Cloud Cost Optimization

Cloud has clearly been a clear winner in most firms’ Covid-19-induced digital transformation path. Affordability remains a major barrier to cloud migration consulting services, especially now.

“Around 80% of organizations consider controlling cloud expenditure a problem,” says a McKinsey analysis. According to Flexera, “organizations lose over 35% of their cloud investment.”

Five obstacles to cloud cost optimization

Many firms struggle with cloud cost optimization while acknowledging its advantages.

1. Ensure top mentality.

Use the “just in time, pay for what you need” mentality to optimize cloud value.

2. Usability and lack of governance.

Scalability, flexibility, and ease of use of cloud services may often result in resource sprawl and expense overruns. Cloud resource control is lacking, adding to unanticipated resource sprawl expenses.

3. Hyperspaces’ multiple pricing and invoicing structures

Public cloud pricing and billing models are complex. Consumption bills for cloud services are difficult to understand and compare in terms of “budget vs. expected vs. actual utilization.” Complexity is increased by the lack of a standard charging model, formats, or APIs

4. Dim light.

Unmeasured consumption is typically the outcome of unmanaged consumption.

5. Too many cloud feature choices.

It’s difficult to identify the best-suited feature at the lowest cost in a complex cloud catalog. It’s also tough for corporations to keep up with the speed and comprehend how each announcement impacts their finances.

7 cloud cost optimization mantras

Here are seven mantras to help companies optimize cloud costs.

1/ First, think cloud.

Cloud adoption requires structural and systemic changes. A cloud-first strategy helps firms adapt quickly to changes in business or revenue models. It also helps if IT professionals can shift cloud based on the changing demands of distinct groups. Investing in PaaS and cloud-native technologies may assist.

2. Design cloud economics solutions.

To determine the most cost-effective cloud architecture, a company must consider the cloud catalog’s offerings, including newer features, and billing use statistics. Previously, businesses planned for availability, performance, and security from a limited set of pre-resources. The cloud reverses this paradigm, allowing for more accurate design to match workload needs. Cloud architecture components have a cost, hence cost-effective cloud designs must be built. Build a robust automation foundation with everything as code to optimize cloud economics (infra, security, configuration, network, documentation).

3.  A cloud cost optimization framework

Any cloud cost optimization strategy has three pillars:

• Boost resources (rightsizing, right features).
• Gain control and visibility (transparency of costs, usage and forecasts).
• Ensure good governance (identify usage, ownership and department allocation).

First, analyze your present cloud estate and look for cost-saving possibilities across compute, network, storage, and other cloud-native capabilities. Cost levers with architectural and feature trade-offs are required in any cloud cost optimization system. Businesses need governance — budgeting, resource allocation, etc. — to function well.

4. Continuum of cost optimization

How frequently a business optimizes cloud relies on its adoption, development, and financial cycle alignment. As technology evolves, cloud optimization must be a constant activity and part of an organization’s operational strategy. Applying optimization methods early on may assist build an optimization and accountability culture. While cost takeout is a starting point, it’s critical to consider improving cost to serve.

5. Use a chargeback system.

Cloud users should be accountable for their actions. Allow them to predict and optimize. To apply the chargeback model, create a resource tagging model (e.g., use, ownership, department, and cost center). With correct resource tagging, a cost center code may be assigned to the resource owner.

6. Then source, price, and discount appropriately.

Choose between allocation-based and consumption-based sources.

Preferably with discounts.

7. Create a cloud FinOps team.

FinOps is a fast, collaborative solution for finance, IT, and the business to manage cloud cost. Creating a cross-functional cloud financial operations (FinOps) team to handle cloud sourcing and consumption would help most major organizations, according to McKinsey. A smart FinOps model saves money and manages the cloud’s utilization to create money.

Cloud cost management is a value-driven strategic initiative, not simply an operational problem. To achieve it, governance, architecture, operations, product management, finance, and application development must work closely together. For enterprises, a solid cloud cost optimization methodology and FinOps may help them realize the true economic value of the cloud.

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As long as the necessary controls and operational models are in place, the cloud is undeniably the most important and promising/futuristic technological investment a business can make.