Cloud spend management to increase business productivity

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Most businesses have at least one workload running on the cloud.

This year, COVID 19 has increased cloud adoption rates; 40% of businesses moved their operations to cloud for business continuity from distributed environments.

Cloud lets enterprises increase their capacity without investing in hardware and facilities and are reliable and available.

Drivers to move to cloud

A Deloitte survey of about 500 IT executives found Security and Data Protection as the top driver for cloud adoption. 58% of respondents ranked it as number 1 and top-of-mind factor.

Data modernization is the number 2 driver, involving moving data from legacy architecture to modern cloud databases.

Another significant driver is cost and IT operations that enable operational agility and efficiency.

To fully use the cloud, businesses must adopt the right cloud approach and invest in infrastructure that improves operational efficiency.

But what’s the right cloud spend management approach?

Are my cloud investments fully used?

To answer these questions, let’s first look at how cloud systems are priced and the need to manage cloud spend.

Managing cloud spend

Enterprises must focus on cloud spend optimization. A 2020 Flexera State of the Cloud Report has found that 30% of Cloud Spend is Wasted.

Top reasons for escalating cloud costs were using services that businesses don’t need, choosing incorrect instances, failing to use discounts, lack of centralized management, multi-cloud strategies, poor storage management and vendor lock-in.

To optimize cloud spending businesses must assess infrastructure, turn on autoscaling, use the cloud vendor’s management tools, take advantage of discounts, use serverless services, deploy containers, implement automation solutions and use a cloud cost management vendor.

How cloud optimization helps to save instantly

In a legacy environment, you’ve already paid for all the IT infrastructure resources so there is no impetus to save resource costs.

But with cloud, optimizing services lets you immediately save costs. For instance, when you scale down a resource, it lowers your bills.

Why cloud costs escalations happen

1. Availing services businesses don’t use: Businesses avail services they will not use owing to a lack of understanding of the environment and guidance from a cloud management expert. This has them spending more than required.

2. Choosing the wrong vendor: While most major vendor pricing charts look similar. Going deep reveals nominal charges for some workload types. To leverage the best offerings, organizations must ensure they fully understand public cloud pricing.

3. Vendor lock-in: Organizations must invest time in fully understanding the possibilities of the vendor offering. Else, they will have to pay more to maintain systems on one framework. And it’s difficult to migrate applications or workloads once they are in production.

4. Working in silos: Small teams or individuals within an organization deploying cloud solutions for their work without IT intervention makes identifying expenditures difficult.

5. Running services when not in use: In certain instances, users may turn on certain services which they then don’t turn off. These instances may continue running even when no one is using them.

6. Selecting the wrong type of instances: Overprovisioning large compute instances instead of a necessary medium or small is one type of overspending that’s hard to spot.

7. Not availing discounts: When developers are in a hurry to launch their applications, they may choose the standard configuration settings without looking at reserved or spot instances that could save them money.

8. Multi-cloud approach: Many organizations choose to avail services from multiple vendors, matching applications and vendor offerings to find solutions that fit best.

However, using services of more than one vendor and maintaining the environment makes it complex and costly to manage.

9. Inefficient storage management: Unnecessarily storing data for longer than required can be a reason that increases cloud costs.

Also having multiple copies for recovery purposes saved on the cloud can increase spend. Organizations must ensure they are managing their storage efficiently and not spending on storage for data that is rarely accessed.

10. Not understanding cloud pricing and billing: One of the main reasons for cloud wastage is the complexity of their billing.

Expert consultation is one way to understand pricing and track where you’re spending money.

How to manage cloud spend?

Instances

Most of the wastage happens for compute instances and virtual machines.

Over-provisioned instances: 56% of cloud spend is on instances. However, 40% instances are a couple of sizes larger than what’s required for the workloads, which converts to 50%-75% wastage on each oversized instance. Optimize cloud spend here, and see 20%-30% savings in instance spend or 11%to16% of all cloud spend

Idle instances: Running cloud instances 24×7, when used only 12X5 takes up much of your costs. Switching these instances to a 12×5 model saves 67% of costs. Temporary instances used for development, QA, training and so on are not terminated after project completion. Shutting this down helps manage cloud costs.

Going for high-cost instances or regions: Selecting vendors from nearby regions to support instances can help in saving costs. Prices vary for different regions and instance types, so evaluate your options. When new instance types are offered, with better specs and less costs, replace the older alternatives for cloud cost optimization.

Storage

Although storage costs are a 10%-25% of your cloud bills, it is something that can quickly grow and drive costs. So, uncover and eliminate wasted storage costs.

Accumulated unattached volumes: When an instance is terminated, volumes attached are often not deleted. These volumes accumulate as instances, causing significant cloud wastage if not managed.

Old snapshots: Snapshots are created for storage volumes, and so not cleaned up often. Organizations have their special policies for how long snapshots must be retained. A cloud infrastructure expert like Nuvento can automate this process helping you save cloud costs.

Expensive storage options: Cloud users tend to use expensive disks, redundancy options or access frequency that causes overspending. An expert consultant can help to identify the best cloud options to avoid overspending.

Instance discounting

You can commit to instance usage and leverage cost discounts provided by the cloud provider. While rules and approach to discounts vary for every provider, the basic principles for using the discounts are the same.

How to reduce your cloud bills and manage cloud spend

Identifying mismanaged resources, eliminating waste, reserving capacity for higher discounts and right sizing computing services to scale is the first, yet the challenging step for enterprises. Though the cloud offers unlimited scalability and lowers IT costs, management and optimization are key to manage spend.

Identifying unused or unattached resources: Finding unused and unattached resources is the easiest way to optimize cloud costs. There could be a temporary server not turned off or storage attached to terminated instances to be removed.

These usages increase charges of cloud resources once purchased but are no longer used on your bill. Your cloud cost optimization strategy, therefore, should start by identifying unused and unattached resources and removing them.

Rightsizing services: Analyzing computing services and using them efficiently is rightsizing.

Sizing instances can be challenging with cloud administrators having over 1.7 million possible combinations to choose from. Rightsizing using services from a cloud consulting expert like Nuvento reduces costs and helps to optimize your cloud infrastructure.

Finding idle resources: Enterprises billing 100% for an idle computing instances is creating wastage. Identify such instances and consolidate computing jobs into fewer instances.

Making use of heatmaps: Heatmaps visually show peaks and valleys in computing demand.

This information can help in establishing start and stop times to manage cloud costs.

Leveraging automation to schedule instances to start and stop can help optimize costs.

Invest in reserved instances (RIs): Invest in RIs for long-term cloud plans.

These are larger discounts based on upfront payment and time commitment.

RI savings can go up to 75%, so this is essential for cloud cost optimization.

Spot instances: Spot instances are available for auction and, if the price is right, are purchased for immediate use. Spot instances however are short-lived and so can be used for jobs that can be terminated fast, which are common in most organization.

This makes spot instances a must have for cloud cost optimization.

Final thoughts

Organizations need to migrate to cloud and they need to optimize spend as well.

Some organizations can optimize their existing services to control spend. And certain others, who are new to cloud, need to put in place appropriate reporting and controls to prevent cost wastage.

Nuvento is a cloud solution expert helping enterprises optimize their cloud investments. We help business move to the cloud and save costs with cloud optimizations.