Cloud cost optimization is a critical practice that ensures the right cloud resources are allocated to each task, optimizing performance, cost, scalability and security. It can prove essential for businesses today because it helps achieve the highest possible return on investment from public cloud expenses, increasing the overall value of the business.

The primary goals of public cloud cost optimization go beyond simply reducing waste. They include improving the performance of cloud resources and achieving operational excellence. Given the dynamic and complex nature of cloud infrastructures, which have different needs for different workloads over time, a robust cost optimization strategy can be indispensable.

In this comprehensive guide on cloud cost optimization, we outline some methods to help companies effectively manage their cloud expenses. Understanding cloud expenses is the first crucial step. Business executives in product, technology or finance need to understand the types of cloud expenses and who generates them in order to make informed decisions. The complexity of dynamic cloud usage often makes it challenging to fully understand cloud costs. Tools can provide detailed information on resource utilization, however, which can be overwhelming without a method to turn raw data into actionable business insights.

Identify, allocate and monitor cloud expenses

One of the basic practices for public cloud cost optimization is to accurately identify and distribute cloud expenses. This involves linking a company’s operations to monthly cloud expenses to understand who is using what and how much it costs. Properly categorizing and allocating cloud resources using tags can help allocate costs to the right projects, departments or initiatives. Automated cost allocation tools can address issues such as uncoded or improperly tagged resources, making it easier to accurately allocate shared costs.

Monitoring cloud expenses through budgets and alerts is another critical strategy. Strict budgeting and real-time expense alerts can be essential to prevent financial instability due to unexpectedly high cloud costs. Tools can enable users to set spending limits and receive notifications when they approach or exceed those limits, so they don’t face any surprises when billing.

Cloud resource planning

Reducing waste in the public cloud is an important aspect of cost optimization. For example, resizing cloud instances involves better matching cloud infrastructure to actual usage so that there is no need to pay for unused resources. Resource planning is equally important, ensuring that cloud resources are active only when needed, such as shutting down non-production environments during off-peak hours to save costs. Eliminating unused cloud resources can also significantly reduce unnecessary costs.

Optimizing storage costs is another effective strategy. Companies should assess their storage needs and use different storage classes and types accordingly. For example, infrequently used data can be moved to lower-cost storage options, while regularly used data remains on higher-performance storage. Upgrading to more cost-effective options can also yield significant savings.

FinOps framework

Data transfer costs can add up quickly if not managed properly. By designing architectures that minimize unnecessary data transfers, companies can significantly reduce these hidden costs. Identifying and analyzing unusual expenses using tools can reveal unexpected spending patterns so that corrective action can be taken immediately.

FinOps, which combines financial operations with public cloud management, plays a crucial role in ongoing cost optimization. FinOps promotes collaboration between engineering, finance, product and business teams to improve the financial visibility, control and efficiency of cloud spending. The FinOps ‘Crawl, Walk, Run’ framework provides a phased approach to implementing best practices for cost management, starting with basic control and moving to advanced automation and predictive analytics.

Automation tools are vital in simplifying and improving cost optimization efforts in the cloud. A range of automated tools is available to help companies manage their cloud resources more efficiently, from rightsizing and scheduling to storage migration and commitment management.

In conclusion, achieving public cloud efficiency can be essential for businesses navigating the current economic and technological landscape. Key points from our guide highlight the importance of understanding and optimizing cloud spend, reducing waste and continuous improvement through FinOps practices and automation. By staying informed and proactive, companies can ensure they are well equipped to effectively manage their cloud costs and achieve both financial and operational success.

Tools for cloud cost optimization

Here are some sample cloud cost optimization tools for AWS, Google Cloud and Microsoft Azure:

Tools for Cloud Cost Optimization AWS

• AWS Cost and Utilization Report (CUR) – Provides detailed resource utilization and cost information
• AWS Budgets – Allows users to set spending limits and receive notifications when these limits are approached or exceeded
• AWS Cost Explorer – Provides detailed cost analysis and forecasting to help manage and optimize AWS spending
• AWS Trusted Advisor – Provides real-time guidance on delivering resources according to AWS best practices, including cost optimization recommendations
• AWS Cost Anomaly Detection – Uses machine learning to identify unusual spending patterns and alert users to potential problems
• AWS Savings Plans – Provides flexible pricing for a specific amount of usage, saving you money compared to on-demand pricing
• AWS Reserved Instances – Allows users to reserve capacity and save up to 75% over on-demand instance rates
• AWS Spot Instances – Enables the purchase of unused EC2 capacity at a discount of up to 90%

Tools for Cloud Cost Optimization Google Cloud

• Google Cloud Cost Management Tools – Provides detailed billing reports and cost forecasts
• Google Cloud Budget Alerts – Allows users to set budget thresholds and receive alerts
• Google Cloud Recommender – Provides cost optimization recommendations, including identification of unused resources
• Google Cloud Committed Use Contracts – Provides discounts for committing to a specific amount of usage over a specified period of time
• Google Cloud Storage Classes – Enables cost savings by using different storage classes for different access needs (e.g., Nearline, Coldline) 

Tools for Cloud Cost Optimization Microsoft Azure

• Azure Cost Management and Billing – Provides comprehensive tools for monitoring and controlling cloud costs
• Azure Advisor – Provides personalized best practices and recommendations for cost optimization
• Azure Reserved VM Instances – Allows users to reserve virtual machine instances at a discount
• Azure Spot Virtual Machines – Provides access to unused capacity at a lower cost
• Azure Budgets and Alerts – Allows users to set budgets and receive alerts when spending exceeds certain thresholds