How to cut down cloud costs without affecting its ROI?
Tags: cloudcosts, cloudskills, cloudnative, cloudcostoptimization
Published: 2023-03-10 14:23:47

The process of cloud cost optimization involves scrutinizing resources to identify areas where unused or wasted resources can be streamlined in order to lower expenses. This includes activities such as resource analysis, identification, monitoring, and management of instances. 

However, optimizing cloud costs is not limited to just monitoring and managing resources, as it necessitates a comprehensive approach to cloud costs across all stages of the software development lifecycle (SDLC). Achieving cost optimization at each stage requires diligent monitoring and data visualization.

To apply [cloud cost optimization](https://www.simform.com/blog/cloud-cost-optimization/) to various phases of the SDLC, developers need to continuously assess cloud resources, pricing, and evolving business requirements since the cloud cost optimization process is dynamic.

## Use cloud cost as a metric

Businesses can foster a culture of optimizing cloud-based expenses by prioritizing cloud costs. To achieve this, organizations should identify key areas where they can monitor, measure, and optimize cloud costs. Some of these areas include:

**Accountability and Enablement:** A foundational pillar that streamlines financial processes to promote financial accountability and business value. Cloud enablement, which can be measured as a percentage, is crucial for this pillar.

**Measurement of Cloud Costs and Realization:** A pillar that involves defining resource hierarchy, tagging data architecture, and identifying IT-driven designators. It focuses on attributing cloud resources through consistent tagging, enabling organizations to identify cloud cost centers. Companies can measure cloud allocation metrics for this pillar as a percentage.

**Planning and Forecasting:** A crucial pillar that focuses on planning resource requirements and creating a computational budget, requiring the estimation of annual cloud computing costs. Annual forecast accuracy, including assessing workload forecasting models, trend-based models for steady-state workloads, and monthly budget variances, can be used as a lead metric and measured as a percentage.

**Tools and Accelerators:** A pillar that focuses on detailed analytics reports of resource tagging and identifying the accelerators of cloud costs. It helps organizations measure the percentage of automation implemented from the analytics tool's recommendations after analyzing the tagged resources.

## Identify the Anomalies

To effectively manage cloud costs, it's important to use monitoring tools and predefined metrics to identify areas that require optimization. Some critical cloud cost metrics to consider include:

**Uptime:** measuring the duration for which a system is available to serve user requests.

**CPU utilization:** measuring the percentage of processing power used to complete a specific task or process user requests.

**Memory usage:** measuring the amount of memory used in public, private, and hybrid cloud environments.

**Requests per minute:** measuring the number of user requests a cloud-based application receives every minute.

**Disk usage:** tracking the amount of disk volume used on a node to determine if storage capacity is sufficient for workloads.

**Average time to acknowledge:** measuring the time it takes for a system to respond to a user request.

**Latency:** measuring the time between when a user makes a request and when they receive a response.

**Mean time between failure (MTBF):** measuring the average time between system or application failures.

**Mean time to repair (MTTR):** measuring the time it takes for a system to restore services after a failure. A shorter MTTR is desirable for cloud cost optimization since it reduces downtime costs.

## Rightsize the resources

The process of rightsizing is crucial to optimize cloud costs, involving the analysis of computing instances, identification of idle resources, and deactivation of such instances. Right-sizing also includes matching cloud resources with workloads and adjusting overprovisioned instances. 

Implementing effective rightsizing practices can result in up to 70% cloud cost savings, making it a critical process for organizations. Cloud providers offer built-in features that enable users to optimize cloud costs and rightsize instances. 
For example, AWS provides spot and reserved instances that help optimize cloud costs. Spot instances allow users to utilize idle EC2 capacity, avoiding high costs associated with on-demand resources.

Webbeds, a prominent travel accommodation provider, is a great example of a company that used spot instances during the pandemic. By migrating its infrastructure to spot instances in 2020, Webbeds was able to reduce cloud costs by 64% and improve CPU performance by 40%. 

Another approach to optimize cloud costs and right-size instances is using reserved resources. AWS offers reserved instances that can significantly reduce cloud costs, and the Google Cloud Platform offers Google Committed Use Discounts for cloud cost optimization.

## Conclusion

To optimize your cloud costs, it's not just a matter of reducing expenses and cutting corners, but rather taking a strategic approach to improve business performance and create value. With the appropriate techniques and tools, you can generate substantial cost savings, enhance resource utilization, and provide superior customer experiences.

Therefore, regardless of whether you're a small startup or a large enterprise, prioritize cloud cost optimization, and witness your business soar to new heights in the cloud.