In the ever-evolving landscape of business technology, where the hybrid cloud model has become a prominent choice, one thing is crystal clear: we are riding the wave of the digital revolution. Yet, as we weave together various cloud landscapes, cost overruns, bill management challenges, and visibility gaps tend to emerge. This emphasizes the importance of cost management principles. Although cloud services promise savings, their actual expenses often raise eyebrows that ask a crucial question, which is: if cloud services are designed to help companies save money, why is it costing them more? In this blog, we will explore the importance of hybrid cloud cost optimization strategies and provide actionable insights on reducing overheads and maximizing return on investment (ROI). Time to dive in!
But Why is Hybrid Cloud Cost Management Such a Burning Issue?
With greater investments in cloud technologies, organizations require better visibility of costs to ensure reliability and performance while managing their data center spends effectively. As companies continue to adopt cloud services, the focus of cost management has shifted towards architectural optimization. This makes it absolutely crucial for businesses to implement robust cost management strategies to avoid unnecessary expenses and achieve maximum cloud cost efficiency.
Cloud Cost Management Strategies: The Impact
Often businesses make the move to the cloud with the anticipation of lowering their overall IT expenses, but many have been caught off-guard when cloud costs spike. In the absence of a well-defined management strategy, keeping these escalating cloud expenses in check can be challenging. According to a report by EY, 57% of companies have already surpassed their cloud budgets for this year.
Cloud cost management is an organizational practice that helps businesses understand and manage the costs and requirements associated with cloud technologies. Its main goal is to find efficient and cost-effective ways to spend on cloud, via cost-optimized AWS Managed Services, Microsoft Azure Managed Services, and GCP Managed Services (Google Cloud Platform) providers. These management strategies help businesses create a framework for budgeting and foster shared responsibility to ensure that cloud resources are used sensibly within the appropriate controls. It also provides visibility into cloud spending, allowing businesses to identify inefficiencies, and making informed decisions to optimize costs. By adopting cloud cost management strategies, businesses can improve profitability, enhance cash flow, reduce flowing overheads and maximize return on investments (ROIs).
Hybrid Cloud Cost Management: Best Practices
Traditionally, cloud cost management is centered around minimizing sprawl by eliminating underused or neglected resources and making strategic procurement choices, like opting for reserved instances and savings plans. But now, as businesses progress towards embracing cutting-edge cloud services, the focus of cloud cost management is shifting toward architectural optimization. Under this perspective, applications are designed with highly elastic infrastructure, ensuring that your company incurs charges solely for the resources utilized. So, how can companies pursue cloud cost reduction?
A successfully governed hybrid cloud platform keeps costs in check by identifying where to focus efforts on optimizing cloud spend. Let us explore some of the best practices for reducing cloud costs and maximizing ROI in the hybrid cloud environment:
Identify Optimal Workload Placement:
The first step in optimizing cloud costs with a hybrid strategy is to identify which workloads should be placed in the public cloud and which should be placed in private or on-premises infrastructure. For example, workloads that require ultra-low latency performance or require high levels of security may be better suited for a private cloud environment. Workloads that have variable demand or require extensive storage may be better suited for a public cloud environment.
Discover Dormant Resources:
Cloud cost optimization can be achieved by locating and consolidating inactive computing resources. The strategy involves identifying all dormant resources and amalgamating them to drive down costs. Storing resources for scenarios like peak seasons or sudden spikes in traffic isn't necessary. Harnessing cloud features such as auto-scaling, load balancing, and on-demand alternatives can be instrumental in ramping up capacity as required.
Gain Visibility into Cloud Costs and Resources:
Implement robust monitoring and reporting mechanisms to gain visibility into cloud costs and resource utilization. This includes tracking usage patterns, identifying underutilized resources, and optimizing resource allocation to eliminate waste.
Review Pricing and Billing Information:
Regularly reviewing pricing and billing information is a great cloud cost optimization technique. By staying informed about cloud pricing and service options, organizations can make informed decisions to optimize costs. This includes evaluating pricing models, exploring cost-saving options such as reserved instances and savings plans, and choosing optimal storage options.
Set Budgets and Monitor Usage:
Setting budgets and closely monitoring cloud usage is essential for effective cost management. This can involve:
- Developing Consumption models - to anticipate application or platform usage, facilitate capacity planning, and avoid unnecessary spending.
