What is Cloud Cost Optimization?

To keep downward pressure on cloud costs and avoid runaway bills, teams need to be continuously asking key questions:

  • How can I reduce my Azure & AWS bill?
  • How much of our cloud bill is waste?
  • How can I identify the waste?
  • How can I automate prevention & control?
  • Who is responsible for cost control?

These questions aren't always easy to answer - but they form the basis of Cloud Cost Optimization.

Cloud Cost Optimization is a process, ideally automated, that involves the ongoing review of cloud costs. Successful optimization results in waste identification & remediation, and constant downward pressure on cloud bills.

Looking For Some Achievable Cost-Saving Tips?

Of course, you are! You should head over and read these cloud cost optimization best practices.

Why is Cloud Cost Optimization Important?

The superpower of the cloud is its dynamic nature and seemingly infinite capacity - but as all good superheroes know, with great power comes great responsibility.

The responsibility for cloud cost usually falls first onto the shoulders of the Cloud Architect. In addition to their technical role, cloud forces architects to stretch their skill set to understand cloud finance. The failure of a Cloud Architect to control cloud costs risks a large unexpected cloud bill that will damage a cloud project’s survival. At its worst, a runaway cost may even threaten the company’s survival.

In the short history of the cloud, there are already numerous infamous stories detailing spiralling costs and angry finance teams (and boards!). Take this example, where Adobe was losing nearly $100k a day.

As this article demonstrates, cloud bills can quickly become eye-watering. Worse still, the growth in costs is frequently waste-led, not value-led.

The report states that “The median cloud spend for small-to-medium businesses is around $120K, and 10% of SMBs are spending $1.2 million or more”.

cloud spend growth chart

A 2019 “State of the Cloud” report by Flexera finds that cloud users are wasting 35% of their spend which means that if you’re an SMB spending $120K on cloud services, the size of your cloud waste is $42,000! That’s a full-time employee headcount.

The causes of cloud waste are many, but common and simple ones include:

  1. Turning on expensive-per-hour resources like large EC2 instances, not using them, not turning them off, even forgetting about them. This can cost thousands of dollars in a short space of time.
  2. Not understanding the “not so obvious” cloud costs like network egress fees or the cost of unused IP addresses or “not obvious snapshots”.
  3. People using the cloud who aren’t suitably trained.

Who is Responsible for Cloud Cost Optimization?

It normally starts with the Cloud Architect.

You can’t really tackle your cloud costs without them because they have to build cost reduction into the architecture (choosing the right size of resource) and they also know the most about the cloud. 

The AWS Well-Architected Framework was written for Cloud Architects; one of the framework's six pillars is dedicated to Cost Optimization.

This is the person who has learned most about the cloud, probably has a professional-level cloud certificate, and is responsible for designing how cloud resources are deployed to support an application. 

The secret to cloud cost reduction is building cost-saving practices into the architecture. Nobody else can do that other than the cloud architect. The AWS Well-Architected Framework Cost Optimization Pillar tells them what they need to do.

Is Cloud Cost Optimization Difficult?

Not at all.

You don’t need to be certified in FinOps to be good at it.

You don’t need to be an accountant or a cloud cost specialist. 

All you need to be is a Cloud Architect with the right actions and tools, with an appreciation of the AWS Well-Architected Framework as a minimum, to save your company a lot of money in the cloud. 

Obviously, the bigger your cloud bill and the bigger your cloud wastage then there’s a point where it makes sense to focus an expert on this.

This begs the question... Do you need a FinOps team to help?

Not always.

In fact, if you build FinOps too early you may be spending more on labour costs than you save in cloud costs.

The Cloud Architect implementing some sane cost practices is a good foundation for future FinOps if it becomes applicable.

How Often Do I Need To Optimize?

If you're using a tool that involves relatively heavy lifting from a human, we'd suggest monthly checks as a minimum. Ideally, you'd be checking in real-time, so every second without automated monitoring adds risk.

When it comes to repetitive tasks, humans are complacent at best, and negligent at worst. The best (and lowest-risk) way to maintain constant downward pressure on cloud costs is to use a third-party tool. These tools can use pre-defined customizable rules to monitor your cloud 24/7, fixing issues as they occur.

What Tools Can I Use to Reduce My Cloud Bill?

Firstly, each cloud provider has valuable (mostly) free options, e.g. AWS Cost Explorer.

These tend to be dashboard-style charts and tables that visualize your costs and allow you to dig down into specific areas.

To some degree, these rely on your architecture being well managed (think tagging strategy). To a larger degree, these tools require human effort. Maximizing the value of these tools is challenging.

Best-in-class cost optimization for AWS & Azure is only possible using third-party tools.

Not only are these tools biased towards lower cloud bills, but they dig far deeper into your costs and save you time.

When looking for third-party tools, e.g. Hyperglance, make sure it includes these features:

  • Multi-cloud coverage
  • Real-time monitoring & alerting
  • Pre-defined, customizable rule-based automations
  • Visualization of your costs with the ability to overlay them onto a diagram of your architecture
  • Reserved Instance (RI) recommendations (AWS)

Hyperglance & Cloud Cost Optimization

If you're looking to improve your cloud cost optimization, Hyperglance is the perfect place to start.

Hyperglance gives you complete cloud management enabling you to have confidence in your security posture and cost management whilst providing you with enlightening, real-time architecture diagrams.

Monitor security & compliance, manage costs & reduce your bill, interactive diagrams & inventory, built-in automation. Save time & money and get complete peace of mind.

Experience it all, for free, with a 14-day trial.