Cloud cost optimization: How to improve organizational agility and strengthen resilience

Cloud infrastructure is an essential tool for modern businesses. When designed properly, the cloud enables organizational agility and promotes resilience. This is accomplished through the following methods:

• Lower operating costs. Consistent monitoring of operational costs allows businesses to spend money on only the services they need. These savings can then be used to improve cloud infrastructure and be better prepared for unexpected circumstances.
• Cloud solutions with flexible spending based on resource usage. One advantage of using the cloud is the ability to scale resources on demand. Designing solutions that take advantage of this infrastructure allows businesses to pay for what is needed for a normal load and immediately scale should the load increase, thus quickly adapting to load changes.

But what does the process of cloud cost optimization look like? By the end of this article, you will understand how to:

1. Evaluate your existing resource usage and needs.

2. Reduce cloud costs.

3. Monitor cloud spending.

Evaluating your existing resource usage and needs

Successful optimization starts by understanding the current state of the infrastructure. There are various factors and original design decisions that could be affecting cloud cost and resource efficiency. To understand what needs to change, you should ask the following questions:

• How do we create and manage existing resources? It’s important for resources to be created and managed in a lean and organized way. A lack of organization can easily lead to improper tagging of resources, which can cause workload duplication, deprecated services that are continuing to run, and not being able to fully account for all utilized resources. As a result, you’d be paying for more than you needed, simply because your resources aren’t well organized.
• What are our usage needs? Proper infrastructure provides metrics for each resource usage. This information together with knowing your peak load needs will help you optimize your cloud. For example, if you’re running (and paying for) large VM’s, but they’re not fully utilized, there’s a cost-saving opportunity for you to downscale and pay for only what is currently needed.
• Do our tools deliver enough utility for the expense incurred? Are there cheaper, equally efficient options? For example, some software has licensing costs associated, but there are alternate options available that are both cheaper and more performance out of the box.

Reducing cloud costs

Successful cloud cost optimization involves three interwoven strategies: adjust your existing tools, change your approach to spending, and/or invest in something new. Each has its pros and cons and should be evaluated carefully considering your organization’s specific needs. Some cost-saving methods may include the following:

• Containerized deployment. Using platforms like Kubernetes or similar tools allows organizations to increase server density of the resources being used. This approach has a great cost benefit as it allows for more efficient hardware usage and can accommodate usage fluctuations.
• Heuristic analysis. Some cloud providers offer their own analysis and provide recommendations for optimizing costs.
• Reservations of virtual machines. Cloud providers offer significant discounts for reserved cloud resources. For example, if you know you’ll need a certain VM type for a few years, you can do a reservation allocation, which could give you up to a 40% discount.
• A different subscription/spending model. Is it most cost-effective for you to pay by volume, by time period, or some other metric?
• A CMP platform. This would only work for a large volume of cloud usage; it wouldn’t be efficient for small workloads and cloud spends.

Monitoring cloud spend

Agility and resilience are dynamic and can apply differently to each new situation. If you design your infrastructure for success today and don’t continue to monitor tomorrow, you can easily end up with unforeseen costs. For this reason, it’s necessary to have a continuous oversight mechanism—a process and responsible party, like in a CoE—to ensure:

• Continuous visibility into resources usage across teams and tools.
• Quick accommodation of new needs to reduce downtime and unnecessary spending.
• Tagging policy is enforced. Each resource must be tagged to indicate its project, environment, creator, team using the resource, etc.
• Proper evaluation of each new additional tools and/or services.

Optimizing your cloud infrastructure should be an ongoing process and it should adapt as financial considerations change. It’s recommended to evaluate possible adjustments to cloud tools every six months.

Strategic cost management can help you and your company optimize your resources, both digital and human. With more money in hand and confidence in your existing systems, you’ll be better prepared for whatever comes next.

Ilya Tsapin is the Director of Technology Consulting at Logic20/20. With over 10 years of experience in algorithm development and data analysis, Ilya is proficient in large-scale projects required data gathering, modeling, and analysis.