4 Actionable Ways to Cut Your Organization’s Cloud Costs in Half

Enterprise cloud adoption has been soaring over the past decade. To top it off, traditional business models are still suffering from continued Covid restrictions. That’s why you may be looking for new ways to operate in a cloud-native world. Cloud expenses can also get problematic if you don’t monitor them. That can lead cloud bills to skyrocket. That’s why companies must reduce cloud costs and optimize usage. That said, reductions must reflect realistic cloud workloads and not result in an excessive reduction.

Learn how you can gain control over your cloud costs in this article. You can usually reduce these by half and end expensive mistakes. Let’s begin with understanding your cloud pricing and where all the money is going. 

Understand Your Cloud Costs

Cloud costs can rapidly rise when companies don’t have good strategies to deal with them. That’s why you want to, first, plan for and manage dozens of variables. You also want to address a complex web of cloud resources and know where your money is going. Here are the 2 main expenses that result in high cloud costs. 

1. Marginal Cloud Capital Expense

Companies usually fail to understand the basic differences between operating and capital expenses. Knowing the operating nature of the cloud and the capital-expense cost is critical. 

Budgeting and managing cloud resources is a continuous process. This is because no visible capital expense exists in cloud services. Costs accumulate over time and depend on: usage, duration, size, and workload attributes.

2. Overprovisioning

You have the option to scale resources based on project requirements. Yet, administrators tend to overestimate the resources they need for a given workload. This margin of safety ends up costing companies money for services that aren’t running.

You may see overprovisioning when resources exist but aren’t accessible. This happens when projects aren’t archived. Users either leave it available ‘just in case’ or forget to clean up after themselves. 

Instances end up running even after they’re no longer needed. One person might also spin up an instance for a short while and forget to shut it down for hours, days, or months at a time. That may happen when companies focus on deadlines more than efficiency. 

Illustration of a blue cloud on a white background with a lime green coin dropping from it. Coin has a white dollar sign on it.
It’s raining savings.

That leads storage, data volumes, and costs to grow over time. Charges also accumulate every passing month through compounding. Developers, in turn, might have an idea of how much storage they have but not how often they use it. That leads to overpaying for high-availability access, which might not be useful. 

Let’s take a look at how exactly you can optimize your cloud costs.

Optimize Your Cloud Costs

When your cloud costs are always shifting and decision-making is remote, problems arise. Understanding expenses can get difficult along with utility. That’s why optimizing your cloud costs is becoming an important need for businesses that use it. To help you, try applying some kind of organizational policy across teams. That’ll ensure you cut your cloud costs in half.

The first thing to do is decide which applications and data need to go on the cloud. Use cloud-optimized software applications. That helps you take advantage of storage-tiering and dynamic scaling. That means leaving legacy applications locally. 

Another way to optimize your cloud costs is to use cloud services that offer billing APIs. You can also use services that offer portals with visualization for budgeting.

Companies can also look at the resources and cost for applications before using them. This allows you to explore expiration dates and remove cloud resources that don’t have tags. 

FinOps is a new discipline that gets accountants and engineers to set usage policies. That provides a company with cost-effective decision-making. Centralized purchasing rates with various options also provide teams with cost visibility. FinOps also helps with resource accountability.

Let’s now take a look at the top 4 cost-cutting methods you can use during the optimization process.

Top 4 Cloud Cost-Cutting Methods

When cutting costs, you want a starting point. That’s why we’ve compiled the top 4 cloud cost-cutting methods for you to use. 

1. Sign-up for Committed Use Discounts 

To optimize your resource usage and cut costs, you can buy committed use discounts. They lock you into one or three-year commitments. Here, you get to decide the amount of money, memory, and other resources you want to buy at a discounted price. You can then distribute resources between machines and at a rate you specify. A committed use discount enables you to optimize your compute costs. That’s possible through analyzing your VM spending trends. You can then decide on either single or multiple contracts according to your need.

2. Use Google’s Cloud Free Program Offerings

Google’s Cloud Free Program (CFP) offers many features for effective cloud costing. That includes a ’90-day $300 Free Trial’ that provides $300 in free Cloud Billing credits. The idea here is to help you to explore Google Cloud and Maps Platform services. 

A ‘Free Tier’ feature enables businesses to use certain Google Cloud products for free. It works by providing you with the full utility but with monthly usage limits. If you stay within the limits, you won’t pay even after your trial ends.

