Cloud computing has changed businesses’ operations, providing a flexible and scalable solution for data storage, processing, and application deployment. However, with the increasing adoption of cloud services, managing costs has become a significant concern for organisations. Flexera 2023 State of the Cloud Report, published earlier this year, highlighted that 82% of respondents identified managing cloud expenditure as their primary cloud challenge over and above security concerns at 79%.
One of the primary reasons for this is the ‘pay per use’ model that many cloud providers adopt. This could limit visibility and make it difficult for clients to monitor and manage cloud resource spending, leading to increased costs. Also, when departments don’t communicate well during the adoption of cloud infrastructure, it can result in unexpected expenses and unused resources. To avoid this, clear communication is key.
It is crucial, therefore, to prioritise effective cloud spend and optimise resources from the start. By doing so, organisations minimise unnecessary spending, maximise value, and ensure appropriate budget allocation.
This article discusses the importance of cloud cost management and explores strategies to help businesses save costs.
Understanding Cloud Cost Management
Cloud cost management tracks and controls cloud resource usage to avoid overspending. It’s essential to have a cost management plan to prevent unexpected expenses in the pay-per-use model of cloud computing.
The Impact of Poor Cloud Cost Management
Without proper cost management, businesses can face several challenges impacting their bottom line. Some of the consequences of poor cloud cost management include:
- Overspending: Without adequate monitoring and optimisation, businesses can pay for unused resources, resulting in unnecessary expenses.
- Budget overruns: Controlling costs with the pay-per-use model can be challenging, leading to financial strain.
- Inefficient resource allocation: Businesses with poor cost management cannot efficiently allocate resources.
- Difficulty in scaling: Proper cost management is crucial for businesses to scale up or down cloud services.
- Lack of visibility: Without proper cost management processes, businesses struggle to identify areas for cloud cost optimisation.
The Role of Cloud Cost Management Tools
Cloud cost management tools are crucial in helping businesses manage their cloud costs. These tools provide detailed insights into cloud usage and spending, allowing businesses to identify areas for cost optimisation. They also offer features such as budgeting and forecasting, which can help businesses plan their cloud spending and avoid unexpected costs.
By understanding the cost components of cloud, including networking, storage, and computing, and their impact on spending, you can manage costs effectively, stay within budget, and maintain financial control.
Here are some tried and tested tools and strategies to help you do this:
Leading Cloud Service Providers (CSPs) such as AWS, Azure, and Google Cloud provide essential tools to assist organisations with monitoring, managing and optimising costs. These provide valuable insights into the intricacies of cloud expenses, highlighting where resources are allocated and shedding light on areas for potential cost savings. Additionally, implementing monitoring and analytics tools ensures continuous visibility, enabling businesses to adjust their resources and workloads as and when required. This real-time insight allows organisations to remain agile and responsive to changes in demand.
- AWS Cost Explorer is a built-in tool that provides detailed cost and usage reports that help you visualise, understand and manage your AWS spend. With Cost Explorer, your organisation can analyse your AWS spend and forecast your potential costs for the next 12 months, helping you to manage your cloud spend and budgets more effectively.
- Azure Cost Management is a native Azure service that offers cost tracking, budgeting and optimisation recommendations. Within Azure Cost Management, you can track resource usage and manage costs across all your clouds through a single view and access insights that can help your organisation make informed decisions.
- VMware Aria Cost powered by Cloud Health, is a cloud cost management platform that supports multiple cloud providers, including AWS, Azure, Google Cloud, VMware and more. It delivers insights to help your organisation optimise costs, simplify financial management through analysing consumption trends and provide visibility into all your cloud environments.
Strategies for Effective Cloud Cost Management
To avoid the consequences of poor cloud cost management, businesses must have a well-defined strategy. Here are some strategies to help businesses maximise efficiency and minimise costs in their cloud environment.
1. Monitor and Analyse Usage
The first step in effective cloud cost management is to monitor and analyse the usage of cloud resources. This involves tracking the use of different services and applications to identify areas for optimisation. By monitoring usage, businesses can identify underutilised resources and make informed decisions about scaling up or down as needed. It also helps identify any unexpected usage spikes that can lead to increased costs.
2. Implementing Budget Controls:
Establishing, adjusting and regularly reviewing budgets and financial targets related to cloud expenses ensures greater cost control. This process starts with agreeing on initial budgets that align with your organisation’s financial goals and cloud adoption strategy, which will act as a roadmap to provide clear spending limits and guide resource allocation.
3. Leveraging Cost Allocation:
Assigning costs to specific teams, departments, or projects helps with accountability and transparency, enabling organisations to track cloud resources, monitor usage, and scale up or down where appropriate. It is critical to conduct regular reviews and adjustments as provisioning cloud workloads can be dynamic as business requirements change, so it is essential to maintain control to ensure that resources are allocated most cost-effectively.
4. Establishing Clear Cloud Governance:
Implementing procedures and reporting processes for cloud security and compliance minimises errors and ensures transparent tracking with clear categorisation. These processes help identify areas where cloud expenses may exceed the budget and highlight potential cost-saving opportunities. These insights can support your organisation’s proactive measures, allowing you to optimise resource usage or explore alternative cloud configurations to allocate your cloud spending better.
5. Clarifying Organisational Responsibilities:
It is vital to ensure that you define and assign responsibilities across the organisation to ensure successful cost management. Designating key teams and individuals responsible for monitoring, optimising, and managing cloud expenses provides greater clarity and accountability.
In summary, cloud cost management is a complex process that requires careful planning and consideration to ensure maximum efficiency and cost savings. Businesses can maximise their cloud efficiency and minimise costs by leveraging the right tools and strategies. In the end, cloud cost management is a critical part of any cloud strategy, and businesses should invest the time and resources necessary to ensure they are taking advantage of the best practices available.
Here at Brightsolid, our job is to make your job easier, so if you need help with how best to manage your cloud costs and maximise your investment, speak to one of our friendly team today.