The unlimited agility, scalability, and technological evolution that cloud computing provides is undeniable. Riding the wave of innovation offered by AWS, Azure, and Google puts you at a distinct advantage over those who aren’t yet bought in.
Like any IT solution, being cloud-native comes with a cost. But unlike other solutions, the cost of the cloud is variable, complex, and often unpredictable. The need for cloud cost optimization is evident, but many companies still struggle to keep their public cloud expenses under control. In this blog, we’ll explore what separates cloud costs from on-premise costs, the cloud cost challenges everyone faces, and how cloud cost optimization is more than a “once and done” exercise.
The different nature of cost: public cloud versus on-premise
Managing and accounting for traditional IT infrastructure costs is relatively straightforward. Your Engineering team identifies their project requirements, presents them to Finance, and is assigned a capital budget. With on-premise costs, it is also easy to forecast your future expenses based on static requirements.
Conversely, cloud computing operates with an elastic “pay-as-you-go” model – you scale up or down as needed, limiting the over- or under-provisioning of resources. That real-time flexibility is the big difference between on-premise and cloud-native, and is why migrating to the cloud is a high priority for so many digital enterprises.
But that same flexibility presents a significant cloud cost management challenge: how do you predict and budget for ongoing expenses when they are driven by constantly changing resource requirements? If you have a spike in application user traffic one month, that is potentially a great thing from a business growth perspective. But that also equals a spike in your costs – something your finance team most likely didn’t account for. By the time your AWS bill arrives, it’s too late.
The evolving cost of the cloud
Recognizing the flexible nature of cloud costs is a good starting point, but there’s another layer of complexity that many organizations haven’t yet grasped. If you’re using AWS, each resource you launch often requires additional peripheral services and charges in order to run. A dollar isn’t always just a dollar.
For example, depending on how you set up your NAT Instance of NAT Gateway, you will be charged per instance per hour, as well as for data transmission. Cloud cost optimization requires extensive knowledge and a multidimensional approach – something most organizations still lack.
In addition, the cloud landscape isn’t locked in place. AWS has evolved beyond just compute and storage, releasing hundreds of new services and updates every year to build the operating system of the future – their goal is to continuously improve what customers are capable of doing on the cloud. This is excellent for digital enterprises, but it also means that potential cost optimizations are constantly missed.
Consider gp2 volumes, a cost-effective, general purpose cloud storage solution at their time of release. But then AWS created gp3 volumes, which provide higher performance at a lower cost. Migrating from gp2 to gp3 is just one example of an easy cloud cost optimization that has come from AWS’s constant evolution. Keeping up with every new service and update announcement is a full-time job, for which no engineering or finance team has the capacity. The frequent introduction of new instances or services means your cloud environment changes as AWS changes – continuous monitoring and action is therefore essential to remain as optimized as possible.
How you can adapt to this new cloud cost environment
There is no way to 100% optimize your cloud costs. But you can make significant improvements with these simple steps:
- Follow the AWS pillars of cost optimization to streamline your cloud environment
- Start with ballpark cost estimates and budgets – be realistic, and expect changes when you receive your bill
- Use billing and cost alerts to stay on top of actual costs and real-time spend
- Educate and train your team on cloud cost – establishing a Cloud Center of Excellence (CCoE) is a great way to get people proactively thinking about ongoing costs
- Use an automated cost optimization tool – using an automated solution like CloudFix is ideal for continuously identifying and realizing AWS cost savings, so your team can focus on growth and innovation
Check out our other blogs for AWS cost savings tips and cloud case studies or see how CloudFix automatically executes savings from AWS now.
CloudFix scans, automates, and executes 100% safe, AWS-recommended account fixes for optimal cloud hygiene. With AWS issuing 50+ recommendations each week for performance and cost, CloudFix continually adds news fixes to its growing library to ensure you stay compliant with AWS recommendations. Each fix that enters CloudFix’s library must meet two criteria: 1) it is zero risk and (2) it offers no downtime. Reduce complexity and boost efficiency with CloudFix.