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Jan 11, 2024 9:46:43 PM by Shira Teller

10 Cloud Cost-Saving Strategies, Part 1

FinOps & Cost Opt., AWS, Cost Optimization, Cloud Computing

In an era where cloud computing has become the backbone of modern business operations, mastering cost efficiency in cloud computing is not just a smart strategy, it's an essential survival skill. As businesses increasingly pivot to cloud-based solutions, the ability to effectively manage and reduce expenses can be the difference between thriving and merely surviving financially.

This is the first article in a two-part series where we delve into the art of cost savings on the cloud. Here we will lay the groundwork with the first 5 strategies, and in the next article we will explore 5 more advanced strategies and savings opportunities.

 

Foundational Concepts

The cloud lets you shift from big costs (like data centers and physical servers) to variable expenses, only paying for IT when you use it. Whether you were cloud-native from the start or are just moving to the cloud now, AWS has resources for managing and improving your spend.

More and more businesses that had mostly on-site setups are switching to cloud services. This change has caused a big move from spending money upfront (CapEx) to paying for what they need when they need it in operations costs (OpEx). We've come to a turning point where we need new ways to understand, control and manage IT costs. To master cloud costs, finance and IT leaders must leverage practical strategies: right sizing, pay as you go models and clear budgeting.

 

FinOps Strategies for Cost Mastery

  1. Resource Right-sizing

    A basic method to save money is using cloud resources exactly as needed. This helps control costs by matching the demand with what's needed in reality. This means finding the right type and size of storage for workloads, ensuring efficient operations without spending too much. 

    Regularly examining the cloud instances already in use is also crucial. This includes checking instances already in use and finding ways to remove or reduce provisions without hurting operational efficiency. Consistently monitoring and adjusting their cloud resources allows businesses to achieve real cost savings.

  2. Adoption of a Usage-based Model

    With use-based pricing, IT costs are only incurred when they actually use the products or services. Customers typically receive a bill at the end of their billing cycle, paying for the services even if they didn’t use them, often using a yearly charge model. In contrast, billing based on usage changes according to how many resources are used.

    With AWS, you only pay for the services you take when you use them. You don't need to sign long-term agreements or handle complex permissions. Once you stop using them, there are no extra charges. Using this plan makes it easy to add or remove resources according to your need. This is helpful when your business requirements shift over time. It not only makes things cheaper, but also improves general work processes.

  3. Cost Visibility and Allocation

    Knowing how money is spent on cloud services helps control these costs better. IT managers should implement strong tools and systems that will help their professionals track and learn about their spending habits. Assigning costs to the responsible teams contributes to their sense of ownership over these resources. 

    This approach also motivates teams to explore smarter and more efficient ways to utilize cloud services. By making each team accountable for their cloud spending, it promotes overall cost savings and responsible financial management within the organization.

  4. Budgeting and Forecasting

    With AWS Budgets, you can create spending plans that effectively manage and control both costs and resource usage. If expenses go over the limit, you get an email or SNS notification to help you course correct. This AWS service can help you predict how much you're set to spend, or how many resources you are going to use, allowing you to make unique decisions for reducing cloud waste.

    When budgeting, it’s imperative to match resources with business goals. This keeps cloud costs in check and helps the company reach its goals. By anticipating upcoming cloud expenses, FinOps teams can better optimize resource allocation, prevent surprises and keep a closer watch on their budget.


  5. Improving Financial Governance

    Cloud cost control has climbed to the top of the agenda for many organizations, with 61 percent of cloud users claiming that cost optimization is a priority. Therefore, advocating for and implementing this practice in organizations is an urgent thing to do. Financial management drives responsible cloud spending by leveraging detailed cost analyses, aligning resource allocation with business priorities, and continuously optimizing technical aspects of cloud environments.

    Tighter financial control in the cloud is mission-critical for maximizing ROI and avoiding budget overruns. IT leaders must take proactive steps to establish robust financial controls by implementing spending limits, granular resource allocation policies, and automated cost alerts

    This also involves making rules, putting controls in place, and encouraging a sense of financial responsibility within the business. Good money management in the cloud makes sure costs match big goals and follow set spending rules.

Basic Cloud Cost Efficiency: Key Takeaways

Mitigating the overuse of cloud resources requires a collaborative effort between IT and Finance teams. Financial management strategies in the cloud are highly diverse, often differing substantially from one organization to another and even among various departments within the same company.

At Cloudride, we also specialize in offering bespoke guidance and solutions. Our team of FinOps experts is ready to provide personalized advice and services. Contact us to optimize your cloud expenses and drive your business forward.

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