Cloud cost optimization is crucial for businesses that have migrated their data and applications to the cloud. While the cloud offers potential cost savings and flexibility, it’s easy to overspend if not properly managed. Cloud cost optimization involves strategies, techniques, and tools to reduce cloud costs, run applications efficiently in the cloud, and maximize business value.

Organizations can waste a significant portion of their cloud spending, which can be as high as 32%. Cloud cost optimization helps identify unused resources and neglected tools, reducing waste and avoiding overspending. It’s not just about cutting costs but also aligning them with business goals.

Why is Cloud Cost Optimization Necessary?

Cloud cost optimization is necessary for several reasons:

• Reduce waste and avoid overspending by identifying unused resources and neglected tools.
• Ensure costs align with business goals and maximize business value.
• Monitor and control cloud costs without compromising performance.

Questions to Ask for Cloud Cost Optimization

Before, during, and after implementing the cloud, businesses should consider the following questions:

• How can we evaluate cloud costs at all company levels and manage cost allocation?
• How do we provision cloud resources and monitor and control spending over time?
• How can we prevent overprovisioning and overspending?
• What metrics should we track, including the cost of services, capacity, utilization, performance, and availability?

Tools for Cloud Cost Optimization

There are various tools available to help track and optimize cloud costs. Cloud providers offer their own cost management tools, such as Azure cost management, Google Cloud cost management, and AWS cloud financial management tools. Additionally, there are independent cloud cost tools that assess multiple vendors, like IBM Turbonomic. These tools can work across multiple clouds and provide reports that compare cloud costs to building an in-house server room.

Understanding Cloud Pricing Models

Cloud providers offer different pricing models and service levels to match resources and costs with application needs, availability requirements, and business value. Some strategies to consider include:

• Using reserved instances (RIs) to take advantage of significant discounts for prepaid instances.
• Using savings plan pricing for low prices based on one- or three-year commitments.
• Utilizing Spot Instances for last-minute purchases of leftover resources at reduced prices.
• Avoiding unnecessary data transfers to limit data transfer fees.

Consider FinOps for Cloud Cost Optimization

FinOps, short for financial operations, is a cloud financial management practice that helps businesses maximize value in hybrid and multicloud environments. It involves a cross-functional team from IT, finance, and engineering to bring financial accountability to the cloud. FinOps relies on reporting and automation to continuously identify optimization opportunities and take real-time action. It aims to build a culture of FinOps within the organization.

Phases of the FinOps Journey

The FinOps journey consists of three phases: inform, optimize, and operate. Organizations may be in multiple phases simultaneously, depending on specific units, teams, or applications.

1. Inform: Organizations need accurate visibility and detailed information on cloud spending to make intelligent decisions on allocation, benchmarking, budgeting, and forecasting.
2. Optimize: This phase focuses on optimizing the cloud footprint by leveraging discounts, automation, and rightsizing environments.
3. Operate: In this phase, organizations continuously measure metrics against business objectives and build a culture of FinOps with appropriate governance policies.

IBM and Cloud Cost Optimization

IBM offers the Turbonomic platform for hybrid cloud cost optimization. The platform eliminates guesswork and automates critical actions to optimize costs and resource provisioning. It ensures the efficient use of compute, storage, and network resources to maintain application performance at the lowest cost.

Cloud cost optimization is vital for businesses to control spending, maximize value, and ensure efficient cloud operations. By implementing the right strategies, tools, and practices, businesses can achieve cost-effective and optimized cloud environments.

FAQs

1. What is cloud cost optimization?

Cloud cost optimization refers to the strategies, techniques, best practices, and tools used to reduce cloud costs, run applications efficiently in the cloud, and maximize business value.

2. Why is cloud cost optimization important?

Cloud cost optimization is important because it helps businesses reduce waste and avoid overspending, ensures costs align with business goals, and allows for monitoring and control of cloud costs without compromising performance.

3. What tools are available for cloud cost optimization?

Cloud providers offer their own cost management tools, such as Azure cost management, Google Cloud cost management, and AWS cloud financial management tools. Additionally, independent cloud cost tools like IBM Turbonomic assess multiple vendors and provide comprehensive cost optimization capabilities.

4. What is FinOps?

FinOps, short for financial operations, is a cloud financial management practice that helps businesses maximize value in hybrid and multicloud environments. It involves a cross-functional team from IT, finance, and engineering to bring financial accountability to the cloud.

5. How can organizations optimize cloud costs?

Organizations can optimize cloud costs by evaluating cloud costs at all company levels, monitoring and controlling spending over time, preventing overprovisioning and overspending, and tracking relevant metrics. Using cost optimization tools and understanding cloud pricing models can also help achieve cost optimization.

6. How does IBM support cloud cost optimization?

IBM offers the Turbonomic platform for hybrid cloud cost optimization. It automates critical actions to optimize costs and resource provisioning, ensuring efficient use of compute, storage, and network resources.