Businesses have increasingly turned to cloud computing to manage their IT operations, datasets and other tech resources. This practice allows enterprises to be more scalable, flexible, collaborative, secure and cost-effective. But to keep enjoying these advantages, stakeholders must understand the importance of proper cloud cost management.
Employing an efficient system, like the Flexera cloud management platform, ensures that organizations maintain full control over the vast resources they deploy on the cloud. It allows them to maximize cloud saving opportunities, eliminate waste and ensure the full and efficient use of their cloud infrastructure.
What is cloud cost management?
Cloud cost management, also known as ‘cloud cost optimization,’ is a strategy that businesses use to reduce cloud spend and increase return on investment (ROI) in cloud usage. It involves employing tools and systems to monitor cloud use and demand, as well as determining underutilized or redundant resources.
What are cloud cost models?
Transitioning to the cloud incurs costs related to computing, networking and storage. To manage expenses, cloud services and providers offer different cloud cost payment models that enterprises can choose from–and even mix and match.
Pay-as-you-go
As its name suggests, the Pay-as-you-go model bills cloud services per actual usage. This is ideal for businesses who want the flexibility to scale down their cloud resources as needed. However, it puts some limitations on expansion as adding more services can quickly rack up costs.
Subscription
In a subscription-based cloud cost model, organizations pay for services in a time-bound predetermined package upfront. Typically, the longer the period subscribed, the more cost-effective the price.
Reserved instances
Similar to the subscription model, reserved instances allow companies to use cloud resources for a specified period, which is typically between one and three years. This is a very cost-effective cloud cost model as providers often apply discounts up to 75% versus pay-as-you-go rates.
Spot instances
Spot instances are generally the cheapest cloud cost model. They offer discounts of up to 90% (versus pay-as-you-go rates) because the services are usually spare capacity from providers. The caveat, however, is that spot instances can be interrupted at very short notice, making them suitable only for non-critical workloads and processes.
How does an organization manage cloud computing costs?
Here are some ways an organization can manage its cloud computing costs:
- Rightsize cloud services based on specific needs, using automation tools that can align usage within the parameters of relevant workloads.
- Constantly monitor cloud systems to identify what works and what doesn’t, adapting strategies to maximize cost-effectiveness and efficiency.
- Identify unused or idle resources to cut down on costs and find potential savings.
- Explore discounts and savings schemes, taking advantage of a mix of cloud cost models to work within a set budget.
- Educate teams to ensure all users and stakeholders adopt a culture of awareness around cloud spending.
What is the best cloud strategy for cost optimization?
For many enterprises, the best cloud strategy for cost optimization is employing tools like the Flexera cloud management platform. These types of resources provide better insight into a company’s cloud usage, enabling enhanced management, governance and cost optimization of cloud services and resources.