4 Pillars for Cost Optimization in the Cloud


In the past few years, we’ve seen an explosion of data. We’re generating roughly 2.5 quintillion bytes of data every day. In fact, the pace of data creation has accelerated so much that 90% of all the data in the world today has been created in just the past two years.  

It’s no wonder that businesses are embracing the cloud and migrating away from on-site infrastructure to maximize computing power and avoid growing hardware costs. Using the right architecture, you can build an efficient Data Center or Data Platform with a host of benefits. 

So what do you need to know to begin building your cloud strategy while keeping cost at the top of mind? Your efforts should focus on these four specific strategies:

  • Know what you need and align resources with demand

  • Choose the right resource to achieve your business goals efficiently

  • Enable deep cost attribution, monitoring, and analysis

  • Improve efficiency and cost optimization over time.

Creating Your Cost Optimization Strategy

Information protection and data migration can be complex. As you build your architecture, make sure you first know what you need and choose the right resources for your organization.  

Know Your Needs And Align Resources With Demand

Your goal is to get exactly what you need to meet your business goals without wasting money on unneeded resources. Cloud data architecture allows you to avoid escalating infrastructure costs by outsourcing the management and maintenance of servers to third-parties. This avoids paying for buying hardware capacity you may not use while reserving the ability to add to scale as demand increases.

Choose The Right Resources To Achieve Your Business Goals Efficiently

Size matters in the cloud. The more resources you want, the more it’s going to cost. Right-sizing will be an ongoing process. Quite simply, you want to purchase the lowest cost resources that can efficiently meet your needs and requirements.

Which resources work best for you will depend on how you build out your structure. You should first decide what capacity you need and then look for the most cost-effective way to achieve it. Often, businesses look at cost first and wind up making poor business decisions that cause problems down the road.

On-Demand Instances will charge a flat hourly rate based on the size and type of instance.  There’s no upfront cost and no long-term commitment. This means you can start and stop whenever you want.  If your usage is unpredictable or you have short-term workloads, this can be an efficient way to go. However, it will also be the most expensive.

Spot Instances (temporary extra capacity sold at a discount) are bought through bids on unused capacity at your cloud provider. You set a maximum price per instance. If your bid meets or beats the current spot price, your instances will be automatically provisioned. Spot blocks can be requested that have minimum durations to handle your projects. Spot Instances can provide significant savings, but pricing and availability are dynamic.

Reserved Instances lock in pricing. Typically purchased over a fixed number of years, you can save significantly over on-demand by guaranteeing your cloud provider a paycheck. Standard Reserve Instances require a commitment for a specific family, size, and Availability Zone for an instance.  Convertible Reserved Instances let you convert to different families, instance sizes, and pricing when needed. You can also choose to pay upfront (AURIs), pay part of the cost upfront (PURIs), or defer all costs and fold it into the monthly allocations (NURIs). Advance payments and longer commitments provide the biggest discounts.

Which global region and availability zone you choose will also have an impact on pricing. You will want to balance your business needs (low latency and performance) with cost concerns.


Enable Deep Cost Attribution, Monitoring, And Analysis

Tracking expenses in an on-premises Data Center can be challenging when applications are deployed to fixed hardware. Allocating power, cooling, management, and IT costs can be difficult.  The cloud allows you to track your expenses in a much more granular way. Allocations and tagging allow costs to be assigned to business units or broken down by product teams. This makes it easier to identify under-utilization and establish ROI.

You will want to pay particular attention to orphan or unused resources. On-demand and cloud infrastructure allow for easy provisioning. It is just as easy to forget about resources that are no longer needed.

Monitoring flags can be defined that trigger warnings about utilization and RI coverage. By knowing where the gaps are in your RI spend, you can identify sub-optimal resources and can better match supply with demand. This avoids overpaying for resources you aren’t using.

Budgeting and forecasting tools can also define your optimum expenditures and warn you when you’re forecasted to go above those numbers.

Improve Efficiency And Cost Optimization Over Time

As you accumulate performance and utilization data over time, you can assess your workflow and adjust for peak periods. This allows you to continuously optimize systems throughout its life-cycle.

Scheduling can be configured to create custom start and stop schedules for elastic cloud resources.  This can help reduce operational costs for development and production environments. For example, running instances during business hours only can reduce fees by more than half rather than running instances 24/7.

Automation can simplify common maintenance and deployment tasks, such as configuring and managing instances. You can create custom workflows, monitor automation execution, and receive notifications. You can enhance the security of Identity Management (IAM) while simplifying processes. All of this can save labor costs since in the past, your IT management staff had to handle these tasks manually.

Cost Optimization In The Cloud

By using Infrastructure as a Service (IaaS) and managing cloud costs and planning, you can realize significant savings. 

If you align your resources with your demand, and choose the right resources that fit your budget and business needs, you will realize cost benefits using the cloud. Do be sure to monitor and analyze your utilization, and don’t underestimate the importance of managing your internet security.  

The more you use the cloud systems and monitor/measure your utilization, the better you can optimize your costs and improve efficiency.

Cloud, IT ProfessionalAndy Wright