Cloud Cost Optimization and its Best Practices

Pre-requisite: Cloud Computing

The act of lowering the expense of running services, apps, and infrastructure in a cloud computing environment is referred to as “cloud cost optimization.” This can be done by monitoring and controlling resource usage, cloud usage, and cost drivers to spot cost-saving possibilities and put cost-cutting strategies like rightsizing, auto-scaling, and employing reserved instances into place. To keep up with shifting usage patterns & technological improvements, cloud cost optimization involves ongoing monitoring, measurement, and analysis of cloud expenses. 

Need for Cloud Cost Optimization

1. Pay-per-use Pricing: Cloud computing bills users according to the resources they use and how long they use them for. Customers can be sure they are only paying for the resources they actually use and need thanks to cloud cost optimization.
2. Dynamic Resource: Using the cloud, businesses may easily and swiftly scale up or down their resources as needed. However, this might also result in the under- or overuse of resources, which would squander money. The efficient use of resources is ensured via cloud cost optimization.
3. Avoiding Waste: Without effective cloud cost optimization, businesses risk paying for resources that aren’t used at all. Over time, this can build up and considerably raise their overall cloud spending. Cloud cost optimization reduces costs and ensures that resources are being used effectively.  
4. Managing Costs: Cloud computing can get very pricey very rapidly, especially for businesses with big or complicated cloud implementations. In order to utilize their cloud resources wisely and keep expenses under control, businesses need to better understand and manage their cloud expenditures.
5. Value Maximization: By cutting waste, improving resource usage, and ensuring that they are only paying for the services they truly use, cloud cost optimization helps organizations get the most out of their cloud investments.
6. Cost Transparency: With cloud cost optimization, businesses can gain better visibility into their cloud spending, allowing them to make informed decisions about how to allocate their resources and optimize their spending.
7. Scalability: As businesses grow and their needs change, their cloud infrastructure needs to be able to adapt quickly and efficiently. Cloud cost optimization can help businesses ensure that they are scaling their resources appropriately to meet changing demands, without overspending on unnecessary resources.
8. Resource Allocation: With cloud cost optimization, businesses can allocate resources to the most critical workloads and applications, ensuring that they are able to achieve their business goals without overspending on less important tasks.
9. Cost Containment: As cloud environments become more complex and difficult to manage, businesses may find that their cloud costs are spiraling out of control. Cloud cost optimization can help businesses contain costs by identifying areas where they can cut back on spending or improve resource utilization.
10. Vendor Management: Many businesses use multiple cloud vendors to meet their needs. Cloud cost optimization can help businesses manage their vendor relationships more effectively, ensuring that they are getting the best possible pricing and service levels from each vendor.

Best Practices to reduce Cloud Bills 

Identifying Mismanaged Resources

Finding mismanaged resources is a crucial step in cutting cloud costs since it enables businesses to find and stop wasting money in their cloud environment. To do this, it is necessary to monitor and analyze cloud usage, resource utilization, and cost drivers in order to spot instances of resource over- or under-provisioning or other poor management. Organizations can optimize their cloud utilization and cut expenses by recognizing mismanaged resources and taking appropriate action, such as right-sizing instances, using auto-scaling, or changing storage options. Mismanaged resource examples include:

• Instances that are overprovisioned: These instances are larger than necessary for the workloads they are supporting, wasting money.
• Instances that are not being used to their maximum potential, resulting in wasted spending 
• Resources that are no longer in use yet are still being charged for are known as orphaned resources.
• Unoptimized storage refers to storage volumes that employ more costly storage solutions than necessary, which raises expenses.

Utilizing Reserved Instances

By agreeing to utilize a set number of resources for a specific amount of time in exchange for cheaper hourly charges than on-demand instances, using reserved instances is a strategy to lower cloud expenses. A company can lock in a lower hourly pricing for a certain instance type, availability zone, and operating system for a period of one to three years by purchasing a reserved instance. The fact that a reserved instance is far less expensive than an identical on-demand instance, enables enterprises to cut their overall cloud costs.  The optimal use of reserved instances is for workloads that are anticipated to run consistently for the duration of the reservation, thus businesses should think about their future resource requirements.

Use Auto-Scaling to Reduce Costs

An approach used in cloud computing called auto-scaling modifies the number of computing resources (such as virtual machines or containers) in response to demand. Auto-scaling can assist cut expenses by preventing resources from being squandered on unused capacity by automatically adding or removing resources as necessary. Here are several methods for using auto-scaling to lower cloud costs: 

• Planning scaling operations: Scaling operations can be scheduled using auto-scaling based on the hour of the day or the day of the week. For instance, you might have more instances running during regular business hours and fewer instances running during off-peak hours. 
• You can specify when auto-scaling should remove resources by using scale-in policies. You may, for instance, define a policy that scales in if a resource’s utilization falls below a specific level.
• When using scale-out policies, you can indicate when resources should be added through auto-scaling. For instance, you might establish a policy that calls for scaling out if a resource’s usage goes above a predetermined level. 

Right-size Computing Services

Rightsizing is a cloud computing method that entails modifying the size of the computing resources you’re utilizing (such as virtual machines or containers) in order to improve performance and cut expenses. Making ensuring you are using the appropriate number of resources for your workloads without over- or under-provisioning is the aim of rightsizing. 

Utilize Real-Time Analytics to make quick Cost Decisions

The goal of this technique is to lower the cost of the cloud by using real-time analytics to make quick cost decisions. Cloud computing services are a cost-effective substitute for purchasing and maintaining infrastructure because they enable businesses to rent computing resources (such as servers, storage, and databases) as needed. However, if not properly controlled, cloud computing costs can soon get out of hand.

