Key takeaways on cloud cost optimisation:

• Match the size of cloud resources to actual usage requirements and automatically adjust resources based on demand to avoid over-provisioning and reduce unnecessary expenses.
• Adopt FinOps (Financial Operations) to optimise and manage the financial aspects of cloud usage, ensuring financial accountability and data-driven decision-making to control costs effectively.
• Utilise platforms like AWS Cost Explorer, Azure Cost Management, and Google Cloud Cost Management to gain detailed insights into cloud usage and spending, enabling the identification of areas for optimisation and cost reduction.

What is cloud cost optimisation?

It serves as a mean of identifying mismanaged resources, saving costs, and eliminating waste.

Implementing a cloud cost optimisation strategy is crucial in managing and reducing cloud expenses while ensuring alignment with business objectives. With the current global shift to cloud environment, it is no wonder that for 64% of respondents of a cloud cost management survey, cloud cost optimisation has become one of the biggest concerns linked to running the cloud.

An interesting angle of cloud services optimisation is called FinOps (Financial Operations) which refers to the practice of managing and optimising the financial aspects of cloud usage in dynamic cloud environments. It involves understanding and controlling the spendings associated with cloud services, improving financial accountability, and making data-driven decisions to optimise spending:

• The Cloud FinOps Guide: mastering cloud finances
• Benefits of a Cloud FinOps adoption in your organization

FinOps third party solutions, including cost visibility and analysis, cost allocation, budgeting and forecasting, as well as recommendations, all done by a partner, are a great option to consider when thinking about optimising your costs related to the cloud.

Using a combination of those tools can help organisations improve their financial performance and maximise the value of their cloud investment, and should be an important part of every cloud management process.

Why optimise cloud costs?

Optimising cloud costs is essential for businesses aiming to reduce unnecessary cloud spending and maximise their overall benefits.

This not only enhances forecasting and budgeting but also promotes a culture of cost awareness and optimisation. When cloud spending is kept in check, businesses can allocate resources more effectively, ensuring that every dollar spent on cloud services contributes to their strategic goals.

Understanding your cloud costs and aligning them to value

It’s crucial to have a deep understanding of your cloud usage and align it with the value it brings to your company. Start by assessing your cloud usage patterns to identify areas of waste.

Implementing cost-saving strategies, such as right-sizing and auto-scaling, can help ensure that your cloud resources are used efficiently. By aligning your cloud costs with the value they provide, you can maximise the return on your cloud investment and ensure that your resources are being utilised effectively.

Listen to my conversation with Adam Grabek, as we explain how companies often lose money in the cloud due to inefficient management practices:

Improving performance and opening new revenue streams

Effective cloud costs optimisation can lead to improved performance and the opening of new revenue streams. By reducing waste and optimising resource utilisation, you can enhance the performance of your cloud-based applications and services. This not only improves user experience but also allows you to reallocate saved resources to new initiatives and projects.

These new ventures can open up additional revenue streams, driving business growth and increasing your competitive edge in the market.

Learn more about cloud costs:

• AWS vs Azure vs GCP vs Alibaba – Cloud Providers Comparison
• FinOps: best practices and tips to manage Cloud costs

Establishing a cost-conscious culture

Establishing a cost-conscious culture is one of the best cost optimisation best practices. This involves educating and training your teams on cloud cost management best practices and promoting a culture of cost awareness throughout the company.

By fostering a mindset of cost optimisation, you can ensure that everyone is working together to reduce waste and optimise resource utilisation. This collective effort can lead to significant cost savings and more efficient resource consumption, ultimately benefiting the entire organisation.

What are the common causes of unexpected cloud costs?

Unexpected cloud costs can arise from several factors, often due to mismanagement or oversight. Key contributors include:

• Overprovisioning resources. Allocating more computing power, storage, or services than necessary leads to increased expenses without corresponding benefits.
• Idle or unused resources. Resources that are running but not actively utilised, such as unattached storage volumes or dormant virtual machines, continue to incur charges.
• Inefficient resource allocation. Not right-sizing resources to match workload requirements leads to paying for unused capacity.
• Lack of monitoring and visibility. Without proper tracking of resource usage and costs, inefficiencies go unnoticed, leading to unexpected expenses.
• Misconfigured auto-scaling. Improperly set auto-scaling parameters can result in unnecessary resource allocation during demand fluctuations, increasing costs.
• Data transfer and retrieval fees. Transferring data between regions or retrieving from certain storage classes can incur significant costs if not managed carefully.
• Lack of tagging and cost allocation. Without proper tagging, it’s challenging to track and manage resource costs across departments or projects.

