Cloud cost optimisation: Strategies for managing cloud expenses and maximising ROI

By Anand JK Jain, VP – Solutions Engineering, MSys Technologies

By adopting a cloud-cost optimisation strategy throughout the value chain, firms can realize significantly higher profitability and operational excellence to deliver superior customer experiences.

While global cloud spending is set to breach the $1 tn mark by 2028, the amount wasted on inefficient cloud operations will also surge to $300 bn by the same year. This roughly translates into an hourly loss of $34 mn with nearly one-third of the cloud investment turning out to be futile. To keep this humongous amount from turning unproductive, there is an urgent need to develop cloud cost optimisation strategies. Cloud cost optimisation will help firms not only to contain the losses but also to ensure cloud operations perform optimally. So, what is cloud cost optimisation and how can organisations reap rich dividends on the front, here are the complete details.

Cloud optimisation: What is it?

Contrary to popular belief, the focus of cloud optimisation is not exclusively on reducing costs. Rather its focus is on generating superior value for stakeholders across the business ecosystem. The premise of cloud optimisation is to justify incremental spending on cloud operations by achieving proportional enhancements on crucial parameters of performance such as profitability, market expansion, and customer satisfaction. To map the cloud cost against productivity and profitability, firms need cloud cost intelligence and how effectively this data is being used to make decisions will ultimately determine the success of the cloud optimisation strategy.

Cloud optimisation: Five best strategies

a) Analyze cloud pricing models: A comprehensive analysis of cloud pricing models can help firms select the most optimum cost structure for their cloud onboarding strategy, thereby grabbing the best value-for-money deal for building, maintaining, and managing their cloud strategy. Signing up for a long-term plan, i.e., three- or five-year can help firms achieve big savings on cloud spending. Grabbing last-minute deals with lucrative discounts also makes a lot of financial sense for organisations – especially when managing distributed datasets, CI/CD operations, and processing workloads are priorities among organisations. Further, keeping checks on unnecessary data transfer can also become instrumental in reducing the cost burden associated with cloud operations.

b) FinOps for cost optimisation: A combination of finance and operations, FinOps is a financial management practice that aims to maximize the value of the cloud environment. FinOps teams draw on interdisciplinary capabilities and by enabling automation across cloud systems, these play an important role in identifying optimization opportunities, implementing efficient cloud strategies, and boosting the ROI of firms.

c) Reserved Instances: The prepaid instances that are available with a huge discount are referred to as reserved instances. Depending upon the type and region of cloud services, organisations can grab up to 75% discounts on long-term commitments spanning 1 year and 3 years. However, given the fact that organisations need to make the upfront payment, it’s essential to do a comprehensive research before investing money to enter long-term service agreements with cloud providers.

d) Automation Optimisation: Instead of employing manual resources, streamlining cloud optimisation through automation could bring enhanced resource savings to the table. The auto-scaling program offered by Amazon Web Services (AWS) is a shining example of how firms can effectively streamline their cloud optimisation in a short time. The program also enables swift optimisation in response to the changing resource requirements of systems and servers. Further, firms can also make use of many automation tools that can automatically shut down virtual servers (EC2) once the predetermined capacities and time limits are reached.

e) Cloud-cost-conscious culture: Until each user in the firm takes responsibility, it might not be possible to achieve the desired results on cloud cost optimisation. At the planning stage, firms need to justify the cloud budget and ensure that unexpected spending is reduced to the minimum. The same approach has to be followed in the building, deployment, and control phases so that any unexpected rise in budgets can be adjusted promptly without throwing the entire financial control into a tizzy. All these steps will help organisations develop a culture of cost-conscious cloud adoption and help them perform optimally while keeping costs in check.

f)Use cloud cost optimisation tools: Incorporating cloud cost optimisation tools is a strategic approach for organisations to streamline expenditures and enhance ROI. These tools play a pivotal role by providing a comprehensive overview of cloud spending patterns and facilitating real-time monitoring of resource usage and costs with customizable alerts to prevent budget overruns. They also aid in identifying potential cost-saving opportunities through commitments to fixed-term contracts with cloud providers. Additionally, these tools ensure proactive adaptation to evolving workloads and pricing models.

Conclusion

With cloud taking the center stage in the strategic scheme of things, it becomes imperative for organisations to optimise cloud costs without compromising on the performance aspect of the technology. The strategies mentioned above can act as a good starting point and by customising these policies as per their specific needs, firms can reap rich results on the cloud cost optimisation front. In sum, cloud cost optimisation can play an instrumental role in enhancing the operational efficiency of firms and by spending optimally on cloud networks, infrastructures, and costs, organisations can gain impressively on both strategic and operational parameters.