In order to make prompt and informed judgments, real-time analytics entails gathering, processing, and analyzing data in real time. Real-time analytics can assist organizations in identifying and optimizing their cloud usage, billing, and costs in the context of lowering cloud costs.

Monitor & Correct Cost Anomalies

By monitoring and correcting cost anomalies organizations can lower their cloud costs. With the help of cloud computing, businesses can rent computer resources (including servers, storage, and databases) as needed. However, if these costs are not carefully controlled, they can soon become out of hand.

Cost anomalies are sudden or extraordinary increases in cloud utilization and related expenses. These anomalies can happen for a number of causes, including resource over-provisioning, under-utilization, improper pricing or invoicing models, as well as unintentional or malicious activities. Here are some ways that businesses can keep an eye on and fix cost irregularities to lower their cloud bill:

• Monitoring in Real-time: Businesses should set up monitoring in real-time of their cloud usage and associated expenditures. As a result, abnormalities will be easier to spot in almost real-time, enabling businesses to move quickly to fix the problem.
• Anomaly Detection: Organizations can employ statistical analysis or machine learning algorithms to find anomalies in their cloud usage and cost information. These algorithms can be used to find use or cost trends that significantly depart from norms.
• Root Cause Analysis: Organizations should carry out root cause analysis after an anomaly is discovered to ascertain the root of the problem. Using this knowledge, decisions can then be made that are well-informed in order to address the problem and minimize

Automate Infrastructure Right-sizing during Provisioning

With the help of cloud computing, businesses can rent computer resources (including servers, storage, and databases) as needed. However, if these costs are not carefully controlled, they can soon become out of hand. The process of choosing the best size and configuration of cloud resources to satisfy an organization’s demands without going over budget or underutilizing resources is referred to as rightsizing. To make sure that the resources are being used properly and efficiently, this procedure should be carried out frequently.

Organizations may make sure they are only using the resources they need and paying for what they use by automating the rightsizing process during deployment. This can verify that resources are being used effectively while lowering the cost of the cloud.

Delete Unused EBS Snapshots

Organizations using Amazon Web Services (AWS) for cloud computing can lower their cloud cost bills by deleting unused Elastic Block Store (EBS) snapshots. Point-in-time backups of EBS volumes known as “EBS snapshots” can be used to restore data or create a new EBS volume. To save their cloud costs, businesses can delete unwanted EBS snapshots by following these steps: 

• Inventory management: Organizations should keep track of which EBS snapshots are in use and which are no longer required by maintaining an inventory of their EBS snapshots. 
• Automated Snapshot Management: Organizations can utilize AWS products like Amazon EC2 Auto Scaling and AWS cloud formation or third-party tools to automate the management of EBS snapshots, including the elimination of unused images.
• Organizations are able to put into place a snapshot retention policy that specifies how long snapshots should be maintained before being removed. To guarantee that crucial data is safeguarded, this policy should consider the organization’s recovery point objectives (RPOs) and recovery time objectives (RTOs).

Pause Your Idle Redshift Clusters when not in use

A key component of managing cloud infrastructure is lowering costs, and halting idle Redshift clusters while they are not in use is one method for doing this. Redshift is an AWS (Amazon Web Services) data warehouse service, and it may get rather pricey if not handled properly.

This strategy’s fundamental tenet is to only resume Redshift clusters when they are absolutely necessary, pausing them whenever they are not in use. Given that Redshift clusters are billed by the hour, this can dramatically lower the cost of cloud computing. The accompanying computation and storage resources are not charged when a Redshift cluster is pausing.

• Finding idle Redshift clusters may be accomplished by utilizing the AWS Management Console, which allows you to monitor user information for each cluster, including CPU and disc space usage.
• Automate the pause and restart procedure: The Redshift clusters’ pausing and restarting processes can be carried out automatically using AWS Lambda, a serverless computing service. The Redshift cluster can be started and stopped by the Lambda function in accordance with a schedule or an event.
• It’s crucial to keep an eye on the Redshift clusters to make sure that the appropriate pauses and restarts are occurring.

Evaluating Alternative Cloud Providers

Evaluating alternative cloud providers is a common strategy for reducing cloud cost bills. Cloud providers offer a variety of services, each with its own pricing structure, and by evaluating these providers and their offerings, organizations can identify the best options for their specific needs and reduce their overall cloud spending.

The steps to implement this strategy are as follows:

• Identify your Requirements: Before you start evaluating alternative cloud providers, you need to identify your specific requirements. 
• Compare Pricing Models: Cloud providers offer a variety of pricing models, including pay-per-use, reserved instances, and dedicated hosts. 
• Evaluate Performance and Reliability: In addition to cost, it’s important to consider the performance and reliability of the different cloud providers. 
• Consider Additional Services and Support: Cloud providers offer a range of additional services, such as security, backup and disaster recovery, and support. Consider these services when evaluating cloud providers to determine which provider offers the best overall value.
• Conduct a cost-benefit Analysis: Once you have evaluated the different cloud providers, conduct a cost-benefit analysis to determine the best option for your organization. 

Conclusion

Cloud cost optimization is an important aspect of managing cloud infrastructure, as it helps organizations reduce their overall spending on cloud services. It is important for organizations to adopt a comprehensive approach to cloud cost optimization, as cloud costs can quickly spiral out of control if not managed effectively.