For over 30 years, CPT Global has been recognised as the authority in cost optimisation and efficiency, delivering over $1 billion USD in IT infrastructure savings. Today, as IT increasingly transitions to cloud-based and "Pay as You Go" models, our optimisation and efficiency strategies are more relevant than ever.
Cloud computing is now indispensable for businesses seeking agility, scalability, and innovation. However, as organisations depend on cloud services more and more to drive their operations, managing cloud costs is becoming a major headache for IT leaders.
From our observations with clients, cloud spending can quickly spiral out of control, impacting your bottom line and stalling business growth. In this article, we share our insights on effectively managing and reducing OPEX expenditure.
Before exploring cost reduction strategies, understanding what is driving cloud expenses should come first. From a technology consumption perspective, these might include:
Now it's time to consider the (good and bad) reasons for the increased costs and how they are being managed. Common factors include:
All of these are legitimate drivers of increased resource consumption. However, too often CPT sees that these are not managed efficiently or effectively, contributing to the overspending.
Next, let’s consider some the technology and optimisation/efficiency approaches to reining in the expenditure.
To effectively reduce cloud expenses, right-sizing resources to align with actual usage is important. This involves selecting VM instance types, storage options, and other resources based on workload characteristics, performance needs, and anticipated demand.
By eliminating over-provisioning and tailoring resources to specific requirements, your organisation can avoid unnecessary costs and enhance resource utilisation.
Cloud providers offer substantial discounts for long-term commitments through Reserved Instances (RIs) and Savings Plans. By purchasing RIs or committing to a certain usage level with Savings Plans, you can reduce your costs significantly compared to on-demand pricing.
For this approach to work, it's essential to analyze usage patterns and choose the appropriate reservations or plans to maximise savings while maintaining flexibility.
Utilising auto-scaling capabilities and resource optimisation tools helps your organisation dynamically adjust resources based on workload demands. Automatically scaling up or down according to traffic patterns ensures optimal performance while minimising idle resources and the associated costs.
Additionally, adopting best practices for resource optimisation, such as tagging resources for cost allocation, enhances visibility and enables improved cost management.
Effective data storage is a critical step to reducing cloud costs. Your business can optimise storage expenses by tiering data based on access frequency, automating data archival and deletion with lifecycle policies, and using compression and deduplication techniques to minimise storage footprint.
Exploring alternative storage options like object storage versus block storage can further optimise costs based on specific use cases and performance requirements.
Embracing serverless computing and containerization can yield substantial cost savings by abstracting infrastructure management and charging only for resources consumed during execution. Serverless services such as AWS Lambda and Azure Functions eliminate the need for server provisioning and management, while containerisation platforms like Kubernetes facilitate efficient resource utilisation and scalability.
Adopting these technologies can streamline development, reduce operational overhead, and optimise costs.
Effectively managing and reducing cloud expenses requires an uplift of your optimisation and process efficiency strategies, which also enables your business to enhance operational efficiency and align resource utilisation with business needs. Here are some techniques and approaches we use with our clients.
Establishing robust observability, monitoring, and cost visibility practices is essential for effective cloud cost management. Leveraging cloud-native monitoring tools and third-party solutions, your business gets insights into:
Whereas continuous monitoring helps your organisation:
However, monitoring spending is only half the solution. Understanding the processes and practices that drive costs is key to effective cost control.
Consider these questions:
Many organisations struggle with the concept of “chargeback” to help identify and control consumption. In the absence of “chargeback,” "showback" can be a good place to start on a cost efficiency journey.
Optimisation is another lever to pull to help rein in costs. CPT has delivered over $1 billion USD in savings to our clients since we’ve offered optimisation and cost reduction services to the market. Optimisation can solve many problems and reduce costs.
Key points to consider:
As CPT has witnessed many times, retrofitting good design into poorly designed solutions can be very expensive and inefficient, as opposed to doing it right the first time.
Another angle to cost reduction is understanding what is being used and its purpose. Is it being used efficiently and effectively? Consider non-production infrastructure as an example.
If it is being used for testing:
Approaching this with an efficiency perspective challenges the current methods to explore if they can be improved, thereby reducing costs and expediting release timeframes.
Key considerations:
At CPT, we believe that proactive cost reduction strategies encompassing multiple approaches are the proven path to maximising cloud costs. Our guiding principles include:
Our experience shows that customers who adopt a holistic approach to cost reduction develop a sustainable cost reduction capability, rather than relying on unsustainable, reactive measures.
To maximise efficiency in the cloud and ensure long-term cost optimisation in the digital era, focus on:
By embracing a culture of cost consciousness and leveraging the latest cloud cost management tools, techniques, and specialist expertise, organisations can unlock the full potential of the cloud while controlling costs and driving business success.