Four Strategies for Better Cloud Cost Optimization
Users of public cloud platforms like AWS Cloud nowadays are placing greater importance on Cloud cost optimization. Learn the latest Cloud trends, barriers to cloud ROI, and techniques for Cloud cost optimization.
The global economy has been facing a challenging environment since the third quarter of 2022, as the possibility of recession looms and inflationary pressures continue to rise. This has led to a more pessimistic outlook among businesses across industries, affecting their budgets, including IT budgets.
Interestingly, companies’ propensity to adopt the public Cloud is increasing even as the economy faces headwinds. However, the nature of customer demand regarding cloud services has also evolved. While companies used to value the flexibility of infrastructure and payment terms that the public Cloud like AWS Cloud offers, today, they are placing greater importance on Cloud ROI through cost forecasting and optimization.
Jade’s AWS expert, Binoy Das, had his 6th consecutive visit to AWS re: Invent last year December. This blog covered some of the recent trends in the Cloud market observed by Binoy and shared in a recent AWS cloud fireside chat. Also, the blog elaborates on why businesses fail to reap the real benefits of the Cloud and what they can do to improve their Cloud ROI.
Recent Trends in the Cloud Market
The Cloud Market is constantly evolving, and staying up to date with the latest trends can be critical for businesses looking to leverage cloud technology to drive growth. Here are some recent trends in the Cloud Market.
Efficient computing with 3rd Generation Graviton Processors
There has been a big push towards more efficient computing using 3rd generation Graviton processors. These processors are more cost-effective and provide better performance compared to previous generations, making them a popular choice among businesses.
Resilient and Cost-Effective Storage
Along with more efficient computing, there has been a focus on resilient and cost-effective storage options. Providers are working to improve their storage solutions to meet the needs of businesses that require fast, reliable access to their data.
Better Networking with More Flow Bandwidth
Networking is another area that has seen improvements, with providers offering more flow bandwidth to support faster, more efficient data transfer. This is especially important for businesses that rely on real-time data processing and analysis.
Focus on Supporting Enterprise Scale Microservices
There has been a big push toward supporting enterprise-scale microservices. This involves breaking down complex systems into smaller, more manageable services that can be developed and deployed independently, resulting in greater agility and flexibility.
Event-Driven Service-Oriented Paradigm
The event-driven service-oriented paradigm is becoming increasingly popular, with businesses leveraging this approach to build more efficient systems. This involves using asynchronous communication to facilitate the exchange of data between services, resulting in greater scalability and responsiveness.
Fully Managed Serverless Features
Fully managed serverless features, such as Lambda, have carved out a niche for themselves in specific scenarios. Providers are continually improving these features to address their limitations and make them more widely adopted.
More Control in Managing Optimized Clusters
More and more businesses are looking to have greater control over their cloud infrastructure, particularly when it comes to managing optimized clusters for running containers. This enables them to get the most out of their cloud resources and optimize utilization.
Why Businesses Fail to Reap the Cost-benefits of Cloud
The adoption of the public Cloud like AWS Cloud has the potential to make organizations more cost-efficient and achieve greater ROI, but many organizations are unprepared to reap the savings. Here are some of the common barriers to Cloud cost optimization.
— Lack of Cost Visibility
One major barrier to cloud cost optimization is the lack of cost visibility and the failure to conduct a cost-benefit analysis. DevOps organizations must develop a culture that considers the cost impact of architectural decisions, as every line of code has a direct financial implication when running on the Cloud. Unfortunately, most engineers lack awareness of the cost impact of their decisions as they develop a product. They tend to miss considering the cost of the cloud infrastructure they are leveraging.
— Lack of Governance
In addition, standing up a web or application server or database on the Cloud is easy, but without proper governance, it can cause resource sprawl. Cloud providers also use granular pricing, which can contribute to hundreds or thousands of line items in cloud consumption bills, making consumption planning and cost attribution, and chargeback complicated.
— Non-standardized Consumption
Furthermore, leading cloud providers keep rolling out new features and services almost continuously, allowing customers to achieve what they want using many alternate architectures. This calls for greater control and standardization to manage the demand and consumption of cloud resources.
Four Strategies for Cloud Cost Optimization
If you are looking to reduce costs and optimize resources on the Cloud, there are various strategies you can implement.
At most priority, you need to develop prudent financial management processes, cross-functional collaboration between infrastructure and operations, Cloud CoE, and Finance, and a culture of ownership to drive architectural design decisions and operational guidelines. That way, it is possible to realize the potential cost savings benefits of cloud usage.
1. Automated downsizing of VMs to a lower instance
As a starting point, you can assess the virtual machines (VMs) running on your cloud platform, both standalone and as part of an autoscaling cluster, and collect utilization data such as CPU Utilization and Disk I/O. By setting a minimum threshold for these values, you can downsize to a lower instance or downscale to a smaller cluster.
Many cloud providers offer tools to simplify this process. For instance, AWS Cloud provides AWS Cost Explorer, which generates reports and triggers automated downsizing or instance stops. AWS Cloud also offers Operations Conductor, a solution for implementing automated optimization. Recently, AWS has introduced a machine learning-driven solution that analyzes past Consumption to recommend future consumption models.
2. Delete or inactivate SAN drives.
You can apply a similar methodology to other types of resources, such as identifying SAN drives with low activity and either deleting or inactivating them. Cloud providers offer tool support to make identifying cost-saving opportunities and taking action easier. For example, AWS Trusted Advisor inspects your environment and makes cost-saving recommendations.
3. Leverage the right pricing
In addition to rightsizing and downsizing, you can also save significantly by leveraging the right pricing. For instance, you can use capacity reservations with 1- or 3-year commitments for VMs, which can bring up to 50% or 75% savings compared to pay-as-you-go prices. Some cloud providers also offer deeper discounts for certain workloads, such as those that are not time-sensitive or interactive.
4. Bid instances on a demand-driven market
Providers often overprovision themselves, leading to idle capacity that they provide in a demand-driven market, such as the AWS spot market, where you can bid on instances and get discounts up to 90% compared to regular prices. However, the caveat is that when demand rises, the cutoff price also rises, and your workload might have to wait. If you architect your application to be tolerant of such interruptions, it can significantly improve your cost.
Conclusion
Organizations often overlook cost optimization during the migration phase, resulting in bulk migrations. This eventually leads to indiscriminate capacity additions without consideration of utilization rates. There may also be a tendency to over-invest in high availability (HA) and disaster recovery (DR) without proper analysis of service level agreements (SLAs) for application groups.
That is where Jade’s AWS expertise comes into play. For your workloads on the AWS Cloud, Jade offers optimization and enhancement support, improving ROI through architectural enhancements. This allows you to adopt new services, APIs, and data stores on top of AWS, enabling innovation and growth.
Jade Global is a digital modernization partner for enterprises, helping businesses thrive on AWS Cloud technology. Learn more about Jade’s AWS Cloud Services.
