A Comprehensive Introduction to Cloud Cost Optimization

19 December 2018 | Posted by Cass Information Systems, Inc.

Time called it the most important technological revolution in decades. Jerry Yang defined it as the next-generation super computer. Gartner concluded it’ll be worth $411B by 2020. But while there’s clear enterprise consensus that cloud computing is necessary, knowledge regarding its cost control is far less well-established.

What is Cloud Cost Optimization?

Cloud cost optimization is one of the four key pillars of cloud management services. It not only helps a business cut immediate costs, but, when delivered as an effective service, it can greatly improve utilization and forecasting, helping to deliver savings year after year.

Why is Cloud Cost Optimization Needed?

In large organizations, the cloud environment is labyrinthine in nature – particularly when multi-cloud configurations are in place.

While the public cloud is often touted as a cost-effective solution, visibility into service usage and spend when using native tools is opaque. And, as a result, organizations frequently end up paying significantly more than necessary.

At the enterprise level, this simply can't be ignored.

Even when errors or over-charges are small, when spread over hundreds of services, they can quickly add up to vast sums – all spent on absolutely nothing.

But, when utilizing an effective cloud cost optimization service, this excess spend is eliminated, and it’s possible for savings of up to 35% to be achieved.

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Who Needs Cloud Cost Optimization?

Eliminating unused-service costs and maximizing utilization is beneficial to any enterprise organization, particularly in the current economic climate where budgets are tight and staffing is stretched.

But for larger organizations – whose cloud configurations are comprised of a much larger number of services, spread among numerous providers, across several global locations, and totaling upwards of $1 million per year – the benefits are significantly maximized.

How Does Cloud Cost Optimization Work?

Cloud cost optimization is formed of three disparate elements that, when combined, help organizations to eliminate unnecessary cloud spend.

1. Waste Elimination

As an organization evolves, demand for resources once freely consumed can decrease, eventually becoming surplus to enterprise requirements.

Due to the chaotic nature of the cloud – whereby workloads, resources, and services are added and subtracted from the same environment simultaneously – and the limitation of native cloud tools, the visibility and control required to decommission these instances is often found lacking.

Even in those cases where virtual machines are spun-down, associated storage or database tools can remain, continuing to increase cloud spend despite being unusable.

Waste elimination is a service that reduces cloud spend by analyzing resource utilization and uncovering optimization opportunities and situations where these can and should be decommissioned.

Using intuitive, latest-generation technology, it aims to remove unused or orphaned resources, while maximizing utilization of current solutions.

2. Rightsizing

Forecasting cloud future usage is no mean feat.

Resource use can fluctuate for any number of reasons, and native cloud management tools are far too limited to provide detailed information about peak loads and other cloud instances.

In a bid to avoid resource shortages – which risk negative impact to performance and user experience – organizations look to over-provision cloud resources, taking a 'better-safe-than-sorry' attitude.

But this lack of optimization takes its toll, overspends of anywhere between 20-40% are common – all spent on capacity that will never be consumed.

Rightsizing is a service that reduces this spend by marrying workload volume with resource capacity, finding the cheapest instance possible while ensuring that performance and UX aren’t impacted.

Combining continuous monitoring practices with detailed usage heatmaps, it aims to remove additional capacity while maximizing utilization of current solutions down to an hour-by-hour basis.

3. Reserved Instance Recommendation

All organizations with mission-critical workloads tied to the cloud run the risk of irrevocable financial, operational, or reputational damage, resulting from a service failure or security breach.

These persistent workloads operate in an ‘always-on’ manner, so, when adhering to a pay-as-you-go model, cloud spend can quickly become a financial burden – particularly when ongoing uptake is expected.

Reserved instance recommendation is a service that reduces cloud spend by suggesting migratory actions to take advantage of cheaper pricing structures.

By pledging loyalty to a workload instance on a long-term basis, organizations can uncover the lowest total cost of ownership for their persistent workloads, significantly reducing cloud spend.

Cloud Cost Optimization

In summary, cloud cost optimization, when delivered as an effective service, can deliver significant benefits to enterprise organizations – improving utilization and forecasting as well as offering substantial cost-savings.

But the value of cloud cost optimization is felt greatest when combined as part of a cloud management services (CMS) solution.

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Topics: Cloud Management Services

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