- Identifying Automation tasks - to prevent redundancy, and auto-scaling features can be employed for dynamic resource adjustments based on demand.
- Transparent Communication - of the budget and consumption models across teams is crucial to prevent overspending.
- Implementing Alert Systems - for timely awareness of cloud application expenses, while leveraging discounts like reserved and spot instances, as well as opting for low-performance storage, that can significantly contribute to optimizing the cloud budget.
Leverage Cloud Cost Optimization Tools:
Cloud cost optimization requires detailed metrics, analytics, and automated tools to handle the complexity of cloud environments. By leveraging cloud cost optimization tools, organizations can gain insights into cost trends, resource utilization, and cost-saving opportunities. These tools provide recommendations for cost optimization, such as identifying underutilized resources and suggesting rightsizing options.
Utilize a Cloud Management Platform:
Leveraging a cloud management platform (CMP) can enhance cost optimization by granting insights into your hybrid cloud management setup and aiding you in making well-informed choices concerning resource distribution. Additionally, a CMP can automate resource provisioning and de-provisioning, and trim costs by removing the necessity for manual interference.
Scale Mission-critical Applications:
When scaling mission-critical applications, consider shifting elements that can easily expand horizontally to the cloud, like web or application servers in a typical three-tier web application. Meanwhile, keep crucial components for data and transaction processing on your premises. This hybrid-cloud approach becomes particularly valuable when speed is absolutely vital.
Utilize a Multi-Cloud Approach:
A multi-cloud strategy is a popular approach for maximizing savings and increasing cloud cost efficiency. By leveraging multiple cloud providers, organizations can take advantage of competitive pricing and optimize costs across different platforms.
Cloud Cost Management and FinOps in Hybrid Cloud
FinOps, which stands for Finance + DevOps, plays a pivotal role in Cloud Cost Management within a hybrid cloud environment to achieve cost optimization and maximize ROI. It introduces a holistic approach that bridges the gap between technical teams, finance departments, and business operations to ensure effective cost optimization and financial transparency. Here's how FinOps fits the mix:
Cross-Functional Collaboration:
FinOps encourages collaboration between different departments, including IT, finance, and business units. In a hybrid cloud environment, where resources are distributed across on-premises and cloud platforms, collaboration is crucial to understand cost implications and optimize spending.
Cost Visibility and Accountability:
It promotes real-time visibility into cloud spending. In a hybrid cloud setup, this visibility extends to both the on-premises infrastructure and cloud services. This allows teams to track how resources are being used, which projects are driving costs, and encourages accountability for expenditure decisions.
Effective Cost Allocation:
Allocating costs accurately can be complex in a hybrid cloud environment. FinOps methodologies help distribute costs to the relevant teams, projects, or departments based on actual resource usage.
Budgeting and Forecasting:
FinOps practices involve budgeting and forecasting cloud expenses based on historical data and projected growth. This is particularly valuable in a hybrid cloud scenario, where balancing expenditures requires careful planning and accurate projections.
Resource Optimization:
By fostering collaboration between technical teams and financial experts, FinOps identifies opportunities for resource optimization. This means rightsizing on-premises infrastructure, optimizing cloud workloads, or leveraging cloud services for specific tasks.
Governance and Policy Enforcement:
FinOps ensures that financial policies align with technical decisions. In a hybrid cloud setup, where the control surface is broader, implementing policies and guidelines for resource provisioning, usage, and access can help prevent unnecessary spending. Also, automated policies can ensure that resources are used efficiently and consistently across the hybrid cloud.
Continuous Improvement:
FinOps promotes an iterative process of cost analysis and optimization. This iterative approach is crucial in a hybrid cloud, where the dynamics between resources can change over time.
Augmented FinOps:
Augmented FinOps are revolutionizing cloud financial management by leveraging AI and ML tools for cloud budget planning, predicting overruns, uncertainties, and optimizing cloud expenses in real-time. It promotes a proactive and agile approach to managing cloud expenses, enabling businesses to make data-driven decisions and achieve greater cost optimization.
Risk Management:
FinOps is closely associated with risk management as it helps businesses mitigate cost consequences. By implementing FinOps practices, organizations can enhance financial accountability, effectively manage budgets, and optimize cloud spending. It also allows businesses to identify and address potential risks and cost overruns, ensuring better cost control and financial efficiency.
