cloud costs

Managing cloud spends is not just about following some practices like closing instances after use and terminating storage attached to instances. It requires detailed documentation to be laid out to forecast consumption and monitor cloud spending through well-defined processes and protocols.

As much as cloud adoption is gaining momentum globally, so is cloud space wastage. In early 2022, in its State of the Cloud study, Flexera gathered responses from 750 enterprises using cloud infrastructure.  

The study revealed that enterprises have been spending more than a million dollars a year (among the 750 companies that were surveyed) on cloud computing costs, but a significant portion of the spends (32%) go to waste. 

Normally, when enterprises decide to adopt a cloud-first strategy, the IT team presents the requirement and the finance and operations team sets the budget. Despite this, enterprises are exceeding the set budget by close to 13%. Plausible reasons for the overspending could be; 

  • The inability of enterprises to wade through and understand the complex number of features and minute billing charges associated with subscribing to each cloud provider 
  • Difficulty in understanding, evaluating, and keeping track of the ever-changing features, upgrades, pricing models, and instances offered by cloud providers 
  • Inability to determine which architecture, service, and components should be used to build applications in the most cost-effective manner 
  • Lack of sync between the IT teams and Finance teams, which can result in IT teams spending more on cloud features to build better workloads, which can be optimised or even secured at better rates 
  • The threat of resource sprawl – where an enterprise doesn’t have a clear view of how instances and workloads are being managed on the cloud, which can lead to wasted cloud space 

5 Best Practices Enterprises Can Adopt To Manage Cloud Spends 

Managing cloud infrastructure costs begins from the time an enterprise lays down the objectives of moving to the cloud. In this blog, we’ll look at the best practices enterprises can adopt to minimise cloud expenditure and maximise efficiency. 

Best Practice #1: Forecast Consumption and User Growth Well in Advance 

When data is stored on-premises, enterprises incur costs mostly associated with managing IT staff and maintaining or building new data centers. Expenses are usually under control because spending on additional infrastructure requires elaborate approvals. However, with cloud adoption has come flexible access to cloud space, storage and networks, which makes forecasting more complicated. So, how do enterprises estimate costs in cloud computing? 

For one, it’s important for IT teams and finance and operations teams to work in sync to determine how much cloud space they need and the features and services they need to function optimally. For example, finance and ops teams can sit with each function to build rough models on predicted usage and arrive at budgets. Additionally, if the enterprise is using multiple cloud platforms for each set of needs, the models can be built taking into account which cloud services are being used by specific teams, and how they intend to use it.  

As a Merit Expert adds, “Most cloud service providers have a cost optimisation tool that is very handy. For example, AWS offers the AWS Cost Explorer which allows IT teams to forecast daily costs using historical data and usage patterns. Google Cloud Billing also performs the same role by helping enterprises determine, based on usage, which features can be suitable for the enterprise’s needs to remain cost-effective. Alternatively, when using a hybrid cloud strategy, enterprises can rely on third-party apps that provide a single dashboard view of usage, features and costs associated with each cloud provider’s services.”  

Best Practice #2: Put Together a Stakeholder Team  

While it’s important to bring the IT and Finance teams together to determine cloud computing budgets, prior to that, it’s important for enterprises to put together a stakeholder team which is responsible for determining and approving cloud strategy and spends. The stakeholder team can include personnel from the IT, ops, product, architecture and finance teams, to get a well-rounded insight into each department’s requirements and deliverables. 

Best Practice #3: Lay Down Cost Management Policies 

In addition to a well-documented data retention policy, it is also important to build a cost management policy document. A member from the stakeholder team can be responsible for putting together governing policies on process and procedures to follow for cloud infrastructure cost management. 

Best Practice #4: Choose the Right Pricing Model 

Cloud service providers offer a number of pricing models layered with additional features and tools. Enterprises need to understand each model in detail, and the costs associated with it before subscribing to it. For example, cloud providers offer a pay-as-you-go model or predetermined cloud space for a particular period of time. Enterprises can choose the most suitable cloud model based on their business objectives, along with inputs from IT, finance, product and ops teams. 

Best Practice #5: Track Progress and Optimise at Each Step 

Once a team has been put together and policies have been laid down, enterprises need to track how the deployments are taking place and if they’re in fact, useful and contributing towards business objectives. 

Tracking is a critical part of cloud management even post migration. Enterprises can lay down processes to monitor and maintain cloud infrastructure usage across various workloads and instances. For example, the processes put in place to manage idle instances, terminating storage attached to instances once they’re obsolete, using heatmaps to track computing demand, and optimising usage where possible, and more. 

Merit’s Expertise in Cloud Cost Optimisation 

Merit works with a broad range of clients and industry sectors, designing and building bespoke applications and data platforms combining software engineering, AI/ML, and data analytics.  

We migrate legacy systems with re-architecture and by refactoring them to contemporary technologies on modern cloud ecosystems. Our software engineers build resilient and scalable solutions with cloud services ranging from simple internal software systems to large-scale enterprise applications.  

Our agile approach drives every stage of the customer journey; from planning to design development and implementation, delivering impactful and cost-effective digital transformations.  

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