Many businesses meet the need to modernize aging IT infrastructure. According to IDC, in 2022, companies worldwide purchased servers worth more than $122 billion.
There is always a risk of purchasing either an insufficient amount of equipment, subsequently purchasing it later at higher prices, or excess, which can lead to unacceptable downtime or storage of equipment in a warehouse.
The transition to cloud services allows businesses not to purchase server hardware and software and thus to avoid significant initial investments (CAPEX - capital expenditure). Instead, they pay only for the actual consumption of resources, transferring IT infrastructure costs to the operating expenses (OPEX). Reducing CAPEX and shifting infrastructure costs to OPEX brings financial flexibility.
However, according to a 2023 study from Flexera, 45% of companies exceed their budget on cloud services, while at the same time, 28% of companies consider their cloud spending to be suboptimal.
There are often cases when a specialist starts an expensive service and forgets to stop it after a short period of use. Such a service might be needed just for a few minutes but could be left without attention and forgotten for days, weeks, or months. The developer most likely is not financially responsible for such expenses, but it is unpleasant for the budget owner to learn about unexpected and sometimes significant expenses.
Therefore, control over cloud costs becomes a priority. According to the same Flexera report, a whopping 62% of organizations surveyed give this a top priority.
The balance between economy and development
The cloud has enormous potential. Effective cloud cost management helps you reduce costs and make efficient use of available resources.
Cloud cost optimization is a cost management strategy that involves monitoring and analyzing cloud services and resource usage. That is why it is certainly very important for modern business. First, it helps reduce operating costs, manage your budget predictably, and avoid unexpected expenses. Second, maximize the use of computing resources, providing higher performance and efficiency. Finally, it helps to increase the company’s competitiveness and focus on strategic objectives.
A good strategy will balance the necessary performance, cost, and security requirements. It will also ensure that cloud investments are optimal and support business continuity.
One of the main challenges when optimizing cloud costs is the complexity of the infrastructure itself. Cloud systems can be unwieldy and leave businesses confused about which resources are being used and which can be optimized.
Lack of transparency in cloud resource usage and costs is another common problem. Company employees often do not have access to information about what services and resources they use, and how much it costs. This situation can lead to financial surprises and unnecessary expenses that could have been avoided.
Predicting future cloud resource usage and costs is also challenging. Business needs can change, and it is often impossible to accurately predict how many resources will be needed. Such uncertainty is unforgivable in business and can lead to a lack of resources or excessive waste. Effective optimization requires the ability to adapt to changing circumstances and forecasts.
One of the key ways to save money when using cloud infrastructure is to choose instances with the proper characteristics.
Instance in the programming context is translated as “an instance of an object.” For example, we have a notepad window - this is one instance of the notepad application or one instance, we open another notepad - we get two instances.
In the cloud-computing context, these are virtual computers or servers that are isolated virtual environments that can be launched, configured, and managed remotely via the Internet to perform computing tasks.
If your business needs to optimize cloud costs, here is what you should pay attention to first:
- Correctly sized instances. Often, companies use instances that are too powerful for their needs, which further increases costs. Optimization starts with selecting the proper size instances to meet your actual needs.
- Reserved instance usage allows you to get significant discounts on cloud resources. This is a good option for stable and predictable workloads to reduce costs over the long term.
- Implementing automatic scaling adapts your infrastructure to changing workloads. This way, you can use only the resources you need during peak activity and scale them down during off-peak periods.
- Use of spot instances - cheap but temporary cloud resources. They can be used for tasks that do not require constant availability.
- Storage cost management. Don't forget to delete outdated data, and use storage with different access levels to optimize storage costs.
- Serverless architecture allows you to pay only for the computing resources used. Serverless architecture is a way to create and run applications and services without the need to manage infrastructure.
- Containerization allows you efficiently manage applications and their dependencies, simplifying deployment and scaling, which ultimately reduces costs.
- Effective network management and choosing the right network solutions help reduce the cost of data transfer between resources in the cloud.