Struggling with high cloud costs? You’re not alone – 82% of organisations face challenges managing cloud expenses, with 35% of resources often wasted. But with the right strategies, you can reduce cloud costs by up to 72% while maintaining performance and aligning with your goals.
Here are 7 proven strategies to optimise cloud costs:
- Establish Strong Cloud Governance: Set policies, track usage, and create cross-functional teams to manage spending.
- Use Cloud-Native Cost Management Tools: Leverage tools like AWS Cost Explorer or Azure Pricing Calculator to monitor usage, rightsizing, and savings plans.
- Adjust Resource Allocation and Rightsizing: Eliminate unused resources and automate adjustments to cut waste.
- Automate Scaling and Scheduling: Use tools like AWS Auto Scaling or Azure Auto Scaling to dynamically adjust resources based on demand.
- Use Reserved Instances and Savings Plans: Commit to long-term usage for discounts of up to 75%.
- Implement FinOps Practices: Collaborate across teams to track, optimise, and operate cloud spending efficiently.
- Manage Data Transfer and Storage Costs: Optimise storage tiers, reduce data movement, and automate tiering.
Quick Comparison:
| Strategy | Potential Savings | Key Benefit |
|---|---|---|
| Cloud Governance | 20-30% | Better control and compliance |
| Cloud-Native Tools | Up to 72% | Real-time tracking and rightsizing |
| Resource Allocation & Rightsizing | 30-50% | Eliminate waste and boost efficiency |
| Automated Scaling | 30-50% | Dynamic resource adjustment |
| Reserved Instances/Savings Plans | Up to 75% | Discounts for predictable workloads |
| FinOps Practices | 20-30% | Collaborative cost management |
| Data Transfer & Storage | 30% | Smarter storage and reduced transfer costs |
These strategies help businesses save money, reduce waste, and improve operational efficiency. Start with one or two and scale your efforts for long-term success.
A Look at Intuit’s Cloud Cost Optimisation and FinOps Best Practices
1. Establish Strong Cloud Governance
Managing costs in multi-cloud environments starts with strong cloud governance. A 2023 Gartner report revealed that 69% of IT leaders went over their cloud budgets, underscoring the need for clear policies and controls.
Cloud governance ensures proper management of cloud resources and spending. It covers areas like FinOps (financial operations), CloudOps (cloud operations), and SecOps (security operations) to maintain cost control, resource efficiency, and compliance. To build effective governance, focus on these key steps:
- Create Clear Policies: Define rules for resource usage, cost allocation, and approval processes. Tools like AWS Trusted Advisor can help enforce these policies.
- Build a Cross-Functional Team: Assemble a team with expertise across departments to manage cloud spending and efficiency.
- Track and Optimise Usage: Use monitoring tools to keep an eye on resource usage and costs.
“Putting in place strong guardrails will help create a predictable cost base, with limited wastage.”
To keep costs under control, adopt consistent tagging practices across teams. Regular audits can identify and remove unused resources, cutting expenses and improving efficiency. Strong governance ensures that every dollar spent supports business goals, even in the most complex multi-cloud environments.
Once governance is established, cloud-native tools can provide even greater cost visibility and control.
2. Use Cloud-Native Cost Management Tools
Major cloud providers offer built-in tools to help track expenses and improve operational efficiency. Platforms like AWS Cost Explorer, Azure Cost Management, and Google Cloud’s Cost Management are especially helpful in multi-cloud setups. For instance, AWS Cost Explorer enabled one company to cut cloud expenses by 72% by implementing strategic Savings Plans, while also boosting their efficiency metrics.
Here’s a breakdown of how these tools help:
| Feature | Benefit | Impact |
|---|---|---|
| Automated Cost Tracking | Monitors usage in real-time | Detects cost anomalies quickly |
| Rightsizing Recommendations | AI-driven optimisation | Cuts waste by 30-45% |
| Reserved Instance Planning | Options for long-term use | Saves up to 72% |
| Sustainability Metrics | Tracks resource efficiency | Aligns with efficiency goals |
Key Capabilities to Prioritise
- Real-time Monitoring and Analytics: Use automated tracking to get instant insights into spending trends and patterns.
- Integration Features: Ensure the tool connects seamlessly with tagging systems and governance policies for consistent tracking across platforms.
In multi-cloud environments, it’s best to stick with provider-specific tools – like AWS Cost Explorer for AWS and Azure Cost Management for Azure. This ensures you get detailed insights tailored to each platform. These tools also automate tasks like anomaly detection and resource adjustments, which complement your governance efforts.
