Whether you’ve been operating on the cloud for a few months or years, it’s sometimes challenging to gain visibility into the drivers of your cloud spend. This can cause your costs to spiral out of control – counterintuitive, isn't it?

Seventy percent of cloud costs are estimated to be wasted. Instead of seeing the cost savings from the cloud, you may find the costs accelerating. While this may indicate growth, without proper visibility, you can’t know how much and why your costs increase and what you can do to optimize them.

What is cloud cost optimization?

Cloud cost optimization refers to the process of reducing or rightsizing your overall cloud spending with some common strategies. These include:

  • Identifying mismanaged resources 
  • Eliminating unnecessary waste or processes
  • Rightsizing your computing services

Let’s take a closer look at these strategies and steps to help you optimize your cloud costs.

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5 ways to optimize your cloud costs

Optimizing cloud costs is the need of the hour for many businesses struggling with burdening cloud expenditures. Below are five best practices that can help you reduce your cloud costs.

1. Autoscale to reduce costs

Autoscaling monitors your applications and automatically adjusts your server capacity to maintain steady performance at the lowest possible cost. It also saves time and manpower by eliminating the need to manually respond to traffic spikes in real-time. Instead, it automatically activates the required resources and instances by changing the number of active servers.

An example of autoscaling to save costs is managing apps during busier and slower periods by allowing the server to automatically adjust to demand.

2. Identifying mismanaged resources

Mismanaged resources are unused or unattached resources you pay for. All environments are prone to unused resources, such as unattached storage volumes and idle load balancers and instances. 

It’s easy to spin up new instances for cloud resources. But, it’s also easy to forget to turn off these resources when not in use. Sometimes, even after terminating a temporary server, you may forget to remove its storage. This means not only are you wasting resources, but you're also paying for what sooner or later will be a hit to your wallet.

If you’re looking to optimize cloud costs, first scan your Azure and Amazon Web Services (AWS) bills. If you find charges for resources you once purchased but no longer use, it's time to get rid of such idle and unattached resources to lower your running costs.

As a developer, it’s also important to maintain your sandbox environments to ensure all spun-up instances are cleaned up or shut when they’re no longer required.

Besides identifying and eliminating unused and unattached resources, you must also remove idle resources by consolidating computing jobs into fewer instances. 

3. Use reserved instances (RI)

While most businesses prefer on-demand pricing models, it’s not your only option. Reserved instances (RI) offer about a 75% discount on cloud services where you pay in advance for a specific cloud capacity for a predetermined period (say, one year). 

So, if you have a steady workload and don't anticipate a need to scale up or down in a particular time frame, purchasing a reserved instance can save you money. 

Another alternative worth considering is a spot instance. Cloud providers sometimes auction spare computing capacity at reduced rates. You can purchase spot instances for discounted cloud services. 

4. Use heat maps

Heat maps are your friends when it comes to optimizing cloud costs. A heat map is a visual tool that shows the peaks and troughs in computing demand. With this information, you can estimate whether any of your services could shut down at specific times without disrupting other services.

Identifying such resources and configuring schedules to run them only when needed eliminates payments for unused services and reduces your cloud costs by. For instance, a heat map can visibly show you whether you can safely shut down your development servers on weekends.

5. Rightsize computing services

You need a complete overview of your cloud services to rightsize. For this, you may have to recentralize your IT or ensure each department operates on cloud environments using the same account. 

For example, with granular visibility, you can identify the over-provisioned or idle assets. The rightsizing tool recommends changes to 'rightsize' usage and reduce costs. Such tools also optimize the cloud by helping you achieve peak performance from the paid resources.

A rightsizing tool sends you notifications when the costs go over a defined percentage in a predetermined period. You can also configure the tool to terminate unused assets after this period to continue optimizing your cloud costs.

6. Eliminate shadow IT

Did you know that most of your tech spending is attributed to projects managed outside (and without the knowledge of) your IT department? This is known as shadow IT that adds significantly to your costs when employees sign up and use a company’s cloud resources for personal use. 

Shadow IT does more harm than just increase costs. It also leads to unaccounted data access and security risks. It is, therefore, important to educate your workforce about shadow IT’s dangers and take steps to prevent unauthorized cloud access. You should also hold regular audits and block unsanctioned apps.

How to make the right cloud optimization decision?

To keep the cloud from transforming into a cost center, involve experts in planning your move to the cloud. You need to keep in mind a few things to make the right cloud optimization decisions.

  • Review the SLAs: When choosing a service provider to architect your cloud transformation, it’s worth checking their service-level agreements (SLAs) and how they match up with your internal SLAs.
  • Integrate seamlessly: Upgrading to new software shouldn’t require an overhaul of your entire IT setup. Check if the new software can complement your existing infrastructure – essential for cutting costs and minimizing downtime.
  • Evaluate scalability: Does your cloud provider allow scalability in line with your needs? Scalability is the main benefit of shifting to the cloud. It’s worth reviewing whether you can customize the application to meet your demand patterns or future expansion plans.
  • Assess operation quality: It’s worth comparing the quality of cloud and on-premise data security of a dedicated cloud provider. You should also check how their team is staffed and someone is always available to assist you.
  • Review security policy: Data security is an organization’s primary requirement. Make sure you review the cloud provider’s security and privacy policies and comply with your company policies.

Finally, to calculate your costs and determine the optimization level, you could use the total cost ownership (TCO) calculator or a similar service to estimate your cost savings over a specific interval.

The bottom line

Cloud has great potential, and it’s probably your fault if you find your cloud costs spiraling. Cloud optimization is not a one-time activity but an ongoing process, and cutting cloud expenses is not just the responsibility of IT but the entire organization. 

It’s essential to make everyone using your company’s cloud-based resources responsible enough to utilize them optimally. You can identify responsibilities for different teams and gather feedback on usability and demand to ensure your cloud continues to work as a profit center instead of a cost center.

Middleware.io is a new generation service that lets you autoscale and manage your cloud platform. Get in touch to find out how we can help you optimize your cloud costs by putting efficiency on autopilot.