April 13, 2023
by Laurent Gil / April 13, 2023
When public cloud services expanded their offerings, organizations started moving their applications to the cloud, inspired by the promise of greater agility and flexibility combined with the cost-effectiveness of pay-as-you-go pricing.
Many soon learned that running workloads in the public cloud introduced a slew of new financial challenges. Cloud cost monitoring and reporting became part of every team's to-do list.
Although the cloud has been with us for a while, companies struggle to control cloud costs. Businesses often overspend by 13% and squander 32% of their cloud investments.
This increased focus on cloud cost management and optimization brought to life a new discipline called FinOps. FinOps is a set of best practices that help engineering, finance, technology, and business teams work together in a cloud-based environment.
The most difficult aspect of implementing cost-cutting methods is convincing engineers to consider costs. Engineers seldom made such decisions before the cloud, which provided quick access to resources on a silver platter.
No wonder, in the current economic climate, 81% of IT leaders have been directed by their C-suite to restrict or avoid increased cloud investment and focus on cloud cost optimization.
Cloud cost optimization is the process of minimizing costs and maximizing efficiency in cloud computing environments. It involves analyzing and optimizing the use of cloud resources such as storage, processing power, and network bandwidth to reduce costs while maintaining or improving performance.
Streamlining your FinOps adoption is critical to reducing cloud bills. Here are two key steps leaders can take to optimize their cloud costs:
The first step in building FinOps capabilities is understanding the cloud bill and identifying which team, project, or department causes overspend. Making cost insights accessible to engineers in a way that fits their experience and habits helps increase cost awareness and gain solid metrics to plan new cloud initiatives.
Cost-tracking data help review how quickly the cloud budget is spent and ensures your teams don’t exceed it. Monitoring costs involves looking at daily or weekly expenses and extrapolating them to reasonably approximate monthly expenses.
Cloud services are dynamic. Things spiral out of control when your team can't access real-time pricing data. Monitoring your cloud bills allows you to check daily expenses, spot anomalies, and take action before they snowball into major problems.
Many teams consider the cost of provisioned resources when developing cloud budgets. These are the tariffs that each cloud provider makes public. However, engineers sometimes overprovision their applications and bypass the cap to ensure they work well and are always available.
This increases the real cost of consumed resources. To avoid overprovisioning, consider the cost of the requested resources rather than those already set up and get an accurate picture of your cloud spend.
Providing engineers with cost management information in their preferred way raises cost awareness and helps them make better infrastructure decisions. Engineers are accustomed to observability tools that monitor application performance in real time. Adding costs to the mix is easy when you use a cloud cost management software that integrates metrics with these operational tools.
Fifty-five percent of engineers spend a few hours each week solving cloud cost issues, ranging from unexpected cost spikes to discrepancies between predicted and actual expenses. Cost-related disruptions last a sprint or longer for 11% of responders!
You can only imagine the impact on product development. With access to historical cost data, engineers can immediately spot discrepancies and avoid wasting time that could be better spent on mission-critical functions.
Gaining cost awareness is the first step on a FinOps journey. It's impossible to keep cloud spending under control without knowing which teams or projects add to the costs or account for sudden spikes.
However, cost visibility is often achieved manually with techniques like labeling and configuration. Manual optimization requires employees to learn to label, tag, allocate, categorize, select, monitor, and report on cloud spend. This isn’t a one-time but an everyday task. The work required to achieve cloud cost visibility can render the resulting cost savings insignificant.
This makes many cloud cost monitoring solutions time-consuming and difficult to scale. Organizations want more than just meticulous records of “who spends how much on what.” They want to stop paying unexpectedly large bills and discover savings to weather the financial storm when the economy shifts.
FinOps leaders care more about optimizing cloud costs than visibility, and automation is the answer to their problem. Automated cloud management solutions can be used throughout the software development lifecycle when running cloud-native apps. In fact, automation is the backbone of cloud-native technologies and modern development practices.
Changes in methodology are common in cloud migrations. A good example is agile development, which many teams have adopted in the cloud. In a dynamic cloud environment, teams iterate quickly, release apps frequently, and keep their infrastructure reliable.
Cloud-native development also requires managing infrastructure and application code in a unified environment. To meet these needs, you can automate deployments and use infrastructure-as-code (IaC) methods with open-source tools to make infrastructure code part of the project, store it in a repository, and version it like the rest of the code for a faster development process.
Another area that benefits from automation is development pipelines – processes from development to testing and deployment. Continuous integration and continuous delivery (CI/CD) is now an industry standard to reduce human error and maintain a consistent software delivery method, thereby increasing team efficiency.
With automation-powered pipelines, you can confidently build and deploy applications to production environments, accelerating and improving business agility.
Engineers implement certain procedures to make applications available and serve customers at peak times. This directly impacts cloud spending. To use continuous capacity management based on autoscaling, assess and predict your development needs well in advance. Autoscaling improves both availability and cost management.
Cloud cost optimization tools analyze resource utilization, identify cost-saving opportunities, and automate optimization strategies, saving significant cloud costs over the long term.
Built-in cost monitoring tools are offered directly on cloud provider platforms and interact seamlessly with billing data. But as your cloud footprint expands, consider using advanced services, accounts, and cloud providers. Native cost tools may not give you a complete picture or access to real-time data, especially when using services from multiple cloud providers.
You can also build your own tool, especially when the only option is a traditional cost-monitoring platform that can’t handle cost management for cloud-native apps. Bespoke solutions can be tailored to each stakeholder – from engineers and DevOps to finance and operations – involved in cloud planning, budgeting, and forecasting.
Another option to consider is cloud cost management platforms that allow you to monitor and report on expenses in real time. Third-party platforms work best for teams looking for a detailed picture of their spending based on cost allocation processes.
Setting up a FinOps approach is hard until you can give all employees – from engineers to management – real-time cost information. All cloud cost optimization tools come with pros and cons. Organizations often turn to multiple cloud cost monitoring and optimization approaches when a single solution doesn’t meet all their needs.
A few best practices can save the day when optimizing cloud costs.
Why manually adjust cloud resources when automation can tackle many technical challenges? With automated cloud cost management, you can go beyond traditional cost management and reduce the cloud bill by a tremendous amount over the application's lifecycle.
Meanwhile, you can focus on delivering business value while optimizing cloud resources and reducing costs.
Stop overspending on cloud resources and start optimizing your cloud cost management strategy today. Discover the latest cloud cost management statistics and unlock your organization's potential for significant cost savings.
Co-founder and CPO at CAST AI, Laurent is responsible for product and business development. He was co-founder and Chief Product and Business Officer at Zenedge, acquired by Oracle in 2018. Laurent was also CEO and co-founder of Viewdle, acquired by Google in 2012.
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