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Struggling with high cloud costs? Here are three ways you can optimize your cloud spend — and the cloud cost intelligence software you can use to help.
For many organizations, cloud costs are a mystery.
Beyond knowing their total cloud spend, businesses have little insight into the biggest drivers of their costs, let alone how they can better manage their cloud investment. With on-premise infrastructure, organizations have a predictable understanding of their costs, but the same cannot be said for the cloud.
In this article, we’ll discuss why cloud cost optimization is important, the largest contributors to cloud spend, and strategies for reducing your cloud costs. We’ll also look at how software can help you better manage costs, and the features your cost optimization software should have.
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Cloud cost optimization isn’t just about saving money; it’s about getting the biggest ROI on your cloud investment.
“One of the most important aspects of cloud cost optimization is that it allows your business to function just as efficiently as you need it to,” says Ronald Sampson, a research analyst at CreditDonkey, a review and comparison website that publishes data-driven analyses to help people save money.
Having proper visibility into cloud spend enables organizations to understand what they are spending and how much value they’re getting back.
Regardless of the size of your business, cost optimization can help you increase margins without having to alter your overall strategy. The business can meet its goals while making its cloud resources go further than before.
Sampson points to an additional reason why organizations should focus on cloud cost optimization: clear cost visibility.
With cost visibility, organizations can gain full insight into their cloud spend. This increase in visibility provides organizations with the data they need to make informed engineering, product, and business decisions that ensure profitability for their company.
Figuring out what is causing your high cloud costs can be tricky, as the answer will not be the same for any two organizations.
Sampson notes that “each organization has different requirements around applications, infrastructure, data protection, and so on.” However, there are certain factors to be aware of when determining the cause of your high cloud spend:
In addition to looking at your cloud spend through this more traditional lens that focuses on tangible aspects, it’s also vital to consider another overarching factor that results in high cloud costs: success.
“When your business is growing, you have more people on your platform and require more resources,” says Erik Peterson, CTO and Co-Founder of CloudZero. “Naturally, this causes your costs to increase.”
In order to prepare your business for success, you need to have visibility into your costs and how they relate to your success metrics. Understanding metrics such as unit cost, cost per feature, cost per product, cost per customer, and how they are all related to growth drivers helps your business plan for future success.
If you don’t know how much you add in costs for every new customer, you can’t effectively optimize costs, Erik explains.
When you optimize for the things that drive your growth — for example each new customer acquisition — you can work more effectively with your engineering team to find ways to optimize your products and your cloud usage to reduce each customer acquisition cost by a certain amount.
Once organizations have a clear idea of their costs, they can work on cost reduction strategies. With cloud cost optimization, however, it’s not just about getting the lowest dollar amount, but also about getting the highest value for your business.
Sampson notes that as a first priority, it’s important to negotiate with your cloud provider to get what you want. If you don’t ask for the price, features, and services your organization needs, it’s likely you won’t receive it.
He also suggests setting clear expectations and guidelines with your team for their usage of your cloud resources. Be sure to be transparent with each team about their usage and relative costs so they are able to plan accordingly.
Similar to how success drives costs, failure can do the same thing.
“Many organizations only think about how they can scale up, but being able to scale down is just as important when it comes to cloud cost optimization,” says Erik.
If there is another recession, pandemic, or other event that significantly affects your customers, you need to be able to scale down your operations quickly. If you can’t, you will be saddled with a huge cloud bill.
It’s important to measure your systems by how elastic and dynamic they are based on customer demand. A successful organization must be prepared for failure as well as success.
In many engineering departments, the old adage “move fast and break things” is king, notes Erik.
However, keep in mind that breaking things always comes with a cost. It’s vital to detect when something is broken as quickly as possible. Erik says, “It’s much easier to swallow a $1,000 mistake than a $100,000 one.”
Cloud cost management isn’t something an organization can take on manually. It is a complex process that requires monitoring multiple data points.
To make the most of your time and strategy, use the right tools for the job.
While there are several excellent software options available that will provide organizations with the recommendations they need for rightsizing their cloud environment, we suggest looking for cloud cost optimization software that go beyond the traditional offerings with these best-of-breed features:
Cloud cost optimization ensures your organization has the resources you need while staying within your budget. However, it’s not just about cost, it’s also about the value of your cloud spend.
Organizations that use the cloud successfully don’t just stop at cloud cost optimization. They go a step further to employ cloud cost intelligence — the what, why, and where insights that surround their use of the cloud.
CloudZero is the only cloud cost intelligence provider that lets you see your costs from any angle, so you can connect your products to your cloud spend.
Engineering can self-serve and explore the cost of their architecture and apps (and see exactly what’s driving their costs and why) and finance can measure the ROI of your technical investments. Controlling costs should be everyone’s responsibility, and CloudZero gets your entire organization on the same page.
Cody Slingerland, a FinOps certified practitioner, is an avid content creator with over 10 years of experience creating content for SaaS and technology companies. Cody collaborates with internal team members and subject matter experts to create expert-written content on the CloudZero blog.
CloudZero is the only solution that enables you to allocate 100% of your spend in hours — so you can align everyone around cost dimensions that matter to your business.