Cloud Cost Optimization: 15 Ways to Optimize Your Cloud

What is Cloud Cost Optimization?

Cloud cost optimization ensures the most appropriate and cost efficient cloud resources are allocated to each workload or application. It balances required performance, cost, compliance and security requirements, to ensure cloud investments are optimal and appropriate to organizational requirements. 

Every workload in a cloud deployment is unique, and its requirements evolve over time. To optimize cloud costs, you should identify performance thresholds for each workload, based on domain knowledge and actual operational metrics. Optimization aims to reduce costs while ensuring that performance thresholds are met.

Cloud cost optimization is dynamic, responding to changing application requirements and constantly changing cloud pricing and service options. Due to the enormous complexity of cloud environments, cloud cost optimization requires detailed metrics, analytics, and automated tools.

 

In this article, you will learn:

 

6 Cloud Cost Optimization Best Practices

Here are a few best practices that can help you build a cost-optimized cloud environment.

Architect Solutions for Cloud Economics

In the past, a computing architecture was designed to achieve certain objectives, such as performance, security, and availability. These objectives were provisioned by a finite set of resources, which were designed for optimal, peak performance.

Today, cloud computing enables organizations to create precise and flexible architecture designs, customized specifically to workload requirements rather than existing on-premises resources. 

While cloud computing offers flexibility and scalability, it still requires organizations to design their architectures with costs in mind. The goal is to arrive at a design that meets workload requirements while remaining cost-effective. This often involves a strong automation foundation, which creates a continuous loop of monitoring and scaling of both costs and utilization.

Adopt a Cloud Cost Optimization Framework

Cost optimization begins with a preliminary analysis of cloud assets, identifying optimization opportunities across compute, network, storage, and other cloud resources. To be successful, an organization must adopt a comprehensive cloud cost optimization framework, which takes into account:

  • Architectural and functional tradeoffs of cost vs. performance
  • Governance, ensuring clear assignment of responsibility for budgets and cloud assets
  • Visibility and control, ensuring transparency of cost and usage in the past and present, and readily available data to predict future trends
  • Resource optimization, ensuring each workload has the most appropriate, right-sized allocation of resources

Establish a Cross-Functional FinOps Team

FinOps is a new discipline that focuses on managing finance for IT organizations in a way that aligns with business objectives. FinOps manages cloud spending in a data-driven and collaborative way, by integrating technical, financial, and procurement experts into a cross-functional team. 

FinOps teams build a financial operating model that works with the flexibility and constraints of the cloud environment, saving money and making more effective use of the cloud.

Establish Open Communication with Teams

Openly consult with the teams that use cloud resources, to understand what tools they are using, what they would prefer to use, and whether there are upgrades or changes that would make them more efficient, promote innovation, or improve satisfaction.

Those responsible for cloud cost optimization may be primarily interested in cost savings, but as productivity, collaboration, and innovation increase, the value of a cloud service also grows. Conversely, cost savings that erode productivity or satisfaction with IT services are likely to have a hidden, negative impact on costs. 

Maintaining open communication with teams can help you achieve cost savings, while understanding the needs and wants of the team who benefit from cloud services will truly help optimize costs in relation to actual business value.

Rightsize Resources

Optimization is the analysis of computing services to determine the most effective scale at a given time. With a sizing tool, you can optimize not just compute instance sizes, but also other factors like database, memory, storage capacity and hardware acceleration. This can not only reduce costs, it also helps optimize workloads and improve performance within existing costs. 

Related content: read our guide to cloud savings

Make Optimal Use of Cloud Pricing Models

Cloud providers offer several pricing models that can allow you to optimize costs for different workloads. It’s important to use pricing models systematically, adapting the right model for each workload at each stage of its lifecycle. Common models include:

  • On-demand pricing - paying for cloud resources according to actual time used
  • Reserved instances - committing to cloud resources for a term of 1 or 3 years
  • Spot instances - leveraging spare capacity sold by cloud providers at reduced rates of up to 90%
  • Savings plans - committing to a certain level of cloud spend across an organization (also for 1 or 3 years) to receive discounts on cloud resources

Related content: read our guide to cloud cost models

 

9 Free Cloud Cost Optimization Tools

There are many cost optimization tools on the market today. Typically, organizations start their cost optimization journey with first-party tools provided by their cloud provider. The advantage of these tools is that most of them are provided for free, they are pre-integrated with the cloud provider’s systems, and they can immediately generate suggestions that result in cost savings.

However, the downside of first party tools is that they are typically limited to one cloud provider, and cannot help you understand and optimize costs across multicloud environments. They are also limited in their ability to deeply analyze the cloud environment and perform changes automatically to save costs.

Below we’ll review the first party tools offered by the leading cloud providers: Amazon, Azure, and Google Cloud.

AWS Cost Optimization Tools

1. AWS Cost Explorer

AWS Cost Explorer dashboard

Image Source: AWS

Cost Explorer allows you to view your costs and usage so you can analyze them. It provides cost and usage reports that allow you to view your costs over the last 12 months or project costs for the next 12 months. Cost Explorer offers preconfigured and customized views for displaying cost information at a glance, and can recommend which resources should be transitioned to Reserved Instances to save costs.

