identifying the accelerators of cloud costs and detailed analytics reports of resource tagging.

5. Identifying the cost irregularities

Identification of cloud costs needs monitoring predefined metrics and tools. Some of the vital cloud cost metrics that you have to focus on include:

Uptime: This metric helps measure the time for which a system is available for serving user requests.

Memory Utilization: This helps the memory used in private, public, and hybrid cloud environments.

CPU Utilization: This helps measure the computed percentage used for processing a user request and completing a specific task.

Disk usage: This metric enables you to track the amount of disk volume used on a node. It helps to determine whether a storage activity is pretty enough for workloads.

Requests per minute: This is the number of user requests a cloud-based app receives each minute.

Latency: This is a difference in time between the request and response. Simply put, this is the time that the user sends a request and a response is received.

Average time to acknowledge: This metric helps measure the time your system needs to respond to a user request.

MTTR (Mean time to repair): This metric helps you to find the time required for a system to restore the services after a failure. For cloud cost optimizations, a shorter MTTR is desirable as it reduces downtime costs.

MTBF (Mean time between failure): This is the average time that an application or a system takes from one failure to another. This helps in determining when cloud computing works before failing.

Top cloud monitoring tools

The tools mentioned below provide data insights and analytics in a visual format. This makes cloud cost optimization quite unique. The tools are:

Harness: This is a platform that has a pre-built cloud cost management module focused on enhancing resource efficiency, governance, and transparency.

Kubecost: This cloud-cost management tool enables users to generate accurate reports to locate cost anomalies by monitoring resource allocation.

CastAI: This is a platform that helps in optimizing, analyzing, and monitoring Kubernetes apps. It enables you to automate cloud optimization through instance selection, rightsizing, and autoscaling of resources.

Cloudchekr: This cloud cost monitoring tool helps to monitor, track, and report the main expenses for your applications. Moreover, it leverages the data recorded for creating policy-based automation.

Cloudability: This is a cloud optimization and monitoring tool that collects key data from the previous 10-30 days on resource usage. Moreover, it leverages algorithms to offer rightsizing recommendations.

6. Rightsizing the resources

The process of rightsizing involves analyzing computing instances, switching off these instances to optimize cloud costs, and identifying idle resources. Moreover, it involves matching the cloud resources with the proper workload and rightsizing the overprovisioned instances. Knowing how to rightsize instances, your savings on the cloud cost will go above 70%. Cloud providers have some pre-built features to rightsize instances and optimize cloud costs.

For instance, AWS provides reserved and spot instances that users can utilize to optimize cloud costs. Spot instances are backup that enables users to utilize the idle EC2 capacity instead of spending too much on on-demand resources. You can rightsize instances and optimize your cloud costs by using reserved resources. AWS offers reserved instances that can be used to reduce cloud costs. To optimize resource provisioning, rightsizing is also important.

7. Reducing excess storage

Storage utilization is the biggest factor that drives the costs in cloud IT up. Business habits and IT culture can push many duplicate data and create redundancies that drive up costs exponentially. Simple adjustments in how data is versioned and copied will need re-educating staff on processes for making it more cost-effective while utilizing cloud storage. For cloud storage infrastructure, pricing models include monthly fees for cost per GB of stored capacity. Cloud storage has to be optimized through various storage tiers in the cloud, with data aging in its lifecycle. Ensure that the provider has transparent pricing that guarantees every factor and rises in cost with the growth of usage.

8. Identifying overprovisioning

The enhanced monitoring put in place for leveraging vibrant pricing will categorize where you have been overprovisioning funds. This is true, especially when you have migrated applications from keen physical servers in the cloud to virtual servers. The average physical server that supports one app is underutilized in the data center. The extensive adoption of server visualization determines this. Also, you may see improvements in the speed of the CPU, the data bus, and the memory speed in your cloud environment.

9. Optimizing resource provisioning

Resource provisioning needs analysis of the system. To create a resource requirement plan, you need to analyze the workloads. For optimized provisioning, you need to ask a few questions, such as how much it can cost to make a feature; for feature allocation, what is the extent of resource allocation; the type of resources it will need; how much is the usage of cloud storage is required to acquire a new customer; what will product or service development cost be on the cloud, the type of products or services do customer seek; the cost of operations number of resources required to keep the operational downtime lower; the type of workload required that you may need to and deploy provision, the cost of migrating a system to a cloud environment, and the cost of deploying the application on the cloud.

10. Leveraging a hybrid strategy

Vendor lock-in might be a challenge to your cloud cost optimization. While using a single cloud provider for all resource needs, there are chances that you might face specific restrictions. Like, some cloud service providers offer services not compatible with external services. Cloud costs that surge because of changes in pricing are another significant issue. Cloud cost increase because of dependency on a single vendor and interoperability issues. So, leveraging a hybrid cloud strategy is the best way. A hybrid cloud strategy is where organizations leverage several environments to run apps.

11. Simplifying cloud contracts

The key to reducing costs is simplifying cloud contracts, as there are various hidden expenses and clauses that can go unnoticed. Cloud contracts require proper breakdowns and assessments by consultants to avoid overhead costs. Some essential things to be considered while signing a cloud contract. This includes analyzing the cloud cost breakdown; researching the contractor for any add-ons, capacity information, and hidden expenses; understanding the migration policies and data ownership clauses; ensuring security measures in the contract; and looking for service-based clauses and SLA availability.

12. Paying attention to software licenses

Often software licenses are limited to use in particular environments. This means that if you are using licenses currently that were bought for your on-premise infrastructure, you cannot use the same licenses in the cloud. It requires creating an inventory of licenses, gain insight into the insights, and determine appropriate licenses per your budget. There are cases where you can reduce the cost of licensing by leveraging a cloud service such as Azure Hybrid Benefit. Helping you bring your own license to the cloud helps you save costs.