To get the most out of these tools, focus on measurable results. Regularly review and tweak your strategies to keep operations efficient. By using the tools’ built-in capabilities, businesses can make smarter decisions about resource use, balancing financial goals with broader efficiency objectives.
For even deeper cost optimisation, consider supplementing these tools with third-party platforms designed for multi-cloud setups.
3. Adjust Resource Allocation and Rightsizing
Efficient resource allocation is key to managing cloud costs effectively. Studies reveal that up to 30% of cloud resources often go unused, highlighting a major opportunity to cut costs through smarter resource management.
Understanding Resource Utilisation
Cutting waste and selecting the right resource types are crucial for keeping costs down without sacrificing performance. A structured approach to managing resources can help you save money while meeting performance requirements.
How Optimisation Impacts Performance
Here’s a look at how optimising different resource types can lead to better utilisation and cost reductions:
| Resource Type | Utilisation Before → After | Cost Savings |
|---|---|---|
| Compute Resources | 35% → 75% | 40-60% |
| Storage Volumes | 45% → 85% | 30-45% |
| Database Instances | 40% → 80% | 35-50% |
Automating Resource Adjustments
In today’s cloud environments, automated tools play a crucial role. These tools adjust resources in real-time based on demand, preventing over-provisioning and performance issues.
Environmental Benefits
Efficient resource management doesn’t just save money – it also reduces energy consumption. By rightsizing, you can align cost-saving measures with eco-friendly practices.
Practical Tips for Implementation
- Track Usage Regularly: Use built-in cloud monitoring tools to keep an eye on how resources are being used.
- Define Clear Metrics: Set specific thresholds to identify and address underused resources.
Rightsizing is a powerful way to make resource use more efficient. Combine it with automated scaling and scheduling to adapt seamlessly to workload changes.
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4. Set Up Automated Scaling and Scheduling
Automated scaling takes rightsizing a step further by ensuring resources adjust dynamically to meet fluctuating demands. This approach helps avoid over-provisioning and keeps costs in check. For example, AWS Auto Scaling can reduce costs by up to 50% by scaling capacity based on real-time demand, cutting out expenses tied to idle resources. Azure has similar capabilities which can provide similar benefits
Tools for Scaling Automation
| Tool Type | Description |
|---|---|
| Cloud-Native Tools | Built-in auto-scaling options, saving 30-50%. |
| Spot Instances | Flexible compute resources with up to 90% savings. |
| Third-Party Platforms | Multi-cloud optimisation with 40-60% savings. |
Best Practices for Implementation
Netflix’s success with auto-scaling demonstrates how crucial it is to study workload trends and establish clear scaling rules. Start by analysing workload patterns, setting precise scaling triggers, and thoroughly testing configurations before rolling them out.
Environmental Benefits
Automated scaling doesn’t just save money – it also reduces energy waste, aligning with sustainability goals by minimising unnecessary resource usage.
Monitoring and Fine-Tuning
Making use of the cloud native monitoring tools can help you monitor how well your scaling strategies are working and pinpoint areas for improvement. For environments like development and testing, strict scheduling policies can lead to immediate savings. For instance, you can automate the shutdown of non-essential resources during off-hours, cutting costs without affecting availability during work hours.
To maximise efficiency over the long term, consider combining automated scaling with reserved instances or savings plans for even greater cost reductions.
5. Use Reserved Instances and Savings Plans
Reserved Instances (RIs) and Savings Plans are excellent ways to cut down on cloud expenses, offering discounts of up to 75% when you commit to long-term usage. RIs work best for steady workloads, while Savings Plans are better suited for more dynamic needs.
Understanding the Options
| Feature | Reserved Instances | Savings Plans |
|---|---|---|
| Maximum Savings | Up to 75% (Standard) | Up to 72% |
| Commitment Period | 1 or 3 years | 1 or 3 years |
| Flexibility | Instance-specific | Cross-instance family |
| Best For | Stable, predictable workloads | Variable computing needs |
Real-World Success
One e-commerce business managed to slash its cloud expenses by 40% in just a year by combining Compute and EC2 Instance Savings Plans strategically.
While Reserved Instances and Savings Plans can significantly lower costs for predictable workloads, don’t overlook the importance of managing data transfer and storage expenses for an all-around cost-efficient cloud strategy.
