Six Efficient Practices to Reduce Cloud Costs

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Yuliia Podorozhko
Market Researcher

As digital transformation gains momentum, organisations are choosing cloud-native software as the cloud offers almost unlimited possibilities and software maintenance savings. However, many companies are struggling to reduce high cloud costs. Yotascale’s CEO Asim Razzaq notes that nearly half of cloud infrastructure spending remains unaccounted for, while according to Gartner, 60% of infrastructure and operations managers experience public cloud cost overruns. Another report revealed that 82% of companies incurred unnecessary cloud costs, 56% lacked tools for programmatically managing expenses, and 86% can't easily obtain a costs overview when needed. 

As cloud-native app developers and digital transformation consultants, MadAppGang understands the struggle. What's more, we also know that as companies grow, wasteful cloud spending gets worse. Organisations may even underestimate waste to the point they’re operating at a loss. Our client Evergen, could be an example here. Their main concern when they came to us was a huge US$22 maintenance cost per customer Evergen users, meanwhile, only paid a US$20 service fee.  

No matter how complicated cloud cost optimisation may seem, it can be solved quickly enough with the support of an experienced team like MadAppGang. In some cases, you might even be able to handle the problem on your own. To help, we compiled a list of six efficient cost-reduction strategies. First though, let's dive deeper into the most common reasons for cloud budget overruns. 

What contributes to cloud costs?

Cloud cost increases are caused by a variety of factors: the nature of the project, management errors, an insufficiently qualified team, and the ways a company organises its processes, to name just a few. That said, it's possible to distinguish the three most common factors that contribute to cloud costs:

Unutilised resources

Сoncentrating on higher priority tasks, it's very easy to forget about less frequently used resources. Usually, these are obsolete snapshots, unattached storage volumes, unused but running instances, and data storage resources used at multiple locations (backups, virtual disks, and so on). Many forget that vendors charge for this, too. You may, for example, be charged for several gigabytes of obsolete snapshots once a month, and for unused, but running instances every hour.

Compute resources

Typically, container orchestration tools like Kubernetes allow capacity planning and resource allocation. It's common practice to define a resource limit on how much CPU (measured in cores) and memory can be used by applications. The downside to this is that public cloud costs rise if over-allocated resources are not used. The same is true for empty clusters, environments, and workspaces.

Hidden costs

It’s not only about companies ignoring the cloud vendor's terms and conditions, and overlooking extra fees. Infrastructure and operations (I&O) managers often forget to include indirect costs in project budgets. For example, residual and data transfer costs and charges for request/application programming interface (API) calls. Frequently, these unavoidable costs are not taken into account. 

6 Ways to reduce your cloud costs

It's clear that the core reasons behind higher cloud costs is a lack of attention to details and poor planning. So the best advice to reduce cloud costs is to conduct a careful analysis of your resources, and a thorough review of the project plans and production processes. The six strategies you'll find below are mostly tips on finding and eliminating "cost bugs."

Improve internal communications and project governance

There are normally several teams working on a project. Often, each of these teams are overburdened with tasks and can overlook critical questions, such as how to efficiently allocate resources or when to scale software up or down. It’s wise to establish strong communication between the teams in charge of cloud infrastructure, and to form a controlling hub where costs can be monitored and quickly addressed if need be.

Monitor and correct cost anomalies

First and foremost, it's necessary to monitor spending on a daily basis to spot and correct cloud cost anomalies when they arise. The problem is that daily monitoring requires time and effort. The smartest thing to do is to use artificial intelligence (AI) trackers that monitor cost in real-time, detect anomalies, provide deep root-cause analysis, and alert appropriate teams. Big cloud vendors such as AWS offer these AI-powered services.

Azure’s cloud cost analytics. Source: Microsoft

Rightsize your compute resources

Many organisations over-provision and buy more computing resources in the cloud than needed. To solve the problem, rightsize your apps and don’t use bigger instances than needed. Rightsizing is especially relevant when we're talking about reserved instances (RI). Normally, companies purchase too much RI capacity at the start of a project and then forget to monitor their services. Meanwhile, by identifying and then downgrading, changing, or deactivating the underutilised instances, you can reduce cloud costs by roughly 20-35%.

Minimise cross-regional and cross-zone data transfer

Did you know that cloud providers charge you more when you move data across availability zones, regions, or countries? These data transfers may be necessary for a project, but they must also be justified. Ideally, you should host data as close as possible to its user base. As a long-term strategy, consider re-architecting your data paths to minimise the distance it needs to travel.

Google Cloud availability zones. Source: Cloud.Google

Consolidate and balance subscriptions across the enterprise

In large companies, there might be confusion with subscriptions. In some cases, IT departments automatically renew cloud subscriptions for users who don't need them anymore. It's also common for different departments in the same company to order licenses and subscriptions on multiple small agreements from the same vendor, whereas the enterprise package is typically more cost-effective. Regular reviews of subscriptions across the organization helps to reduce cloud costs. 

Exploit promotions

One of the most efficient cloud cost management strategies is to monitor the promotions vendors offer. Check if you can buy an enterprise package for your organisation instead of dozens of separate on-demand cloud services and resources. Also, there are special discounts available for larger organisations. For instance, if you pay AWS premium support of US$85,000 every month, you can get a discount of up to $6,150. And remember that it's okay to negotiate, even if you're in a multi-year contract.

how to save on aws cloud packages

Source: AWS

Final word

When it comes to cloud costs, remember that the devil is in the details. And although these six strategies can help you address cloud storage costs, consider having more control over cloud resources in the long run. It might be necessary to re-architect software and migrate apps from one vendor to another if costs are skyrocketing and basic strategies aren’t helping. In this case, you need help from experienced professionals.

You might need either a team of auditors or a team of developers, depending on the situation. A thorough audit provides a solid foundation for cloud cost optimisation and future cost management. Alternatively, you can restructure your app so that it’s more cost-effective. MadAppGang can help you in both cases. Our team has experience planning and building cost-efficient software from scratch, as well as redesigning apps and transferring software from one cloud to another.  

Contact us and find out how our expertise can help you reduce cloud costs.