Addressing these issues requires diligent monitoring, proper configuration, and effective cloud governance to ensure costs remain predictable and controlled:

• Cloud governance: framework, challenges and benefits
• The most common problems in cloud implementation
• Discover how to cut cloud costs and boost your efficiency

How can we monitor and control cloud costs?

There are several tools and techniques companies can use to optimise their cloud costs. Some of the most important ones include:

• Cloud cost optimisation tools such as AWS Cost Explorer, Azure Cost Management and Google Cloud Cost Management. These tools provide detailed insights into cloud usage and spending and can help organisations manage and reduce their cloud expenditures by identifying areas where they can optimise usage and reduce costs.
• Right-sizing which involves matching the size of cloud resources to actual usage requirements. By scaling resources up or down as needed, organisations can avoid over provisioning and reduce unnecessary spending.
• Reserved instances which allow organisations to commit to using specific cloud resources over a period of time in exchange for a discounted rate, helping them reduce costs for resources that are used consistently.
• Spot instances that allow organisations to bid on unused cloud resources, which can be significantly cheaper than on-demand resources – a good option for workloads that are not time-sensitive and can be interrupted without consequences.
• Auto-scaling that allows organisations automatically adjust cloud resources based on demand, helping organisations optimise resource usage and reduce unnecessary spending during periods of low demand.
• Tagging which involves labelling cloud resources with descriptive metadata, helping organisations better track and manage their cloud usage and spending.
• Cloud cost allocation which involves allocating cloud costs to specific departments or teams within an organisation.
• Serverless computing which allows to eliminate the need to provision and manage infrastructure. This can help reduce costs by only paying for actual usage.
• Implementation of cost-saving policies, such as turning off resources when not in use or enforcing a policy of using only approved cloud services. This can help reduce unnecessary spending and optimise cloud usage.
• Regular monitoring of cloud usage and spending and adjustment of strategies and policies as needed to optimise costs. Identifying cost anomalies and setting alerts can help maintain budgets and optimise cloud costs effectively.
• Buying cloud through partner which may allow you to save on costs and get a customised solution, as well as enhanced support and responsiveness whenever you need.
• Licence portability, meaning utilisation of on-prem licenses to reduce cloud costs.

How often should we review our cloud spending?

Regularly reviewing cloud spending is needed for effective cost management. The frequency of these reviews should align with your organisation’s specific needs and the dynamics of your cloud environment.

For most companies, conducting a comprehensive review at least once a month is advisable. This regular assessment allows for the timely identification of spending patterns, detection of anomalies, and implementation of necessary adjustments to prevent cost overruns.

During periods of significant activity — such as large-scale deployments, migrations, or promotional events — more frequent reviews may be necessary. Weekly or even daily monitoring during these times can provide the agility required to manage costs effectively. Implementing automated monitoring tools can facilitate continuous oversight, enabling real-time alerts and insights into spending anomalies.

Ultimately, the goal is to establish a review cadence that aligns with your organisation’s operational tempo and financial objectives.

What are the benefits of implementing a cloud costs optimisation practices?

Some of the most important benefits of cloud cost optimisation include:

1. cost savings obtained by optimising unnecessary costs and reducing unnecessary spending,
2. improved efficiency of operations by optimising usage and reducing the amount of resources they consume,
3. enhanced visibility into cloud workload, allowing organisations to identify areas where they can optimise usage and reduce costs,
4. better budgeting obtained by better understanding of cloud budget and spending patterns,
5. improved governance by implementing policies and procedures to discover cost saving opportunities,
6. increased agility.

Understanding and reducing cloud bills is required for effective cloud cost management and optimisation strategies. By focusing on unnecessary and unexpected costs, organisations can achieve significant savings.

The role of consulting in cloud cost management

With so much to do when it comes to optimising your cloud cost and with all the benefits your organisation can have when doing it correctly, it is worth considering taking advantage of cloud consulting services.

They provide expertise, guidance and support in your cloud management processes as well as of FinOps in case of large environments. Want to know more? Read our article: “FinOps consulting: maximise your ROI with experts“.

Good consulting services include cost optimisation assessment, cloud cost analysis and reporting, resource utilisation optimisation, cost-saving policy development, vendor negotiation and management, and training and education allowing organisations to better understand cloud cost management and optimise their cloud usage.

By working with Future Processing, organisations can gain the expertise and support needed to effectively manage their cloud costs and maximise the value of their cloud investments.

If you are keen to hand your cloud cost optimisation to the safe pair of hand or just want to speak about it with specialists experienced in doing it at a variety of levels, do get in touch with us.