Cloud Cost Optimisation: 7 Best Practices and Tools for Your Business

One of the great promises of the cloud was to give us the freedom to spin up new instances without having to worry about the costs of infrastructure.

Yet as great as pay-as-you-go sounds, it doesn’t help control your cloud spend. And mishaps happen, even to the best of us. 

A few years back, Pinterest incurred a bill of $20 million on top of the $170 million worth of reserved AWS resources. A similar thing happened to Adobe, whose team accidentally racked up $80,000 a day in Azure charges.

Most companies surveyed in Flexera 2022 State of the Cloud reported that their cloud costs went over budget by 13 percent. At the same time, they expected their cloud spend to grow by almost 30 percent in the following year. 

Together with gloomy economic prospects, this trend proves that it’s more critical than ever to keep cloud spend in check from day one. 

And that cloud cost optimisation should be a crucial element of your migration strategy – and not something you leave to chance.   

Cloud spend is bound to grow

As if it wasn’t going through the roof already, global spending on public cloud services will increase even more. 

According to Gartner, it will reach nearly $495 billion in 2022 and grow to a whopping $600 billion in the next year.  

The pandemic has undoubtedly accelerated the pace of cloud adoption. But organisations had been moving away from traditional client computing solutions long before its outbreak. 

Sid Nag, Garther’s Research VP, compared the cloud to “a powerhouse driving today’s digital organisations”. And these are already more thoughtful about the services they choose to achieve precise business outcomes in their digital transformation journey.

According to Nag, IT leaders who view the cloud as an enabler and not an end state will be most successful. Combining it with other emerging technologies, their businesses will do better, which, in turn, will increase their appetite for the cloud even more. 

But how will they ensure the right cloud performance without breaking the bank?  

Let’s talk about cloud cost optimisation!

In short, cloud cost optimisation is about reducing your overall expenses by identifying mismanaged resources, eliminating waste, and ensuring optimal capacity for the right price. 

Simple in theory, this often proves challenging in practice. 

For example, take the total cost of ownership (TCO) that organisations often use to measure adoption success. 

While estimating cloud computing costs is complicated yet manageable, the real problem lies in quantifying labour costs, which usually seem easier to identify. 

Advanced clouds like AWS, Azure, and Google Cloud use automation to reduce the burden on IT teams and increase their efficiency. This translates into a significant pool of saved engineering hours, which should also feed into the final calculation as they are an additional benefit.