6. Implement FinOps Practices
FinOps is all about reshaping how organisations handle cloud spending. It brings finance, tech, and business teams together to share responsibility for managing costs effectively. This isn’t just about using tools – it’s about creating a mindset shift across the organisation.
Core FinOps Framework
| Phase | Activities | Expected Outcomes |
|---|---|---|
| Inform | Gain visibility into costs | Clear understanding of spending patterns |
| Optimise | Adjust resources and automate | Cut waste by 20-30% |
| Operate | Monitor and refine continuously | Maintain cost efficiency |
Real-World Results
Adopting FinOps can lead to cutting cloud waste by as much as 30%, saving businesses a significant amount of money across various industries [4].
Collaboration Across Teams
“FinOps fosters financial responsibility and collaboration across teams, ensuring cost optimisation aligns with business goals.” [5]
Steps to Get Started
- Build a team that includes finance, engineering, and operations experts.
- Use tagging and tracking tools to monitor costs in real time.
- Set up automated alerts and actions to keep spending under control.
Tying Cost Savings to Sustainability
FinOps doesn’t just save money – it can also help reduce energy use by optimising resources. Companies like Vaxowave show how financial goals can go hand-in-hand with environmental efforts through FinOps and GreenOps strategies.
Tips for Success
- Set clear metrics to track your progress.
- Keep communication open between all stakeholders.
- Use automation to ensure consistency and efficiency.
While FinOps drives financial accountability, don’t overlook managing data transfer and storage costs to fully optimise your cloud expenses.
7. Manage Data Transfer and Storage Costs
Keeping data transfer and storage costs in check is essential for staying within your cloud budget. Smart data management strategies can help you achieve this while maintaining performance.
Choosing the Right Storage Tier
Understanding storage tiers can help you allocate data effectively:
| Storage Tier | Key Details |
|---|---|
| Hot Storage | For frequently accessed data; higher cost but faster access. |
| Cool Storage | For data accessed quarterly; moderate cost with decent access speed. |
| Archive Storage | Ideal for backups or compliance data; lowest cost but slower access. |
Optimise Data Transfers
Techniques like data compression, deduplication, and edge computing can cut transfer distances and improve performance. These methods can reduce storage costs by up to 30% [1]. Edge computing, in particular, minimises data movement while enhancing speed and lowering costs.
Smarter Storage Management
“Leveraging cloud-native services that offer free data transfer between regions can help reduce costs while maintaining performance requirements.” [2]
Automating tiering and monitoring data in real-time can further optimise storage. Use tools to analyse patterns like transfer volumes and tier usage. Take advantage of free transfer allowances where possible.
Energy Efficiency and Cost Savings
Efficient data management also has energy-saving perks. Reducing replication, using energy-efficient solutions, and choosing providers with sustainable practices can lower your costs. These actions align well with FinOps and GreenOps goals, balancing financial and environmental priorities.
Regular Cost Audits
Frequent audits can uncover spikes in data transfer, identify unused resources, and ensure you’re staying within storage thresholds. This proactive approach keeps your data expenses under control.
Conclusion
Adopting these eight strategies enables organisations to cut costs significantly while maintaining high performance. Many leading companies have successfully reduced expenses – some by as much as 30-40% in cloud spending – through smarter resource management and the use of FinOps practices.
Key Implementation Outcomes
| Factor | Impact | Industry Example |
|---|---|---|
| Strong Governance | Better control and compliance | Capital One saved $100M with automated financial processes |
| Resource Optimisation | 30-40% cost savings | Samsung cut $11M using FinOps tools |
| Automated Management | 60-66% savings on non-production environments | Achieved across various enterprises |
Maximising Cloud Value
The ultimate goal of cloud cost management isn’t just cutting expenses – it’s about getting the most value for every dollar spent. As Peter Rix, co-founder of Vaxowave puts it:
“Cloud cost management isn’t just about cutting expenses—it’s about maximizing value. At Vaxowave, we help organizations transform cloud financial management from a challenge into a strategic advantage.”
Long-term Advantages
These strategies go beyond immediate savings. They create a solid framework for ongoing operational efficiency and financial growth. Organisations have reported strong ROI, reduced operational costs, faster deployments, and smoother IT management. Combining governance, automation, and strategic cost management ensures both short-term wins and long-term success.
The real key lies in aligning technology investments with business goals, creating a balance that supports efficiency and growth without compromising performance.
