Wednesday, May 31, 2023

Managing Cloud Computing Cost: Challenges & Strategies

By Nisha Sharma - March 31, 2023 6 Mins Read

 Managing Cloud Computing Cost: Challenges & Strategies

An organization can put into practice a cloud cost management strategy to aid in planning its future cloud service consumption and expenses.

One of the many use of cloud computing is rapid scalability and the lack of initial capital investments. DevOps & IT teams can swiftly and efficiently begin using services thanks to cloud solutions, but they also risk incurring unforeseen costs that go over budget.

Top 10 Cloud Software Vendors, Market Size, and Forecast 2020-2025 by Apps Run The World stated that the cloud applications market stands at over $150 billion.

Companies must form a successful cost management plan as most businesses use multi-cloud deployment. It entails tracking and contrasting the prices charged by various cloud service companies.

It is crucial to have deep insight into cloud utilization and costs to enforce accountability throughout the organization, enhance the functionality of cloud-based technologies, and make decisions regarding the workloads operating in each cloud environment. 

Top 15 Best Strategies for Managing Cloud Computing Costs 

Develop a clear understanding of the usage patterns

Analyze business usage patterns to identify the types of frequently used services, peak usage times, and commonly used instances. It will help in determining the most cost-effective instance type for the workloads.

Also Read: Economic Benefits and Challenges of Cloud Computing

Choose the right instance type

Optimize the instance types based on business-specific use cases. Choose appropriately sized instances and offer the right level of performance for the applications. Use the AWS cost calculator to compare instance types and pricing.

Utilize Reserved Instances

Reserved Instances offer substantial cost savings over On-Demand Instances. Identify consistently running workloads and purchase reserved instances for significant cost savings.

Use Spot Instances for non-critical workloads

Spot Instances offer significant savings over On-Demand Instances but can be interrupted anytime. Use them for workloads that are not critical and can initiate instantly.

Use Auto Scaling

Auto Scaling allows businesses to adjust the number of instances based on demand automatically. It will help to optimize costs by automatically scaling up or down based on usage patterns.

Implement cost allocation tags

Assign cost allocation tags to the resources to help businesses track and allocate costs to specific teams, departments, or applications.

Use Cloud Formation templates

Use Cloud Formation templates to create and manage AWS resources. It will help to deploy resources in a standardized and repeatable way, reducing the risk of configuration errors and unnecessary costs.

Monitor usage and costs

Monitor the usage and costs regularly to identify any inefficiencies or unexpected expenses. Use the AWS Cost Explorer tool to visualize cloud costs and usage.

Use AWS Trusted Advisor

AWS Trusted Advisor recommends optimizing business infrastructure, improving security, and reducing costs. Use it regularly to identify opportunities for cost savings.

Use data transfer wisely

Data transfer costs can add up quickly. Minimize data transfer costs using content delivery networks (CDNs) or storing data closer to the applications.

Use serverless technologies

Serverless technologies, such as AWS Lambda, allow users to pay only for computing time. It can result in significant cost savings for workloads with unpredictable usage patterns.

Use storage classes

Use AWS storage classes to optimize costs based on business data’s frequency and access patterns.

Use cost-effective backup strategies

Use cost-effective backup strategies such as snapshots and lifecycle policies to manage backups and reduce costs.

Consider multi-cloud or hybrid cloud

 Consider using multiple cloud providers or a hybrid cloud strategy to save costs and optimize performance for specific workloads.

Use AWS Marketplace

 AWS Marketplace offers a variety of third-party solutions that can help businesses optimize their infrastructure, reduce costs, and improve performance. Browse the Marketplace regularly to identify new cost-saving opportunities.

Top 10 Challenges of Managing Cloud Computing Cost

Cloud computing has revolutionized how organizations manage their IT infrastructure, enabling them to scale their operations quickly and efficiently. However, controlling costs is one of the biggest challenges associated with cloud computing.

Lack of visibility

One of the primary challenges is the need for more visibility into cloud usage and spending. Organizations must understand their resources, who uses them clearly, and for what purpose.

The complexity of pricing models

Cloud service providers offer a variety of pricing models, including pay-as-per-use, reserved instances, and spot instances. Understanding the nuances of each model can be challenging, and choosing the wrong model can result in higher costs.

Cost optimization

Managing cloud costs also involves optimizing resource usage and identifying opportunities to reduce costs. It requires a deep understanding of the organization’s needs and the ability to monitor and adjust usage continuously.

Governance and control

Organizations must ensure proper governance and control over their cloud resources to prevent wastage and unauthorized usage.

Vendor lock-in

Organizations relying on a single cloud service provider may be vulnerable to vendor lock-in, limiting their ability to negotiate pricing or switch providers.

Cost allocation and chargebacks

When multiple departments or teams use cloud resources, accurately allocating costs and chargeback usage becomes challenging. It requires a robust cost allocation methodology and clear communication with stakeholders.

Balancing cost and performance

Organizations need to balance the need for cost savings with the need for optimal performance. Choosing cheaper resources may result in slower performance, while choosing more expensive resources may only sometimes be necessary.

Security and Compliance

Organizations must ensure their cloud usage meets security and compliance requirements, which may incur additional costs for specialized tools or services.

Unforeseen costs

Unexpected events, such as spikes in usage or outages, can result in additional costs that are difficult to anticipate. Organizations need to have contingency plans in place to mitigate these risks.

Also Read: Gartner’s View: Cloud Computing in 2027

Lack of expertise

Managing cloud costs requires specialized skills and expertise, which may be available in various ways. Organizations may need to invest in training or hire outside experts to help manage their cloud costs effectively.

By addressing these challenges, organizations can proactively manage their cloud costs and ensure they get the most value from their cloud investments. To address these challenges, organizations can take a proactive approach to managing their cloud costs. It includes

  • Regularly reviewing their usage and spending,
  • Leveraging cost management tools provided by cloud service providers, and
  • Exploring multi-cloud strategies to reduce the risk of vendor lock-in.

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Nisha Sharma

Nisha Sharma- Go beyond facts.Tech Journalist at OnDot Media, Nisha Sharma, helps businesses with her content expertise in technology to enable their business strategy and improve performance.With 3+ years of experience and expertise in content writing, content management, intranets, marketing technologies, and customer experience, Nisha has put her hands on content strategy and social media marketing. She has also worked for the News industry. She has worked for an Art-tech company and has explored the B2B industry as well. Her writings are on business management, business transformation initiatives, and enterprise technology.With her background crossing technology, emergent business trends, and internal and external communications, Nisha focuses on working with OnDot on its publication to bridge leadership, business process, and technology acquisition and adoption.Nisha has done post-graduation in journalism and possesses a sharp eye for journalistic precision as well as strong conversational skills. In order to give her readers the most current and insightful content possible, she incorporates her in-depth industry expertise into every article she writes.

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