As companies scale their cloud strategies, IT and finance leaders are looking to maximize both operation efficiency and return on investment. On their digital transformation journey, companies are migrating more workloads to the cloud, which can incur higher costs during the process due to the higher volume of cloud resources needed. However, it is also an opportunity to create more agile, resilient systems that will lower costs in the long term while increasing its business value.
Additionally, many organizations are increasing the number of advanced cloud-based services. This includes the addition of artificial intelligence, machine learning, data analytics, and similar technologies that demand more resources and have higher associated costs.
Still, when managed effectively, cloud and even multi-cloud strategies can offer significant savings compared to on-premise. However, organizations must be mindful of the challenges that can arise when embracing cloud and multi-cloud strategies, as unexpected costs can balloon quickly.
Organizations can employ several strategies to mitigate rising cloud costs. Implementing a robust cloud governance framework that includes ongoing cost optimization practices is key. Here are four critical components of a cloud governance framework that can help keep cloud costs under control.
1. Right-sizing resources
The first step is to right-size resources by matching the type and size of instances to the needs of the workload. In this process, tech leaders will examine the performance of the company's cloud instances, as well as analyze its cloud usage patterns and needs. By accumulating this data, the organization can determine if unused or underutilized services can be eliminated.
In addition to pure cost cutting, the right-sizing process enables businesses to fully understand their cloud environment and usage. This is especially true with regular analysis, allowing the organization to evolve with shifting priorities.
2. Utilize automation and real-time insights
Traditional methods of deploying cloud workloads require manual processes. This exhausts an IT team's time and creates opportunities for errors. Introducing automation increases the speed, security, and cost-efficiency of various tasks, including autoscaling. This occurs when a tool monitors and adjusts cloud usage to automatically remove or increase compute resources as needed.
Additionally, organizations can take a proactive approach by using cloud management services with real-time insights into usage, costs, and performance. These tools analyze vast amounts of data from cloud operations to provide insights into performance, cost trends, and resource utilization. Predictive analytics can forecast future cloud needs, enabling proactive capacity planning and budgeting. Detailed reporting features allow organizations to track key metrics and KPIs, providing a clear understanding of their cloud environment's health and performance in real-time.
3. Move to a serverless architecture
Moving to a serverless architecture also reduces costs by eliminating the need to manage and pay for always-on servers. In a serverless environment, you only pay for the exact compute resources used during the execution of your code. This approach is particularly beneficial for applications with variable workloads, as it automatically scales based on demand, ensuring that you only incur costs for what you use.
4. Create a cloud cost-aware culture
Finally, the role of culture cannot be underestimated. It is crucial to foster a culture of cloud cost awareness. From the top down, teams should be encouraged to continuously monitor and analyze their own cloud usage patterns. This way, those most familiar with a project's needs and processes can determine what can be streamlined with minimal ripple effects.
Companies that ingrain this into their organization may also consider creating a Cloud Cost Optimization Officer role if they don't already have one. This individual would lead efforts related to analyzing and strategizing cloud usage. Because they would have an overarching view of all cloud usage throughout the company, they would be able to spot opportunities for optimization that others may not have visibility into.
Looking ahead
These are all strategies IT leaders can and should implement today. It is also vital to keep an eye on the future to avoid falling behind. Cloud costs will continue to rise, particularly as cloud adoption deepens and businesses leverage more advanced and specialist cloud services. That doesn't necessarily mean that the cloud will become less cost-effective.
As cloud technologies become more widespread and mature, more cost-management tools and strategies will emerge, offering even more opportunities for organizations to optimize their spending more effectively. For example, artificial intelligence can play a crucial role in analyzing, forecasting, and scaling cloud usage. This can enable greater fine-tuning in automation and, ultimately, lowered costs.
Lastly, the pricing structures offered by various providers will continue to shift based on customers' priorities. There is already a trend toward increasingly granular pricing models. As providers cater to their clients' industry-specific needs and sustainability goals, new and increasingly competitive pricing models may emerge for enterprises to take advantage of and further reduce their cloud spend.
