While it's wise to get on the cloud, staying there can be expensive. According to Pepperdata, over one-third of businesses overrun their cloud budget by up to 40%. If you end up with unused or idle resources, the wrong server size, or a cloud service provider that does not meet your business needs, your cloud infrastructure might become more costly than on-premises.
So, what are the signs that you need cloud cost optimization, how to perform it successfully, how much you can save, and what businesses have already benefited from it? Discover in this article.
Signs you need cloud cost optimization
You need to remember that by reducing costs, you might compromise something else if you choose the wrong approach. For example, by getting rid of one of the cloud providers to cut cloud expenses, you risk getting into a cloud vendor lock-in. Also, keep in mind that reducing costs in the cloud is not the ultimate goal. Your aim is to reduce costs in relation to business outcomes. If a certain cloud spending brings business value, you shouldn't reduce these cloud costs.
Before you opt for cost optimization in the cloud, you need to clearly understand what this can affect. However, in some cases you should know for sure that you require cloud cost optimization. They are:
1. You are a mid-sized company or enterprise
Such businesses typically have complex and long-lasting projects, bigger budgets, and more employees. So, it is more challenging for such companies to understand if all their resources are allocated correctly. Apart from that, a higher number of employees raise the risk of human error which can lead to extensive cloud expenses. For instance, your employees can forget to shut down the additional cloud resources that they used to complete a task.
2. You have a non-consistent workload
Many businesses have peak workload periods. For example, Black Friday and holiday seasons are such periods for retail platforms. One of the ways to withstand these high loads is by purchasing additional cloud resources and getting rid of them afterward. If your workload is frequently changing, you need to keep tabs on cloud resources you need and don’t need.
3. You don’t have a clear understanding of your cloud spendings
If your organization keeps overrunning its cloud budget, this is a clear sign that you need cloud optimization. You must know for sure what cloud services you use and how your business benefits from them. If you lack this understanding–it is time to find a trusted tech partner that will help you track all your cloud resources and optimize what should be optimized.
4. Your cloud budget can be used more effectively
Even if you understand your spendings, it doesn’t mean you can’t use these resources more effectively. In this case, your tech partner can, for instance, help you find alternative and smarter approaches to the processes that you already have in place.
If your business case matches at least one of these points, you should consider cloud cost optimization. But how to do it correctly? Let’s find out together.
3 major steps of successful cost optimization in the cloud
1. Cloud audit
The audit is a critical part of every infrastructure optimization, and the cloud is no exception. During this stage, you need to find solid reasons why optimization is required, what consequences it may bring, and how your optimized cloud infrastructure may perform in the long run. It is vital to understand what cloud resources you have and what is actually used.
Trusted vendors typically have a separate team to audit each project. At N-iX, for instance, it is called the product discovery phase. During the discovery phase, the N-iX team shapes the scope of your solution based on the goals of different stakeholders, the user journey map, as well as market research. The team validates the assumptions and hypotheses from different perspectives of Business Analysis, UX, and IT Architecture and produces all the deliverables required to efficiently kick off the implementation phase.
Also, remember that in order to perform a thorough cloud audit, you need a strong team of DevOps experts.
Within this stage, it is vital to:
Find unused or unattached resources
The easiest way to cost optimization in the cloud is to look for unused resources. An employee can purchase a temporary server to perform a certain task and forget to turn it off when the job is done. Or, someone may forget to remove storage attached to terminated instances. Such common mistakes result in charges for resources you are no longer using and thus should be optimized.
Identify and consolidate idle resources
Idle resources could cost your organization thousands of dollars. A resource is defined as idle if it is not fully utilized–e.g., if you use 20% of a particular instance, it is 80% idle. And your cloud vendor still charges you 100%. So, ensure that your vendor finds the idle resources to tackle them afterward.
When the audit is done, and you know for sure that you could use your cloud more efficiently, it is time for the planning stage. Your team is to decide what way of optimization is the best fit for your business.
For instance, to optimize cloud infrastructure, creating Kubernetes clusters/Docker containers is a tried and trusted N-iX approach. By doing so, we, for example, can create a system of five virtual machines and run ten applications on them. With such an approach, our clients can reduce the hosting costs and avoid problems if one of the machines breaks down. If one of the machines happens to fail, the system transfers services hosted on it to other machines automatically. At the same time, if the machine becomes operational again, the services also return to their initial place.
When a team has a clear understanding and vision of how the cloud optimization process will look, they continue to the implementation stage. With the help of skilled DevOps experts, you can:
- Reduce infrastructure usage where it can be reduced;
- Automate the CI/CD process and perform provisioning of cloud infrastructure;
- Delete underused instances;
- Rightsize your workloads;
- Re-size resources if they are not used;
- Leverage autoscaling to your benefit;
- Move rarely accessed storage to cheaper vendors;
- Set alert notifications for crossing predetermined spend thresholds;
- Leverage spot instances for serverless and things that don’t require high availability;
- Invest in reserved instances;
- Host in a different region;
- Use discounts many cloud vendors offer.
N-iX has been working with the cloud for over a decade now. During this time, we have come up with some best practices that help us deliver timely and quality cloud solutions. Let’s take a look at these best practices.
Best practices of cost optimization in the cloud
1. Utilize heat maps
Heat maps are essential mechanisms for cloud cost optimization. A heat map is a tool that shows peaks and valleys in computing demand. This data is valuable for establishing start and stop times to cut expenses. For instance, heat maps can indicate whether development servers can safely shut down on weekends.
2. Right size computing services
This is the process of analyzing computing services and modifying them to the most efficient size. Apart from server sizes, you can optimize its memory, database, computing, graphics, storage capacity, throughput, and more.