2. AWS Cost Anomaly Detection

AWS Cost Anomaly Detection Dashboard

Image Source: AWS

AWS Cost Anomaly Detection enhances your control over your costs and helps you avoid surprises. Cost Anomaly Detection uses advanced machine learning algorithms that recognize spending patterns and identify anomalous costs. A personalized monitor alerts you to anomalous spending, allowing you to respond quickly to shifts in spending.

3. AWS Budgets

AWS Budgets Dashboard

Image Source: AWS

AWS Budgets helps you contain your costs and track usage according to the budgets you have set. You receive alerts when your forecasted or actual usage exceeds your budget or falls below your expected budget threshold. AWS Budget Actions allow you to configure response actions that kick in automatically to minimize excess usage and costs. 

4. AWS Trusted Advisor

AWS Trusted Advisor Dashboard

Image Source: AWS

AWS Trusted Advisor helps guide you through AWS best practices. The service is fully managed, offering recommendations that help you optimize your performance, security and costs according to your needs.

Azure Cost Optimization Tools

5. Azure Cost Management

Azure Cost Management Dashboard

Image Source: Azure

Azure Cost Management helps you plan and control your spending through cost analysis and budget implementation. Cost management also provides recommendations and allows you to export cost management data.

You can analyze your costs by aggregating your expenses and organizing them according to various categories. This allows you to identify spending trends, break down the cost of using each service, and view your overall costs for a given time frame. You can also specify budget thresholds and implement automated tools to help ensure that you stick to your budgetary limits. 

You can take advantage of Cost Management recommendations to see where you can increase efficiency or if there is a less expensive solution. This helps you optimize your costs and avoid paying for underutilized resources. You can respond to a recommendation by automatically adjusting Azure resources.

6. Azure Advisor

Azure Advisor Dashboard

Image Source: Azure

Azure Advisor is a free service offering personalized recommendations to help you optimize your use of Azure products. Advisor analyzes your resource usage and configuration and offers solutions for improving the cost effectiveness, security, reliability and performance of your Azure deployments.

Azure Advisor allows you to:

  • Receive actionable recommendations for implementing best practices
  • Identify cost inefficiencies so you can better optimize your Azure resource usage and costs
  • Enhance the security and performance of your resources

7. Azure Cost Anomaly Detection

Azure Cost Anomaly Detection Graph

Image Source: Azure

You can use the Anomaly Detector API to monitor your time series data and detect anomalies, leveraging machine learning algorithms. The algorithms can identify and automatically apply the models best suited to your time series data. You can easily integrate the RESTful Anomaly Detector API into your applications.

Google Cloud Cost Optimization Tools

9. Cloud Billing Reports

Google Cloud - Cloud Billing Reports

Image Source: Google Cloud

Cloud Billing Reports is a page that offers an at-a-glance view of your Google Cloud usage costs, allowing you to identify and analyze usage trends. You can track all the usage costs linked to your Cloud Billing account on a chart displayed on the Reports page. You can focus on particular spending trends by configuring the chart filters to specify the time range, project, service, location or SKU. 

Cloud Billing Reports are useful for assessing:

  • Overall monthly cost trends
  • Which projects are the most expensive to run
  • Which Google Cloud services are costing the most
  • Future cost estimates based on historical trends
  • Expenditure per region
  • The cost of each resource

9. CUD Analysis Reports

Google Cloud CUD Analysis Reports

Image Source: Google Cloud

CUD Analysis Reports allow you to visualize the savings realized by purchasing Committed Use Discounts (CUDs).

You can use CUD analysis reports to assess:

  • Overall savings resulting from CUDs
  • The level of utilization of existing commitments
  • CUD coverage—assessing whether you are taking advantage of usage commitments for all eligible use cases
  • Additional savings opportunities—identifying whether you can save more by increasing usage commitments
  • Potential for enhancing commitment utilization and discount sharing

 

Cloud Cost Optimization with Spot by NetApp

While public cloud providers offer native tools for monitoring your cloud spend, and even provide recommendations for potential cost reduction, they stop short of actually implementing any of those optimizations for you. 

This is where Spot by NetApp’s Cloud Analyzer can help. Cloud Analyzer not only provides comprehensive visibility into what is being spent in AWS and by whom, but also: 

  • Generates an average saving of 68% by showing you exactly where you can use either EC2 spot instances or reserved capacity (RIs and Savings Plans) to save costs. It lets you reliably automate workload optimization recommendations in just a few clicks. 
  • Guarantee continuity for spot instances, ensuring even production and mission-critical applications can safely run on spot instances, using predictive algorithms and advanced automation to guarantee workload continuity. 
  • Manage RIs and Saving Plans portfolios, providing maximum utilization and ROI with minimal risk of financial lock-in and cloud waste. 

Learn more about Cloud Analyzer from Spot by NetApp!