The cloud is no longer an interesting gimmick – over the last decade, it has become an essential tool for every modern business. Some of the benefits include safer data storage, easier collaboration across large distances, and unprecedented flexibility. But every IT solution comes with a cost – and if you are not careful, those expenses can quickly spiral out of control. Before you know it, you might be paying double what you initially budgeted for. This can wreak havoc on other areas of your business if left unchecked.
Luckily, all of this can be avoided with the correct precautions. Cloud cost management is a complex but crucial part of your business, allowing you to effectively track costs and reduce expenditure where necessary. This process will keep the budget on track, improve ROI, and ensure efficient cloud operations.
Defining Cloud Cost Management: Why Does It Matter?
Cloud cost management is the process of tracking, managing, and reducing cloud expenditures to ensure a positive ROI. It involves:
- Monitoring: Understanding where your money is going
- Optimisation: Checking that all cloud services contribute value
- Reduction: Eliminating unnecessary expenditure
Many modern businesses use multiple cloud services at once – sometimes without even fully realising they’re doing it. This easily leads to inefficiencies, overlap, and redundancies, which all contribute to higher costs. When not properly monitored and controlled, this very quickly turns into a money pit. While they may seem insignificant, these small losses will build up over time, costing your business opportunities and weakening your market position.
Cloud cost management solves these problems by reclaiming those funds, so they can be used for other initiatives.
The Factors That Lead to Spiralling Cloud Costs
To regain control of your cloud spending, you must understand how you lost it to begin with. Some common reasons for spiralling cloud costs include:
1. Over-Provisioning and Under-Utilisation
Many organisations pay for more storage, features, or computing capacity than they need. This seems like a reasonable decision at the time – after all, why pay for more storage later when you can get ahead now? But the reality is that if you don’t actually need the resources, you are only wasting money.
2. Lack of Visibility and Reporting
Cloud environments are complex, especially when multiple services are leveraged at once. Without sufficient visibility into usage patterns, you may lose track of what is being consumed and at what cost.
3. Shadow IT
Shadow IT is when resources – such as new cloud services – are used without the knowledge or approval of IT leaders. This can happen if a different member of management starts implementing solutions without proper communication. These costs often go completely unnoticed until the bill arrives.
4. Infrequent Clean-Ups
Unused storage, multiple services that fulfill the same function, and stale instances all contribute to unnecessary expenditure. If cloud services are not being regularly audited and cleaned up, these inefficiencies will continue to quietly rack up charges over time.
5. Misaligned Workloads
Technology is exciting for business leaders, and this often results in IT becoming misaligned with overall goals. If cloud solutions that don’t actually contribute value are being adopted, money is being wasted.
Read more: Cloud Computing and Data Security: How to Protect Your Business
How to Manage Cloud Costs More Effectively
1. Set Clear Policies and Budgets
Identify why your business uses the cloud, and how it contributes to overall goals. Set out a clear cloud budget that focuses on meeting your company’s needs. Support this with policies controlling how new solutions can be adopted, what they should be used for, and where they will fit into the budget.
2. Monitor Closely
The first and most important issue you must address is poor visibility. Set up a way to monitor cloud usage and resource allocation.
3. Remove Unused Resources
Removing any unnecessary cloud resources will significantly reduce costs. Remember: If it is not currently being used, you do not need it.
4. Right-Size Necessary Resources
Even essential services could still be contributing to overspend. Make sure your business is using the correct tier, rather than paying for the next one up. Eliminate unused features within your current cloud services. Downgrade storage that isn’t being utilised.
5. Secure Buy-In
Create a report with your cloud cost reduction suggestions, and present it to key stakeholders. Include an analysis of the potential benefits, to help them make an informed decision. By securing this buy-in as fast as possible, you get everyone on the same page and ensure a consistent approach. Clear communication also reduces the likelihood of shadow IT, by making everyone aware of the issues it creates.
6. Audit and Optimise
Managing cloud costs is an ongoing process. While you may clean up the mess for now, those inefficiencies can easily sneak back in over time. Repeat the optimisation process regularly – at least once a year – to ensure your hard work is not being undone.
Cloud Cost Management Tools vs MSPs
There are many third-party cloud cost management solutions available:
- Google Cloud Cost Management: Google provides a pricing calculator to help you plan ahead and budget effectively.
- AWS Cloud Cost Management: AWS offers a variety of cloud financial management (CFM) solutions to help their clients.
- Harness Cloud Cost Management: Harness provides cloud cost management software that automates critical functions such as reporting and optimisation.
- Gartner Cloud Cost Management Insights: Gartner’s insights and software reviews are extremely useful for cloud cost management.
- Azure Cloud Cost Management: Microsoft provides their own cost management solutions to help Azure users reduce waste, as well as clear pricing structures.
However, there’s a downside to cloud cost management tools such as these. Each of them still leaves you to handle the bulk of the work in-house. This can be impractical for a number of reasons, from limited resources to a lack of knowledge. If this sounds familiar, managed services might be a better option.
Managed service providers (MSPs) can handle cloud maintenance and resource optimisation for you. Unlike cloud cost management software, they do more than simply automate basic tasks – they take care of the entire process, while providing additional support and guidance. This option is also more cost-effective than attempting to manage the cloud internally. Instead of dedicating your own staff to this complex, ongoing task, you can hand it over to an expert.
The best cloud cost management solution for you will ultimately depend on your business. Understand your needs, and decide which option best supports your future goals.
Reduce Cloud Waste and Watch Your ROI Skyrocket
Cloud migration can vastly improve your profitability and agility – but only if you put the time in to keep things running smoothly. With the right mix of strategy, tools, and support, managing cloud costs becomes an opportunity to get ahead instead of a burden. The resulting cost savings can make an enormous difference, improving your overall ROI and giving you the flexibility to spend in other areas as needed.
If you need advice, the cloud experts at National IT are here to help. We provide actionable insights to get you back and track and increase the value your cloud services drive. Get in touch with a consultant to learn more.
