Are you in the midst of an ongoing cloud migration or looking to streamline your existing cloud infrastructure? No matter your situation, the following article will provide crucial knowledge about achieving the best results when it comes to the cost of cloud in your company.
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Companies across the globe are increasingly embracing digital transformation. That’s why business leaders find themselves at a crossroads. The benefits of cloud solutions are undeniable, promising scalability, flexibility, and innovation support. However, with these advantages come new challenges. How do you approach cloud cost optimization without compromising performance or security?
Cloud adoption has skyrocketed in recent years. According to research, the cloud computing market is predicted to reach over $947 billion by 2026. The main dillemma decision-makers face is managing cloud spending (82%). With 96% of brands using public cloud and 84% using private cloud, this problem is quite significant and should be addressed with proper solutions.
It seems that many companies recognize the need to modernize their IT infrastructure and succeed at migrating their data into innovative cloud environments. Our State of Software Modernization 2024 report mentions, that cloud platforms are often picked by brands that want to rebuild their legacy systems.
The complexity of cloud pricing models, paired with the dynamic nature of cloud resources, makes cost optimization a daunting task. Gartner predicts that global public cloud spending will reach approximately $679 billion in 2024. Right now, 38% of businesses waste 30% of their cloud spend, and 68% waste 20%.
Enormous budgets are burned, usually due to:
Effective cloud cost optimization can free up valuable resources for innovation and growth, while poor management can lead to skyrocketing expenses that eat into profit margins.
To help brands navigate the complex world of cloud cost optimization, here are some proven approaches and methodologies:
One of the most effective ways to optimize cloud costs is to ensure you're using the right size and type of resources for your workloads. If you already have a cloud infrastructure, analyze usage patterns to identify underutilized resources. Then, downsize or upgrade instances based on the actual needs of your team. Using auto-scaling enables dynamic resource adjustment based on demand. It’s a suitable method for companies with fluctuating requirements.
The tools that can be helpful with right-sizing and other cost-related optimizations include AWS Cost Explorer, Azure Advisor, Google Cloud Recommender, and VMware Tanzu CloudHealth.
Establishing clear policies and procedures for cloud usage can prevent unnecessary spending. First, creating a separate budget for this area of operations and monitoring spending regularly helps to eliminate unnecessary costs. Setting up approval processes for provisioning new resources can also be a great method to cut overspending. Furthermore, implementing tagging strategies enables better cost allocation.
Big players offer governance tools in their portfolio. For instance, there’s Azure Policy and AWS Organizations. Other solutions include HashiCorp Sentinel, and Flexera’s RightScale.
For predictable workloads, taking advantage of reserved instances or savings plans can lead to significant cost reductions. For example, customers can save up to 72% with AWS savings plans and up to 75% with AWS reserved instances compared to on-demand pricing. Recommendations suggest that the former is better for brands with steady usage that might need adjustments from time to time, while the latter is great for even more predictable usage.
Storage costs can quickly add up if not handled properly. That’s why implementing lifecycle policies to move infrequently accessed data to cheaper storage tiers is one of the best strategies to follow. Others include deleting unnecessary snapshots and unattached volumes, as well as compressing data whenever possible.
Cloud providers offer a range of managed services that can be more cost-effective than building and maintaining internal solutions. For instance, migrating legacy systems into an external cloud can be less disruptive and supported by specialists on the provider’s side. With many proven players on the market and their flexible offerings, almost every company will find something that matches their requirements.
Cloud cost optimization is not a one-time effort but an ongoing process. That’s why introducing tools and processes for certain activities should be an integral part of your cloud strategy. The main operations to cover include real-time monitoring of cloud usage and costs, regular audits of the cloud environment, and continuous refinement of your brand’s cloud cost optimization best practices.
<span class="colorbox1" fs-test-element="box1"><p> Build your cloud migration strategy with this comprehensive guide.</p></span>
While cost optimization is crucial, it's equally important to acknowledge areas where cutting spending could have negative consequences. What are some aspects worth investing in?
In an era of increasing cyber threats and strict data protection regulations like GDPR, neglecting security is not an option. Businesses should invest in robust identity and access management (IAM) solutions, data encryption at rest and in transit, regular security audits, and penetration tests to prevent potential cyberattacks.
Case studies showcase how sensitive this area can be. For example, Marriott was fined almost $24 million dollars by the UK’s Information Commissioner's Office (ICO) for a cyberattack that lasted from 2014 to 2020. Their hotels reservation system wasn’t protected enough, but the introduction of GDPR in 2018 (and Marriott’s inability to comply) significantly increased the penalty.
Poor performance can lead to lost productivity and dissatisfied customers. Ensure you're not sacrificing performance by choosing the right instance types for performance-critical workloads, implementing content delivery networks (CDNs) for faster delivery, and using performance optimization techniques like caching.
While it may be tempting to cut costs by reducing redundancy, having a solid disaster recovery plan is crucial. Consider multi-region deployments for critical applications and perform regular backups. Testing recovery procedures regularly is also a good practice. Businesses with bigger budgets can invest in managed disaster recovery services to reduce cloud spending associated with potential disruptions or downtimes. Moreover, when updating legacy systems, it’s paramount to have a business continuity plan to avoid potential cloud migration challenges.
Having a team with the right skills to manage and optimize your cloud environment is invaluable. Internal IT staff should undergo regular training, especially when new solutions are introduced. This way, they can handle the company’s growth regarding technological advancements. Hiring cloud specialists, like cloud-oriented software providers, is also a good idea to ensure the infrastructure is always well-maintained and up-to-date.
<span class="colorbox1" fs-test-element="box1"><p> In this ranking, you can find top companies that can help you with cloud migration.</p></span>
There are many established cloud platforms and solutions that can help companies effectively manage and optimize cloud costs. The most popular solutions include:
As cloud technologies continue to expand and improve, so too must companies’ efforts towards cost optimization. Staying informed about new services, emerging features, and pricing models offered by cloud providers is imperative to adapt accordingly.
The goal of cloud cost optimization is not just to reduce spending, but to maximize the value of cloud investments. By finding the right balance between cost efficiency and performance, you can leverage the cloud to drive innovation and growth in your organization.
To create a cloud cost optimization strategy and continuously improve it, here are a few actionable steps. By following them and leveraging the strategies outlined in this article, you can ensure that your cloud investments deliver maximum value for your company:
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Software development enthusiast with 7 years of professional experience in the tech industry. Experienced in outsourcing market analysis, with a special focus on nearshoring. In the meantime, our expert in explaining tech, business, and digital topics in an accessible way. Writer and translator after hours.
With over 12 years of professional experience in the tech industry. Technology passionate, geek, and the co-founder of Brainhub. Combines his tech expertise with business knowledge.
Software development enthusiast with 7 years of professional experience in the tech industry. Experienced in outsourcing market analysis, with a special focus on nearshoring. In the meantime, our expert in explaining tech, business, and digital topics in an accessible way. Writer and translator after hours.
With over 12 years of professional experience in the tech industry. Technology passionate, geek, and the co-founder of Brainhub. Combines his tech expertise with business knowledge.
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