To sum up, FinOps acts as a bridge between technical teams and financial departments in hybrid cloud environments. It ensures that cloud costs are transparent, resources are optimized, and decisions are made with a deeper understanding of their financial impact, all of which contribute to effective Cloud Cost Management.
Cloud Cost Management Tools
Choosing the right cloud cost management tools is crucial for effective cost optimization in hybrid cloud environments. These tools provide organizations with the necessary insights and capabilities to monitor, analyze, and optimize cloud spend. These tools offer features such as cost tracking, resource utilization analysis, cost allocation, recommendations for cost-saving measures and much more.
Here are some of the best available cloud cost management tools:
Intel Granulate:
Intel Granulate offers an array of optimization solutions that work autonomously and continuously in real-time, enhancing compute performance and reducing costs by up to 45%. It is an AI-enabled, automated solution that helps enhance performance and reduce latency in cloud deployments. Its autonomous workload optimization promotes efficiency, availability, and performance from existing on-premises infrastructure and applications, leading to substantial time and cost savings.
Intel Cloud Optimizer:
Intel Cloud Optimizer serves as a cloud cost optimization tool catering to AWS and Azure users. By delivering cost visibility, optimization recommendations, and automation capabilities, it empowers businesses to maximize their cloud investments. It facilitates real-time visibility into cloud spending, offering insights into resource utilization, cost allocation, and recommendations for cost-saving measures.
Corestack:
Corestack is a cloud cost management tool that offers budgeting, forecasting, and resource optimization capabilities. It enables businesses to plan and create budgets, optimize resource utilization, and identify opportunities to reduce costs by utilizing different pricing plans or usage tiers. It is compatible with various cloud service providers, including Amazon Web Services (AWS), Microsoft Azure, and Google Cloud, allowing businesses to monitor and control costs across multiple services and aggregate the total cost of their entire environment in one report.
Azure Cost Management + Billing:
This tool serves as Microsoft's native cloud cost management solution within the Azure Cloud Service. It offers essential features such as monitoring Azure cloud expenses, cost analysis, budgeting, exporting data, and providing optimization suggestions aligned with best practices. Additionally, it facilitates billing management for both Azure and AWS if used together.
CloudWatch:
CloudWatch serves as Amazon Web Services' (AWS) native solution for cost management. By extracting metrics and logs from over 70 AWS services and resources in near real-time, it offers comprehensive cost reporting. These insights are consolidated on a unified dashboard for streamlined analysis. Additionally, CloudWatch enables the collection of custom metrics, budget setting, cost anomaly alerts, and automated responses to cost fluctuations on ECS, EKS, and Kubernetes clusters.
CloudCheckr:
CloudCheckr is a cloud cost management and optimization tool that provides comprehensive cost analysis capabilities for AWS, Azure, and Google Cloud. The tool offers features such as cost tracking, resource utilization analysis, cost allocation, and recommendations for cost-saving measures. It also provides detailed reports on cost trends, usage patterns, and cost optimization opportunities.
A thing to keep in mind when choosing a cloud cost management tool, organizations should consider their specific requirements and choose a tool that aligns with their business goals.
Cloud4C: Your Trusted Partner for Hybrid Cloud Cost Management
In a digital landscape where cloud adoption is the new norm, the pursuit of innovation should never compromise fiscal balance. The answer to the burning question: why are cloud expenses soaring, when they're meant to save us money, lies in the effectiveness of hybrid cloud cost management, and here's where Cloud4C steps in as the solution.
Cloud4C, a premier provider of hybrid cloud solutions and managed services, curates a diverse suite of resources to drive businesses toward hybrid cloud cost optimization. Seamlessly harmonizing public, private, and edge cloud domains, our end-to-end managed service, powered by AIOps-driven cloud operations and an automated resource administration platform, ensures a smooth hybrid cloud experience while proactively addressing cost optimization hurdles. Our comprehensive suite of SHOP services further enhances our offerings, augmenting resource utilization while our cloud cost optimization solutions help break down accounting barriers, enabling strategic resource allocation and optimized budgeting.
Contact us today to learn more about how we can help you achieve cost optimization goals in your hybrid cloud environment.
