The cloud, as we know it today, was created as recently as 2006. For most of its lifespan since then, companies have been throwing money at cloud services with abandon.
The competitive edge gained by having the newest, best, and most powerful tools at their disposal made it worthwhile for companies to spend ever-increasing amounts without too much worry.
Having the best product possible and the strongest claim to the market — and therefore possibly becoming the next Uber or Twitter — was worth any price tag.
While the economy was roaring and investment capital was relatively easy to find, businesses could absorb carefree spending. But the last year or two of economic downturn has served as a harsh wake-up call for companies used to throwing money into the cloud.
These days, the paradigm has shifted a complete 180 degrees. The name of the game in 2023 and the foreseeable future is cost optimization — and the more quickly it can happen, the better, before companies continue hemorrhaging money in the hopes that perpetual growth can outlast the struggling economy.
If your company is in this position right now and wondering how to pull back on spending without sacrificing too much functionality, it can help to adopt a “lever” mentality rather than a “scissors” mentality.
Let’s explore this metaphor in detail, and hopefully the path forward will seem a bit clearer.
Think Of Cloud Cost Optimization In Terms Of Making Strategic Choices Rather Than Simply Slashing Costs
“Scissors” offer temporary relief
When you look at your cloud bill and it’s far too high, the natural impulse is to cut costs off the top and achieve a lower total as quickly as possible.
One of the most common ways companies do this is by purchasing Reserved Instances (RIs), leveraging committed-use discounts, and negotiating other buying arrangements with their cloud providers.
This is a useful strategy — and any company not taking advantage of these discounts should probably start — but used alone, it’s merely a band-aid slapped over a festering wound.
Discount plans can make you feel better in the short term, certainly, but they do nothing to solve the underlying problem. And if you don’t solve that underlying issue, more than likely your costs will snowball back to where they were and keep growing from there.
We use the term “scissors” to describe these cost-cutting efforts because you can give your costs a haircut to see a smaller cloud bill immediately. Some discount plans can save you a significant percentage of money right off the bat. But just like hair after a stylish trim, those costs are going to grow back and be as unwieldy as ever in just a few short months.
“Levers” address the root of the problem
To stop the endless growth of your cloud costs, you’ll need to take a deeper approach.
Often, this means examining the way you build products and restructuring your priorities to include cost efficiency in everything you do.
In other words: The fundamental way to solve the problem of out-of-control cloud costs is to empower engineers to build cost-efficient cloud infrastructure from the very beginning of a project.
Instead of using scissors to cut costs off the top, let’s instead think of cloud costs as a series of levers that can be pulled to varying degrees and fine-tuned until the perfect balance appears.
Each lever represents one singular component of every individual project, every decision an engineer makes, and every cloud service your company uses. If it makes sense for your business, you can also assign levers to different customer demographics, geographical regions, products, features, or whatever other variables are most crucial to the health of your business.
If one factor seems to cost too much compared to others, skilled engineers will be able to dial that lever back and go full throttle with a different lever that’s more cost-efficient.
To put this into real-world terms, an engineer might notice that she’s spending significantly more on S3 than makes sense.
In response, she can investigate why this is happening and turn off a troublesome feature, rebuild a portion of the project to run more efficiently, set some resources to run less often or at different times of day, or make any other adjustments that would fix the issue.
This lever-pulling might sound like it’s only good for making small adjustments, but that’s absolutely not the case. Pull the right levers, and your cost savings could be very significant.
CloudZero saw one client go from spending $10,000 per week on a single S3 bucket to paying nothing for that bucket — without sacrificing any functionality — because our platform allowed them to see that red-flag number and investigate further.
When they discovered the resource wasn’t actually being used for anything critical, they simply switched it off.
In other words, they flipped a specific lever to the “off” position and saved $10,000 per week — or $520,000 per year.
By comparison, cutting 12% off the top with a committed-use discount would have only reduced that wasteful spending to $457,600 per year.
CloudZero Shows You Which Levers Should Be Pulled In Your Business
Without the right cost optimization tools, it can be difficult to know which adjustments to make.
That’s why CloudZero developed a platform to help you break your costs apart into granular details and see the exact costs generated by individual resources, customers, regions, and any other variables you wish to track.
With this level of information, adjusting levers and building with cost efficiency in mind becomes ingrained into your company culture.