The ‘Projects’ feature helps you group cloud resources to understand your spending better. 

You may also like the ‘Google Cloud Billing’ feature. That’s a dashboard that explores the trends in your spending. It predicts how much you’re likely to spend in the future, allowing you to change your spending habits. 

3. Listen to Your Budget Notifications

3D rendering of a bell ringing with a text bubble on the left and a new email notification in a speech bubble on the right. Bell is shown above a smartphone.
Warning, something isn’t right!

Establishing budgets for cloud services and ensuring all the teams are aware of them is a must. A budget dashboard is a staple for teams using cloud services. You can set up specific budgeting for different services and display them to users.

You can also set automated alerts for spend thresholds. That enables relevant teams or users to inspect and analyze the overrun. 

4. Implement Cost Breakdown Reports

A cost breakdown report provides a complete view of what you spent. That includes details of on-demand costs and any usage credits. Tracking your savings can also help you become more efficient in the future.

Now you know all the key cost-cutting measures, let’s look at the governance you’ll need. 

Effective Cloud Costing Governance

Cloud governance defines how users work with cloud computing services daily. Some of its principles consist of budget, cost trends, and cost optimization policies. These rules help identify if a budget is enough. These also reduce costs by keeping you in the know about committed use discounts or credits. 

Governance tools enable you to track the cost and cloud usage. They alert you when the total usage may exceed a limit. A robust governance solution will contain proactive protocols that automate tasks. That helps ensure user compliance with protocols. In turn, this saves your company both time and money.   

Final Thoughts

When it comes to cloud costs and planning, every company has different needs. Your cloud strategy should optimize your workflow and increase efficiency. That said, managing cloud storage costs isn’t as daunting as it seems. 

You can benefit from cost-cutting methods like committed use discounts. These can save you money by helping you know your needs better. Google’s Cloud Free Program and budget alertness can also help you. Implementing cost breakdown reporting ensures user and team accountability and transparency. 

Don’t pay more than you need to with cloud costs. Instead, save a lot by following the simple steps I mentioned in this post.

FAQs

What is a free cloud trial?

Google’s Cloud Free Program is a free trial that provides $300 in free credits to explore features. It also provides 20+ free products and a few operations. That’s a great way for you to explore a cloud platform’s capabilities without breaking the bank.

What is a cloud pricing calculator?

It’s a cost management tool or service that provides a value-based pricing model for cloud usage. You can create an estimate with it for your cloud use cases and model a solution before building them. This is a handy tool when estimating cloud costs ahead of time.

How are cloud storage and network usage costs calculated?

Cloud storage is no different from virtual disk space measured in GB. You can buy storage for on-demand usage or a fixed period. GB/TB/PB measure storage usage and data transfer. These costs may seem small at the start but can spiral out of control if you don’t monitor them. 

What is DRA storage?

Durable Reduced Availability (DRA) storage lets you store data at a lower cost. This storage type has a lower data availability than others. It’s useful for longer-term storage needs for non-critical operations. You can expect DRA to have the same durability as standard storage pools. In general, it gives you more flexibility and options as you look to save on cloud storage costs.

Is a cloud budget applied at the account level or the service level?

A budget can either manage the entire Cloud Billing account or focus on a specific set of resources. That includes subaccounts, projects, products and services, and labels. This is useful to attribute costs to specific departments within your organization.

Is there a limit to projects created on an account at the Google Cloud Platform?

Yes, the number of projects on Google Cloud Platform (GCP) has a limit. Yet, once you reach your quota, you can request an increase by filling out a request form. In this form, you’ll need to specify the number of extra projects you’ll need. That said, that’s only applicable to larger organizations. Remember you can always create separate accounts for each team to reduce the need to do this. It’s also a great way to keep track of your cloud costs

Resources

Techgenix Website

Visit the TechGenix website to stay up-to-date on popular technology news.

Read more about managing cloud costs

Understand Cloud Cost Management including its purpose, advantages, and best practices.

Did you know cloud pricing wars are real?

Read about the pricing wars between the big cloud vendors.

Key Ways to Control Cloud Cost

Check out 5 ways to stop your cloud costs from increasing here.

Be Smart, Cut Your Cloud Costs in Half

Get 5 smart strategies to reduce your cloud costs in this article.

Google Cloud’s Website

Learn about the Google Cloud Free Program here.

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