Cloud computing has become an integral part of the modern digital landscape. Promising scalability, flexibility, and cost-effective solutions, the tech is transforming the way businesses operate, allowing teams to transfer their entire infrastructure to the cloud. 

While cloud computing offers scalability and lower IT costs, it is essential businesses manage their resources correctly to avoid overspending.

​​Enterprises that only use cloud-native technologies such as microservices containers and Kubernetes don’t have full visibility into their costs, leading to overspending and mismanagement of company assets.

Without careful management, cloud costs can quickly spiral out of control, leading to overspending and negatively impacting the bottom line.

Cloud cost optimisation is the process of reducing a business’s overall cloud spend by identifying mismanaged resources, eliminating waste, and reserving capacity for higher discounts and right-sizing computing services to scale.

In this article, we'll explore practical strategies of cloud optimisation to help businesses tackle cloud costs head-on and readjust their spending for maximum efficiency.

Start with an audit

The first step in any cost optimisation journey is for companies to conduct a comprehensive cost audit on their cloud operations.

This involves identifying the services, resources, and usage patterns that contribute most to your cloud bill and understanding if those products provide are worth their cost.

Organisations can start by gathering data on your current cloud usage and spending across different services and resources and utilise cost analysis tools provided by cloud service providers or consider third-party tools for more detailed insights.

Cloud service providers often offer cost analysis tools that provide detailed insights into your cloud costs. These tools can help you analyse your spending patterns, identify cost drivers, and pinpoint areas where costs can be optimised.

During the cost audit, organisations must pay close attention to services or resources that are consistently underutilised or unused.

This could include instances that are running idle or storage volumes that are not actively accessed. Identifying these wasteful resources will allow you to take appropriate action, such as resizing or terminating them to eliminate unnecessary costs.

Right size cloud resources and computing services

One of the key areas to focus on for cost optimisation is rightsizing. This involves analysing cloud resources and computing services and modifying them to the most efficient size.

With an overwhelming number of instance combinations available, selecting the right size can be challenging for cloud administrators.

Right sizing goes beyond merely reducing cloud costs. It is also a means to achieve cloud optimisation, ensuring that you extract maximum performance from the resources you are paying for.

By optimising server sizes for specific workload requirements, such as memory-intensive, database-heavy, or graphics-intensive tasks, you can ensure that your cloud infrastructure operates at its peak performance.

Read our Top 10 for the ten best Cloud Cost Optimisation Tools

To facilitate the Right Sizing process, specialised tools and services are available to analyse workload patterns, resource utilisation, and performance metrics to recommend the most appropriate instance sizes.

These tools consider factors such as CPU utilisation, memory usage, storage capacity, throughput requirements, and more. They can even suggest changes across different instance families to further enhance efficiency and performance.

Embrace reserved instances

Another strategy for cloud cost optimisation is leveraging reserved instances and savings plans offered by cloud providers. These options allow you to commit to long-term usage in exchange for substantial cost savings.

By identifying workloads with stable or predictable resource requirements, you can leverage reserved instances or savings plans accordingly.

Making these commitments unlocks significant discounts compared to on-demand pricing, resulting in considerable cost optimisation.

Go serverless

In the quest for cloud cost optimisation, embracing serverless computing provides an excellent opportunity to cut down costs.

Traditionally, managing and provisioning infrastructure to handle varying workloads can be complex and expensive.

Serverless architectures offer a paradigm shift that eliminates the need to manage and pay for idle resources, enabling businesses to optimise costs by paying only for the actual computing time consumed.

With serverless platforms like AWS Lambda or Azure Functions, businesses can automatically scale the infrastructure based on the demand, ensuring that resources are dynamically allocated to meet the workload requirements.

Serverless architectures eliminate the need to manage and pay for idle resources, as businesses only pay for the actual computing time consumed.

This pay-per-use model of serverless computing is a significant advantage for cost optimisation. Instead of paying for idle resources, organisations only incur costs when their functions or applications are actively running.

It also eliminates the need to provision and pay for underutilised resources, resulting in significant cost savings.

When considering serverless migration, it is essential to evaluate the suitability of workloads. Serverless architectures are particularly well-suited for event-driven or short-lived tasks that can run independently.

Functions can be triggered by events such as file uploads, database updates, or API calls, ensuring that resources are allocated only when needed.

Implement robust cost monitoring and governance practices

While adopting cloud cost optimisation strategies is essential, maintaining control over cloud costs requires the implementation of robust cost monitoring and governance practices.

By regularly monitoring and tracking cloud costs, businesses can identify anomalies, cost spikes, or underutilised resources. Additionally, establishing governance policies and mechanisms help enforce cost-control measures within the organisation.

Effective cost monitoring starts with leveraging the cost analysis tools and features provided by cloud service providers.

These tools offer insights into cost breakdowns, usage patterns, and trends, allowing businesses to track their cloud spend over time. By analysing this data, organisations can identify areas of overspending, optimise resource allocation, and make informed decisions regarding cost optimisation initiatives.

Regular monitoring also enables timely identification of cost spikes or unexpected increases in cloud spending, allowing businesses to investigate the root causes, such as changes in workload demand, inefficient resource allocation, or unauthorised resource usage.

This enables better visibility and cost accountability, setting up alerts and notifications to proactively monitor cost thresholds and prompt action when necessary.