The 5 Most Important Things About Cost Optimization

  • July 15, 2021

For organizations using the cloud, cost optimization is a key priority. The cloud offers endless opportunities for lower costs and unlimited scalability. To take advantage of these benefits, it is critical to understand and control your spending in the cloud. Cost optimization is the process that allows you to do this. 

Optimizing is not the same as reducing. If your business is growing and you are gaining clients, reducing costs is not optimal. Instead, you want to understand the impact of your costs on your business. Creating a cost report is one of the first steps you should take when trying to understand your organization’s costs. As you create a cost report, you will want to define the business metrics to help understand your costs. These metrics might be cost-per-page-view, cost per client, etc. Once you define these metrics and have begun to create reports, you will be able to track the evolution.

The next step after analyzing your data is optimization. The report you create will be your guide and help identify the areas where that need improvement. When it comes to optimizing your costs, there are five things you should know. 

1. Financial Optimization

All cloud providers will offer different financial options to optimize costs. AWS provides Reserved Instances and saving plans which allow you to pay upfront and therefore reduce costs. Other providers offer financial incentives, too. GCP provides committed user discounts, and Azure has reserved user discounts.

2. Use Spot and Preemptible Instances

If you are looking for even bigger cost savings, you may want to consider using spot and preemptible instances. This is when Cloud Service Providers offer their unused capacity at a very low cost. They could save you up to 90%. This is very similar to financial optimization. However, it does require some work in your infrastructure and applications to support them. These instances could disappear at any moment. So, you will want to prepare your platform in case such an event occurs. 

They are an excellent option for testing and development environments. For some production workloads, they can also be used. 

3. Rightsizing

When you right size, you analyze your computing services and modify them to the size required. You will want to use the right instance type and size for your workloads. This requires monitoring and metrics collections to review current capacity v’s current use and to adjust the size of your infrastructure. To use rightsizing, automation must be in place. When you are using automation in the cloud rightsizing is a simple update.

4. Autoscaling

Autoscaling is usually used to increase your computing capacity horizontally to meet the increasing demand. It helps you save money because you will have the right resources in place based on your current load. For example, when you use auto-scaling, you do not have instances up and running when the demand is low. 

5. Turn On/Off Resources Based on Demand

You do not need all your resources running all of the time. Testing environments and manual UAT environments are usually used during specific days and hours. So you can turn them on and off on demand. You may want to consider self-service environments. These are good options for devs and QA. You can allow your teams to launch environments for specific needs and destroy them later. Automation is key here. With it, you can create, destroy, start and stop on demand, and use things only when you need them. 

 

BONUS: Don’t forget about resource tagging. It won’t reduce costs, but it will help you have visibility and reporting capabilities. If you understand how you are spending your money, you can optimize later. 

Cost optimization does not have to happen overnight. It is a process that can be introduced and improved upon over time. What is most important is that you get started. There is infinite potential in the cloud, but you must pay attention to your costs to take full advantage of it. By taking into account the five things we have outlined today, you will be well on your way to optimizing your costs and maximizing your use of the cloud.