3. Invest in cost-saving tools provided by cloud vendors
There are many cloud vendors out there that offer tools for cloud cost optimization. However, in this article, we will focus on the most significant market players– Microsoft Azure and Amazon Web Services. Keep in mind that a wide variety of tools can help you, only a reliable tech partner can help you choose the tools that will bring the most value to your business.
In this article, however, we provide several examples of tools that can help you with cost optimization in the cloud for listed providers.
Azure cost optimization
- Azure Advisor:
With this tool, you can identify idle virtual machines (VMs), ExpressRoute circuits, and other underused resources, as well as get recommendations on which resources to shut down and see how much you would save.
- Microsoft Cost Management:
With the Microsoft Cost Management tool, you can track all costs related to your Azure consumption, download billing statements, set budgets, and more.
- Microsoft Azure Well-Architected Review:
While this tool doesn't directly assess your Azure resources consumption, it provides recommendations that can be used to enhance the quality of a workload. Apart from cost optimization, this framework consists of such pillars of architectural excellence as reliability, security, operational excellence, and performance efficiency.
AWS cost optimization
- AWS Cost Explorer Resource Optimization:
This tool will identify Amazon EC2 instances with low utilization, reduce costs by stopping or rightsizing, and get a report of EC2 instances that are either idle or have low utilization. You can reduce costs by either stopping or downsizing these instances.
- AWS Instance Scheduler:
With the help of this AWS tool, you can stop instances automatically. Or, you can use AWS Operations Conductor to automatically resize EC2 instances (based on the recommendations report from AWS Cost Explorer).
4. Choose wisely between multi-cloud and single-cloud approaches
Some enterprises opt for the multi-cloud approach to avoid vendor lock-in. This is a viable strategy for increasing availability and uptime. On the other hand, these organizations may risk losing potential discounts by using a single cloud vendor.
Let's say you spend $500,000 on AWS, $300,000 on Azure, and $200,000 on Google Cloud Platform. In this case, you miss out on reaching a $1M tier with a single vendor. The value of that $1M tier may be substantial discounts on overall cloud expenses and preferred status with that particular vendor. So, the multi-cloud approach is not one-size-fits-all, and you should keep that in mind.
5. Find a reliable technology partner
Partnering with a trusted vendor is a great cloud cost optimization strategy. According to the Telegraph, companies can save up to 30% on operating costs with IT outsourcing. With a trusted partner by your side, you can avoid the recruitment headache, mitigate all risks, scale your team easily, and develop your solution within your required time and cost estimates.
Cloud cost optimization in action: N-iX success stories
1. Reducing costs by 30% for global telecom
Lebara is one of Europe’s fastest-growing mobile virtual network operators (MVNO), with millions of active customers and employees across six countries worldwide. The client needed to perform a wide range of solutions. The project consisted of several phases:
- Re-platforming: our experts worked on cost optimization and lead time decrease by migrating from on-premises to the cloud;
- Tech-stack upgrade: N-iX team has migrated the solution from on-premises WCF and BizTalk to Azure and from Azure Service Fabric to Azure Kubernetes Services;
- Enhancing flexibility and scalability of the solution.
Cloud migration allowed our client to improve scalability. The reduction in new infrastructure costs amounted to around 25-30%. The client also managed to improve innovation and lead time.
2. Reducing infrastructure maintenance costs for a leading technology company
Our partner is a provider of stock photography, stock footage, stock music, editing tools, and custom content tailored to a brand’s needs. They have a library of 300M+ images, with 200,000 more added every day. This platform needed modernization, as it was inconvenient for its managers to track the process without notifications. Also, they needed a place to consolidate all the notifications. If the customer did not address their need, they would spend more time managing the processes and, in turn, would lose money.
To solve this problem, we have chosen AWS, which makes it easier to build, deploy, and scale the applications. So, our client can focus on business problems instead of updating and managing tools.
Together with the client, we have managed to modernize the system to optimize workflows allowing the managers to save time and respond to any updates immediately. The platform has become more convenient for managers and more efficient for users.
Since there is no consistent workload in the system, managers do not work at night, and no notifications are required. In the morning, the load increases, and AWS Lambda automatically scales without any need for maintenance by developers. Amazon RDS offers reliable storage and also allows to save money on its maintenance. In particular, we reduced the staff of DevOps engineers who were supposed to support the infrastructure.
Our client is a leading provider of in-flight connectivity with 20+ years of experience and more than 1,000 employees. The business is growing and needs to support business functions and decisions with analyzed and prepared data. Therefore, Gogo has decided to go for tech transformation and chose N-iX as a partner. N-iX has built a team of specialists with vast experience in cloud, Hadoop, Apache Spark, Tableau, etc.
N-iX team has successfully migrated Gogo solutions to the AWS cloud platform and built a unified data platform. We’ve helped the client to:
- optimize operations;
- completely re-build the solution using open-source technologies, such as Spark;
- developed the system for predicting failures and replacing devices from scratch;
- build several highly efficient analytics platforms.
As a result, we have helped the client to significantly cut maintenance costs.
Why entrust your cloud cost optimization to N-iX?
- Our expertise in Cloud includes on-premise-to-cloud migration, cloud-to-cloud migration as well as multi-cloud and hybrid cloud management;
- N-iX boasts a talent pool of more than 2,000 specialists, including 120+ certified cloud experts that can help you boost your project delivery or build a solution from scratch;
- We offer professional DevOps outsourcing services, including Cloud adoption (architecture, migration, optimization), building and streamlining CI/CD processes, security issues detection/prevention (DDOS & intrusion), firewall-as-a-service, and more;
- N-iX is a certified AWS partner, a Microsoft gold certified partner, and a Google Cloud partner;
- N-iX complies with PCI DSS, ISO 9001, ISO 27001, and GDPR standards.