Cloud Spending

How to Manage and Reduce Your Cloud Spending

By Read Dive 19 minutes ago
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Migration to the cloud has become one of the top trends among businesses that want to optimize their data storage and maintain security and accessibility. Cloud services have gained popularity due to the vast scope of manipulations that can be performed while managing data. You can easily scale your applications or platforms depending on activity, number of active users, data transmission periods, and implementations required at a given moment. However, despite their importance, cloud services adoption may lead to unexpected expenses if not properly managed. Therefore, this article will discuss critical elements that assist in managing your cloud spending more wisely while staying efficient with the help of the most popular cloud service providers: AWS, Azure, and GCP.

What is cloud cost composed of?

According to a 2023 report by Flexera, 82% of respondents mentioned managing cloud spending as their top priority. Cloud costs can quickly mount depending on multiple factors including excessive or inefficient resource use, lack of visibility, etc. For this reason, organizations opt for the pay-as-you-go pricing model. As attractive as it may seem owing to its flexibility, it also requires thorough monitoring and management to prevent budget overruns in the future.

Credit: Flexera

The key components comprising the price of the cloud cost are:

  • Compute resources: Virtual machines (VMs), containers, and serverless functions.
  • Storage: Block storage, object storage, and data backups.
  • Networking: Data transfer between regions, virtual private clouds, etc.
  • Licensing and services: Software and managed services like databases or machine learning models.
  • Security: Firewalls, identity and access management (IAM) services, security monitoring tools, and compliance-related services.

Strategies for Cloud Cost Optimization 

To successfully optimize your cloud costs, we recommend considering several key strategies that will help you manage your cloud environment wisely.

Evaluate your resource allocations to make sure they match actual usage. This includes choosing the appropriate instance types, storage sizes, and services based on your business’s current demand. Tools like AWS Compute Optimizer and Azure Advisor provide recommendations for rightsizing, helping to identify places where resources are underutilized or over-provisioned.

Cloud providers offer cost-saving programs for long-term commitments. For example, AWS offers services where reserved instances can reduce costs by up to 72% compared to on-demand pricing for predictable workloads.

Use auto-scaling features to adjust resources based on demand. This ensures that you’re not paying for idle capacity during low usage periods. Both AWS Auto Scaling and Azure Scale Sets offer powerful tools to implement this strategy effectively.

Optimize your storage costs by using lifecycle policies to transition data that are not frequently used to cheaper storage tiers (e.g., Amazon S3 Glacier or Azure Archive Storage). You can also delete unnecessary snapshots and backups to save storage space.

Continuously monitor your cloud environment using cost management tools. For instance, with the help of such tools as AWS Cost Explorer, Azure Cost Management or Google Cloud’s Billing Reports you get insights into your spending patterns and can easily figure out the areas for optimization.

Analyze which type of cloud is the most suitable for your operations. Be that a multi-cloud or hybrid cloud approach, you should learn whether distributing workloads across providers or keeping certain workloads on-premises can lead to cost efficiencies.

If you have flexible workloads, we suggest using AWS Spot Instances or Google Cloud Preemptible VMs for efficient cost allocation.

How AWS and Azure Help Optimize Cloud Costs

Both AWS and Azure provide a wide range of tools and services that help organizations optimize their cloud spending. Below we provide several examples of such tools and services and their advantages:

AWS 

AWS Cost Explorer offers detailed insights into your AWS spending and usage patterns.

AWS Compute Optimizer analyzes your workloads and provides recommendations for optimizing compute resources, such as instance types and sizes.

AWS Savings Plans provide flexible pricing models that guarantee significant savings on compute usage for periods between one- and three-year periods.

AWS Trusted Advisor offers best practice recommendations for cost optimization, performance, security, and fault tolerance.

Azure

Azure Cost Management + Billing provides comprehensive cost analysis and forecasting tools to help track and control spending.

Azure Advisor delivers personalized recommendations to optimize performance, high availability, and cost efficiency.

Azure Hybrid Benefit allows organizations to use existing on-premises licenses to reduce costs when migrating to Azure. Microsoft reports that customers save up to 85% on Windows Server and SQL Server workloads.

With the help of these tools and services, businesses get better control over their cloud environments, identify cost-saving opportunities, and properly allocate their resources.

Conclusion

If you are using the cloud for your business, you must learn how to manage these environments properly and efficiently to avoid excessive spending. By implementing best practices and with the help of the most suitable tools, organizations can maximize the value of their cloud investments while minimizing waste. As cloud adoption is becoming more widespread, proper management of your cloud expenses will remain a crucial step toward the successful implementation of your business strategies.

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